In today’s world, many people see purchasing a new car as a significant milestone or a worthwhile investment. However, financial expert Dave Ramsey has a different view. His perspective on car buying is blunt and eye-opening, particularly when it comes to splurging on a vehicle that costs $40,000 or more. Ramsey warns that purchasing such an expensive car is not the road to wealth and can actually set you back financially in the long run.
Ramsey firmly believes that cars are not good investments, regardless of their brand or price tag. He often tells his audience, “Listen, honey, if it has a motor or wheels, it goes down in value quickly.” He’s not exaggerating either—Ramsey’s advice is backed by hard data. According to car valuation websites like Carfax and Edmunds, a new car loses about 60% of its value in the first five years. That steep depreciation means that a $40,000 car will drop in value by $24,000 within that time frame.
To illustrate the point, Ramsey uses a relatable analogy: “When the tires clear the car dealer’s lot and go onto the road and you hear that sound, boom boom, that was $10,000.” In other words, as soon as you drive off the lot, you’re instantly losing a significant chunk of the car’s value, and that’s money that you’ll never recover.
Ramsey doesn’t just rely on general advice—he’s learned this lesson from personal experience. In fact, Ramsey himself once fell into the trap of purchasing an expensive car. He recalls buying a $39,000 Jaguar in the past, only to be confronted by his millionaire grandfather, who had a no-nonsense approach to money. Upon hearing the price of the car, his grandfather’s response was blunt: “Oh my God, you’re stupid.”
At first, Ramsey defended the purchase, arguing that a car like that was an investment. However, his grandfather’s retort hit home: “Most of my investments go up.” This exchange stuck with Ramsey and contributed to his understanding that vehicles, even luxury ones like a Jaguar, aren’t an appreciating asset. Rather, they are liabilities that lose value the moment they are driven off the dealer’s lot.
Ramsey’s broader message is clear: buying an expensive car may feel like a status symbol or a sign of success, but it is not a smart financial move if your goal is to build wealth. Instead of purchasing a car for its perceived value, Ramsey advocates for a more financially responsible approach. He suggests buying used cars, which typically experience less depreciation, or opting for more affordable options that won’t drain your finances.
Additionally, Ramsey urges people to focus on saving and investing money in assets that appreciate over time, like stocks, real estate, and retirement accounts. Cars, by their nature, are a depreciating asset—no matter how shiny or new they may seem when you first buy them.
The key takeaway from Ramsey’s advice is that while a new car might offer temporary enjoyment or a feeling of accomplishment, it won’t help you grow wealth in the long run. Instead of spending a large portion of your money on a vehicle, consider redirecting those funds into investments that will provide long-term financial security. By avoiding the temptation of buying expensive, rapidly depreciating cars, you can stay on track toward achieving your financial goals and building real wealth over time.
