Buying a car isn’t just about selecting something new and exciting — it’s a decision that should reflect a person’s lifestyle, long-term needs, and financial situation, according to one well-known personal finance author.
Dave Ramsey, the author, podcaster and radio host, encourages car buyers to let go of the notion that a flawless, dream vehicle is waiting to be found. Instead, he advises focusing on practicality.
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Buyers should ask themselves what kind of vehicle suits their daily life: Is a truck or a car more appropriate? How many passengers are typically transported? What level of fuel efficiency is important? How much cargo space is truly needed?
He emphasizes the fact that no single vehicle will meet every desire. The key is to separate true necessities from mere preferences and to consider how the vehicle will serve over time.
Ramsey also recommends that car buyers take their time with the search. Exploring both dealership inventories and online listings provides a broader view of available options. Jumping at the first appealing deal may lead to regret, as better choices could be just around the corner.
Related: Dave Ramsey warns Americans on buying a car
Dave Ramsey emphasizes buying a used car
Before beginning the search, Ramsey suggests evaluating whether the current vehicle still meets essential needs. If it remains reliable and functional, delaying a purchase can allow one to save enough money to pay for the car outright rather than taking on a car payment.
When it becomes time to buy a car, Ramsey emphasizes the importance of paying cash for a used one rather than taking on car payments with interest while purchasing a new vehicle.
Using a car payment calculator, one can easily see the math. Financing a $30,000 car at 9% APR over five years results in more than $7,000 in interest payments.
Ramsey warns that the car-buying process often comes with emotional pressure and persuasive marketing. To counter this, he advises buyers to stay grounded in their budget and needs, turning the experience into a financial advantage rather than a setback.
Approaching the process with patience and clarity is the best way to avoid costly mistakes, Ramsey explains.
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Dave Ramsey stresses the importance of avoiding car payments
“You’ve got to take the idea of getting a car payment completely off the table,” Ramsey wrote. “Not only do you end up forking over thousands more when you take out a car loan or lease a car, but do you really want a gigantic car payment weighing you down like a modern-day ball and chain for the next six years?”
When buying a car, it’s crucial to have a crisp understanding of how much cash one has on hand that can reasonably be spent on an automobile, Ramsey clarifies.
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“Look at your bank accounts and see what you’ve got in savings,” he wrote. “You also need to ask yourself where buying a ride fits in with your other financial goals.”
“Do you have debt you want to get rid of? Are you saving for a down payment on a house? You may need a new vehicle, but remember: Every extra dollar you put toward a car is one less dollar you could put toward something else,” Ramsey added.
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Dave Ramsey shares an income rule for car buyers
Ramsey advises that the combined value of a person’s vehicles should not exceed 50% of their yearly income.
His reasoning is rooted in the principle of avoiding excessive investment in assets that lose value over time. Vehicles tend to depreciate rapidly, making them a poor place to store wealth.
Ramsey emphasizes the reality that financial stability comes from putting money into things that grow in value — not into items that decline the moment they’re driven off the lot.
“Once you land on a number you can spend out of pocket, decide you’re not going above it — no matter what promises the dealer tries to throw your way,” Ramsey wrote. “Having a firm budget and paying in cash are both powerful negotiating tools.”
Keeping vehicle expenses in check helps ensure that more income is available for savings, investments, and other financial priorities. This kind of discipline is key to building long-term wealth, according to Ramsey.
Related: Dave Ramsey has blunt words for Americans buying a car
