What does Dave Ramsey think about car payments?

The less money you’re spending on your car every month, the more money you’ll have to put into other more important things—like paying off any other debt you have, putting away money for your kids’ college fund, saving money for the retirement of your dreams, and so much more.

Why getting a car loan is a bad idea?

Financing a Car May be a Bad Idea. All cars depreciate. When you finance a car or truck, it is guaranteed that you will owe more than the car is worth the second you drive off the lot. If you ever have to sell the car or get in a wreck, you owe more than what you can get for it.

What does Dave Ramsey say about buying a car?

Is It Ever Okay to Buy a New Car? As a general rule of thumb, the total value of your vehicles (anything with a motor in it) should never be more than half of your annual household income. Dave doesn’t recommend buying a new car—ever—until your net worth is more than $1 million.

Why does Dave Ramsey say not to lease a car?

It is the most expensive way to operate a vehicle. When you give the leased car back, you will have paid the car company more than the car has depreciated during that time.

Is financing a new car a good idea?

Financing a car may be a good idea when: You want to drive a newer car you’d be unable to save up enough cash for in a reasonable amount of time. The interest rate is low, so the extra costs won’t add much to the overall cost of the vehicle. The regular payments won’t add stress to your current or upcoming budget.

Is it smart to pay off your car?

Experts say that paying off a car loan early can be a smart approach if you’re able to afford it. Paying off your car loan can also take pressure off your monthly budget, Montoya says. After your car is paid off, you now have extra money you can use to pay down other debt, increase savings or put toward expenses.

Are cars bad investments?

Cars are depreciating assets, meaning they lose value over time. New cars are the worst. That’s because the biggest depreciation comes in the first year, with a big chunk of that coming when you drive it away and it goes from new to used. This is unofficially referred to as the new car hit.

Is Dave Ramsey advice any good?

The bottom line: Ramsey may have done as much as anyone else to motivate Americans to get out of debt and start saving. Ramsey’s advice makes for good radio, but that doesn’t make his investment advice solid. Any competent advisor or fee-based planner could poke holes in Ramsey’s recommendations.

When should you stop putting money in your car?

When repair costs start to exceed the vehicle’s value or one year’s worth of monthly payments on a replacement, it’s time to break up with your car, according to automotive site Edmunds and Consumer Reports, the product review site.

Why does Dave Ramsey call it a fleece?

My good friend Dave Ramsey calls it “fleecing” because getting fleeced means getting financially taken advantage of—and he’s right on the money with that nickname. It’s the most expensive way to operate a vehicle, so you’re definitely getting fleeced if you do this.