Dave Ramsey warns Americans on wrong way to buy a car | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

There are many reasons Americans decide it is time to purchase a new automobile.

Often, it’s because the car they are currently using breaks down or because maintenance costs are adding up — and trips to the shop are occurring too frequently.

Sometimes a household that has been relying on one car decides an additional car or truck is necessary. Or a family simply desires a new car for leisure trips or an RV for vacations.

Whatever the reason an automobile purchase becomes part of the conversation, personal finance bestselling author and radio host Dave Ramsey offers advice on the most financially savvy way to go about buying one.

First, Ramsey recommends potential car buyers take a good look at the advantages and disadvantages of buying a used car or a new car — and he advises buying used.

Dave Ramsey recommends buying a used car over a new one

Ramsey believes buying a new car is a choice people too often make for the wrong reasons, such as the compulsion to own a shiny vehicle they see advertised on television, online or in a magazine.

But new cars, Ramsey says, present financial difficulties in both the short term and the long term.

“Brand-new cars lose a huge chunk of their original value in the first couple of years (even in the first hour),” Ramsey wrote. “A used car, on the other hand, keeps more of its value over time — which means you’re not losing as much money as you do with a new vehicle.”

“The choice between a new or used car could be the difference between you riding the highway to wealth or spinning your wheels in a never-ending cycle of payments,” he added.

For new cars, Kelley Blue Book reported in October 2025 that the average transaction price (ATP) was $49,766, down slightly from September’s record high of $50,080.

For used cars, Kelley Blue Book reported in November 2025 that the average used car sold for $25,945 in October, a modest increase from the prior month.

Ramsey explains new car depreciation

After one minute, a $50,000 new car loses about 9–11% of its value, which is roughly $4,500–$5,500.
After one year, that same car is worth at least 20% less, dropping to about $40,000.
After five years, the car typically loses around 60% of its value, leaving it worth about $20,000.

Dave Ramsey views buying a used car with cash as best option

In August 2025, the average interest rate for a new car loan was 7.64% for a standard 60‑month loan, according to the Federal Reserve Bank of St. Louis.

Rates vary widely depending on credit score, with excellent credit borrowers sometimes seeing offers closer to 5% and weaker credit profiles facing double‑digit APRs.

More on Dave Ramsey

“The best way to buy a car is with cash (as in, without a car loan),” Ramsey wrote. “We know, we know. That might sound crazy, especially if you’ve always had a car payment. But a car loan is the most expensive way to buy a car!”

Ramsey’s tips on paying cash for a used car

Review your savings and consider how purchasing a car aligns with other financial priorities such as paying off debt or saving for a home.
If you plan to replace your current vehicle, use Kelley Blue Book to estimate its trade-in or resale value.
Keep the total value of all your vehicles below half of your annual income to avoid tying up too much money in depreciating assets.
Decide on a maximum spending limit and stick to it, since paying in cash and holding firm strengthens your negotiating position.

Top 5 best used cars in the U.S.

Here is a list of the top 5 best used cars to buy in November 2025, according to (and with some notes from) SlashGear.

2018 Mazda CX-5: The Mazda CX-5 is one of the more fun-to-drive SUVs on the market, offering lithe handling and a 187-horsepower four-cylinder engine. Not only that, the compact SUV also had some of the best fuel economy estimates in the class, earning 24 mpg in the city and 30 mpg on the highway.
2016 Mazda6: Just like its larger sibling, the CX-5, the Mazda6 is a joy to drive and offers agile handling. The Mazda6 was also incredibly fuel-efficient for the time, earning a combined 32 mpg in testing done by Consumer Reports. The Mazda6’s engine isn’t the most powerful or exciting on the market, but it does offer 184 horsepower and a manual transmission.
2019 Toyota Corolla: Consumer Reports calls it the best used car to buy that is under $15,000. This generation of Corolla began in 2014, with 2019 being the last year of production before another full redesign.
2019 Toyota Camry Hybrid: The Camry Hybrid comes powered by either a four-cylinder engine mated to a lithium-ion battery that is capable of earning 47 mpg combined in city/highway driving. This hybrid has a full-driving range of more than 600 miles when using the hybrid technology.
2020 Mazda MX-5 Miata: Powered by a 181-horsepower four-cylinder engine and weighing just over 2,300 pounds, the Miata is a tiny car with a relatively not-so-tiny engine.