Many people have the wrong approach.
Many people go about buying cars the wrong way, says radio host and author Dave Ramsey.
He says the incorrect approach often happens when people need to replace a vehicle quickly.
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The personal finance personality believes buying a used car is a much better solution than it used to be.
She explained that a counseling student who calls herself Valerie recently collected her car, according to Arizona’s KTAR News on April 23.
“Dear Dave” I wrote. “I recently got into a car accident that totaled my car. My old car is paid for, and the insurance company is writing it off and giving me $15,000. I’m a physical therapist who does home therapy, so I need a car to work.”
She continued, “I’m debt free, and I’m in the process of finishing my emergency fund, but I can’t find a car like my old 2014 Toyota Camry with all the accessories.” “My rental car is paid for by insurance until the end of the month, and I’ve looked at used cars at a few dealerships, but dealers and salespeople tell me used cars still cost the same as new cars, and that I should only finance a brand new car. I’m not. I’m sure of what I’m doing.”
Ramsay responded with some sobering advice.
“Dear Valerie,” he wrote. “Asking a new car dealer if you need a new car is like asking a dog if he’s hungry. And the answer will always be yes. However, the smart answer is this: If you have a $15,000 insurance check on your hand go buy a great used car for $10,000. $15,000.”
Ramsey provided some details about the meaning of this approach.
“You may not be able to find the exact same car you had before, down to all the bells and whistles, but the Toyota Camry isn’t exactly rare either,” he said. “That money will get you nearly the same car—a very comparable car in terms of equipment, reliability, mileage, and overall quality to a collected car.”
Ramsey then expresses some sympathy for Valerie’s predicament, but tells her what he believes is the real truth about used cars.
“I realize this whole thing is a huge inconvenience. And you probably feel a little pressure to make a decision,” he wrote. “But the line you get about used cars still costing the same as new cars is a load of crap.
“Used cars no longer cost as much as new cars,” he said. “That was right about five minutes into the back end of the pandemic, when the Mississippi River was running backwards and used car values soared. It was an absolute miracle!”
Ramsay too discussion How psychological instincts tend to cause car buyers to deal with situations like this in such unfortunate ways.
Something in the human brain seems to be trying to tell us we have to get a promotion if we collect a car. I want you to fight this notion, because you don’t need to destroy your emergency fund over something that isn’t an emergency. Get online, and look around there without the stress that comes with always being in the parking lot.
And I’ll say this out loud: a $15,000 car today is way better than anything I drove in the first 30 years of my life. The quality of used cars and their remaining life is much greater than even new cars back in the day. You know that old saying, “They don’t make ’em like they used to”? Well, thank God for that!
But a $15,000 used car in today’s world? Such a beautiful car!
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