Should You Buy a New Car Right Now? Here's What Financial Experts Say

The question of whether to purchase a new vehicle is one many consumers face, especially as car prices remain elevated. To answer whether you should buy a new car now, it helps to understand what financial experts and the data reveal about this major purchasing decision. Recent market data from early 2025 showed the average new car price hovering around $48,641—a figure that still sits roughly 26% higher than pre-pandemic levels, despite being lower than the December 2022 peak of $49,929. This context matters when evaluating whether now is the right time for your new car purchase.

The True Cost of Buying New: Understanding Vehicle Depreciation

One of the primary reasons financial experts warn against buying a new car is straightforward economics: new vehicles lose significant value almost immediately. Industry data shows that cars depreciate by approximately 20% during the first year of ownership, with that decline continuing until they retain just 40% of their original value after five years.

This depreciation reality fundamentally undermines the case for buying new. When you drive a brand-new vehicle off the lot, you’re immediately accepting a substantial loss in value. For a $48,000 car, that means losing roughly $9,600 in year one alone—money that simply vanishes regardless of how well you maintain the vehicle.

Dave Ramsey, the bestselling author and financial personality, has been vocal about this dynamic. As his company Ramsey Solutions explains, the financial logic of purchasing new doesn’t make sense for most people: “The very best way to buy a car is to save up and buy a reliable, slightly used car with cash. You’re always going to be better off buying used and paying up front instead of going for the shiny new model.”

Why Used Vehicles Make Financial Sense

The depreciation curve creates a compelling argument for considering used or nearly-new vehicles instead. By waiting for another buyer to absorb that initial steep depreciation hit, you can capture significant savings. A vehicle just two to three years old has already experienced its steepest value decline but typically still has most of its useful life remaining.

Financial expert Suze Orman emphasizes this logic: “Your goal should be to buy the least expensive car. Period. That should steer you to a used car rather than a new car.” This advice isn’t about penny-pinching—it’s about directing your financial resources toward building actual wealth rather than financing depreciating assets.

Purchasing a nearly-new model after the initial depreciation phase means you can save thousands compared to buying fresh off the dealer lot. Those thousands represent money that could be redirected toward building emergency savings, investing, or paying down debt—activities that actually create financial progress rather than stalling it.

The Wealth-Building Case Against New Cars

The choice between buying new versus used extends beyond simple math—it reflects fundamentally different approaches to building wealth. Ramsey often highlights this distinction: “Most millionaires don’t drive flashy cars. When people don’t waste money to LOOK wealthy, they have money to actually BECOME wealthy.”

This observation connects purchasing decisions to broader financial outcomes. Every dollar spent on unnecessary vehicle depreciation is a dollar not available for investments, savings, or wealth-building activities. Over a lifetime, these choices compound significantly. The person who consistently purchases reliable used vehicles while investing the difference between new and used prices will substantially outpace the person who prioritizes driving the latest models.

When—and If—It Makes Sense to Buy New

While experts consistently warn against buying new vehicles, they don’t suggest it’s permanently off-limits. Ramsey Solutions offers clear guidance: don’t consider purchasing a brand-new car until your net worth exceeds $1 million. At that wealth level, if you choose to buy a new vehicle that represents only a small percentage of your net worth, the depreciation impact becomes less consequential to your overall financial picture.

This threshold isn’t arbitrary—it reflects the reality that building substantial wealth requires discipline about major purchases early on. For most people in the wealth-building phase, every dollar directed toward a depreciating asset is a dollar not working toward financial independence.

Making Your Purchase Decision Today

So, should you buy a new car now? The financial evidence suggests the answer remains no for the vast majority of consumers. Current pricing, while moderating from 2022 peaks, remains elevated by historical standards. The depreciation mechanics haven’t changed. And the wealth-building principle remains constant: purchasing used vehicles while directing savings toward investments creates a far more favorable path toward financial security than financing new ones.

Instead of focusing on whether now is the right time for a new car purchase, consider whether a used vehicle meeting your reliable transportation needs might better serve your long-term financial goals. That approach aligns with advice from financial experts who’ve studied what separates wealth-builders from those stuck in endless payment cycles.