Here's why buying a new car at 0% interest is a mistake: Dave Ramsey

[Nature Boy 2.0 8,370]

0% is not always the best deal, he is right about that. However like so much of what you read everywhere this article is full of mis information.  Makes me wonder what else Dave is dead wrong about.

 

 

https://www.foxbusiness.com/money/new-care-0-interest-mistake-dave-ramsey

 

"The only way you have a chance of getting 0 percent interest on a new car is if you have perfect credit and pay full MSRP (manufacturer’s suggested retail price). But, if you walk onto a car lot with cash, and haggle with the salesperson a little bit, they’ll knock a bunch off the sticker price."

 

This claim is liar liar pants on fire. Cash is never going to get you , your best deal ever.  You also dont have to have perfect credit to get a special APR. In some programs a 680 will get you the zero %.  Also I have never seen anyone pay full MSRP to get zero percent.  True you usually lose some incentive money but can still pay invoice and get zero percent.

 

A new car also loses about 60 percent of its value in the first four years after you buy it. How is that 0 percent?

The whole 0 percent int

 

 That is also BS.  while some models may, it is not uncommon for vehicles like Tacomas, Tundras and Ridgelines to hold well over 60% of value after 4 years.

 

 

[Steeleballz 7,550]

 

   Dave has some good info, but also some niche advice and some is just out of date/wrong. He takes some good generic advice but I think he tries too hard to make a gimmick out of that to sell books to everyone. I think it's something that applies to a more narrow set of people who have difficulty with finance in general. Most people don't really need to do most of what he is saying. I still like listening to his show sometimes when I'm driving, but after a while it's very repetitive content.

 

   There are a few things he says that I just don't like. One thing is I always hear is him advising people to buy used cars instead of new. That is OK if you are mechanically inclined and like spending time working on cars, but for a lot of people who are not, you can end up sinking a lot of time and money into a used car too. The other thing he says a lot is to never use credit cards. Why not? My credit cards paid me more than $1000 back last year and I didn't pay a cent in interest. Why turn that down.

 

 

 

  

  

[millefleur 5,046]

3 hours ago, Steeleballz said:

The other thing he says a lot is to never use credit cards.

I think it's because of his target audience. A lot of them have essentially gambled away thousands on credit cards, digging themselves into a deep debt hole, almost like an addiction, and so he's encouraging them to stop cold turkey and just learn how to actually understand how money works. I agree that a lot of his advice makes no sense to people who already essentially have good money habits.

[Voice of Reason 10,298]

10 hours ago, Steeleballz said:

   There are a few things he says that I just don't like. One thing is I always hear is him advising people to buy used cars instead of new. That is OK if you are mechanically inclined and like spending time working on cars, but for a lot of people who are not, you can end up sinking a lot of time and money into a used car too.

I think this used to be more true a few years ago than it is today as regards the mechanical ability bit.  Most cars today are not sustainable using shade-tree mechanic abilities like they used to be (I know, I am one.  I can change oils and filters and what not, but cars today require computers to even begin to know what is wrong with them).  Most vehicles DO lose a big chunk of value in the first 1-3 years, so unless one negotiates an excellent purchase of a new vehicle, much can be saved by buying used.

 

That being said, if one trades in a new vehicle every year or two, it can be advantageous.

 

The other thing he says a lot is to never use credit cards. Why not? My credit cards paid me more than $1000 back last year and I didn't pay a cent in interest. Why turn that down.

Agree 1000%.  I am going to a bank on Monday for the first time in about 8 years.  I write about 1 check every three years.  Rarely use cash.  But I use my CC for everything I possibly can.  Would pay my loans with it if I could.  I love my cash back CCs. Haven't paid interest on a CC in 20 years or more.

 

 

 

  

  

 

Edited July 26, 2020 by Voice of Reason

[Nature Boy 2.0 8,370]

13 minutes ago, Voice of Reason said:

 

As to the cash is King thing. I think you can affirm that is not true 

[TBoneTX 45,273]

Never listen to Ramsey's investment advice.

[millefleur 5,046]

11 hours ago, TBoneTX said:

Never listen to Ramsey's investment advice.

What's his basic investment spiel? I heard him once telling people amid the early Corona freakout in March to not sell their stocks...he turned out to be right on that.

 

I do agree with him on the anti-student loans front. Community colleges (and that plus transferring to a cheaper, in-state school) are underrated.

[TBoneTX 45,273]

I can't remember details -- haven't heard him for years and don't want to.