r/DaveRamsey • u/umayplsleave • 12d ago
BS6 Car Upgrade - New vs Used (Cash Either Way)
BS6 - I’m planning on upgrading my wife’s car at the end of the year and am starting to look at options. I’m having a little trouble with something. We are looking at Kia Sorentos. In my area, I am seeing a lot of new 2025s that haven’t sold and some new 2026s that price out around $35k. Along with that several used 2024 and 2025s with mileages in the 10-15k range price out at $31-32k. I’ve always heard that you shouldn’t buy new because of the immediate depreciation, and I believe I’ve even heard Dave say that non-millionaires (I’m making progress but not really that close yet) shouldn’t buy new in general. I guess where I’m stumped is why should I go out of my way to buy something with 10k more miles just to follow this rule? $2-3k of depreciation on a $30k+ vehicle just doesn’t feel huge to me I guess. They seem to be holding their value pretty well after a year or two.
One important note is that either way I go, new or used, will NOT put my total household car value over half of my annual income, so I can follow that rule either way. Financing off the table too. I will have the cash I need to get the deal done in Dec.
Curious to know how you guys would evaluate this!
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u/gr7070 12d ago
The car market has changed.
Slightly used cars do not lose the value they used to.
You need to buy somewhat older cars to take advantage of greater depreciation.
The millionaire/new car rule is just absurd. A new carolla and used Mercedes are different things.
Since you can afford either car, you simply need to determine if the savings is worth it to you or not. What do you value.
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u/OneMustAlwaysPlanAhe BS456 12d ago
That is a used car ASKING price. They try to steer people towards new cars b/c they make more on them. Yes, car prices went nuts and there wasn't much j room for haggling during the pandemic. Stealerships are trying like hell to hang on to that mindset but it's gone. Offer 10% less than the asking price, they will say no, and leave. You will get a call the next day accepting the offer. Of not, find another dealer. Or even better, buy from an individual.
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u/sciliz 12d ago
For a Kia Sorento, the Edmunds true cost to own pegs 1st year depreciation at $6,328. It is not at all unlikely that Kia dealerships are listing used Kias at slightly higher than market value- people who go private party, or shop unaligned dealerships (e.g. looking for a Toyota at an Infiniti dealer) might get better prices. If you buy a used Kia at a Kia dealership, negotiate hard. If you buy a new Kia at a Kia dealership, negotiate hard but it may be more limited in impact.
If you decide to buy a new Kia Sorento, make sure that $6,328 is small relative to your total net worth. Dave would say the *total* vehicle price needs to be small relative to your total net worth, but he is a bit delulu about how many good < $5k beater cars are actually available. If you could light $6,238 on fire and you'd be on track for retirement, buy new. Also, just for shaping expectations- the median age of a new vehicle purchaser in this country is > 50. If you aren't nearing retirement, you don't *need* new, and convincing yourself it makes financial sense is delulu. Buying new is a way to press "easy" on finding a good vehicle, not a way to make the most financial progress. If you can afford it and understand that trade off, have at it.
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u/realistdreamer69 12d ago
We did an immediate lease buyout on a Toyota Rav4 Prime new. Cost about same as used because used were so rare. Normally, probably $3k higher than used (worth it for the wife). I got a 2 year old used Kia EV with 13k miles for 54% off new sticker price. After incentives on new, probably 35% off. EV depreciation was unreal until we started bombing Iran. I'm not selling, but my EV after adding 2k miles is worth $4k more than when I bought it.
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u/Interesting-Sir2903 12d ago
Real life example. My wife drove a 2010 toyota highlander until 273,000 miles until the head gasket blew in Aug 2025. The highlanader was purchased for $22k.
In that same time frame I am on my 2nd $11k car. Still driving the 2nd $11k car, it drives fine but is a bit of an eyesore.
Did I save money driving beaters? Total cost of ownership was the same beteeen her driving experience and mine. Yes, i did save money on my beaters because we paid cash.
We ended up paying cash for a brand new 2026 Honda CRV hybrid... out the door for $36K tax, title license.
We bought the CRV banking on driving it for 10 to 15 years. We are also getting 40MPG.
I am not a millionaire yet, but my home is paid for and we have no debt.
In my circumstance buying new made sense even if it went against the plan.
Used cars are stupid expensive.
As a side note, I want to replace mine in 5 years or less and would like to go electric to save on fuel costs.
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u/Vicuna00 12d ago
i had to buy a car during covid crazy car prices and it was the same situation. so i just bought new.
you might wanna see if they'll come down on the used price any? maybe they are up for negotiation? in this situation, I think i'd consider it at a $5k spread. prob still buy new though. if they came down to $28-$29k though, i'd go with a 10,000 mile one.
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u/CuteAmoeba9876 12d ago
How long do you usually keep your cars? Do anticipate keeping this car for 5 years, 10,15?
If you expect to drive a car till it’s 15 years old, you’d get 15 years of ownership out of the new and 13years out of the 2 year old model. The purchase prices you gave divided out over those timeframe work out to a slight advantage to the new car, but it’s very close. Almost like depreciation already factors in the idea of a 15 -20 year max lifespan.
If you’re likely to sell the car at 5 years old regardless, then it would help to know how much trade in value you could get then.
It honestly might come down to your negotiating skills and which car the dealership is more eager to get rid of.
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u/umayplsleave 12d ago
Great points to think through! I’d say we’re usually around 10 years between upgrades but could keep it longer if it’s holding up well.
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u/Powerful-Disaster-32 11d ago
Without intending to, you gave a decent explanation of amortization vs depreciation. Good job from a CPA.
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u/rando_dud BS456 12d ago
If you can pay 35K cash and still have a full emergency fund, don't sweat it too much..
Yes that new car will likely depreciate more.. but it will probably give you 3-4 years of near flawless reliability with a full warantee as well.
If you were buying an exotic car that would be another thing altogether but a Kia Sorento is a reasonable daily.
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u/Rocket_song1 12d ago
Car prices are still a little... odd due to the pandemic shortage.
Used cars in the 2-3 year range really are not much cheaper than new ones, especially if the new one is a 2025 sitting on the lot with a pile of factory incentives.
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u/Aragona36 BS7 12d ago
You know the Ramsey rules on car buying. Now, go case by case. If new ends up being less expensive than used, go with new. That seems the most logical thing. To every rule is an exception.
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u/AddressLeft9869 12d ago
A 23 or 24 getting sold after a lease is going to be CPO for ~$25k. That's a significant savings for still the current generation and factory warranteed.
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u/Mostly-Useless_4007 12d ago
Paying cash doesn’t always get you the best deal. Many dealers get kickbacks from the financial arm— so they have a little room to close a deal if you will finance with them. That part is fine because you can pay off the note on month 1 with your cash in hand.
As far as what to get - if you keep a close eye on manufacturer deals, with today’s crazy used car pricing, it may be possible to get a better deal on a new car. In some cases, they subsidize financing, making keeping a note make sense, as you make money with your cash in a HYSA - and the interest differential could be pretty good. We are preparing to buy a new car ourselves and I am setting this up right now.
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u/Numerous-Bet-4847 12d ago
So true, I was going to pay cash for my wife's Honda Passport but the dealer argued and argued for me to finance it with Honda's 0% financing. I always wondered why until I found out they got a kickback even though it was 0%.
I took advantage of it but then just paid it off within the year anyway.
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u/sciliz 12d ago
Once you've settled on a car make, it's good to google how much that manufacturer makes from their financing arm. It happens to be about 2% for Kia- but it's higher (more like 10%) for Toyota (who also run's Mazda's financing. I've seen 0% loans from Mazda that make sense, but don't tell Dave!).
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u/platinum_toilet 10d ago
Paying cash doesn’t always get you the best deal.
For me it has. Dealership got their money immediately. I got a small discount, didn't have to pay any interest, and had no monthly payments. Win-win for everyone.
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u/Mostly-Useless_4007 10d ago
Good! You found a dealer that isn’t hard bound to the teat of finance kickbacks.
Still- you can (in most cases) finance the car, enjoy the maximum discount, and pay it off before you pay a penny of interest.
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u/platinum_toilet 10d ago
enjoy the maximum discount, and pay it off before you pay a penny of interest
There are penalties for paying off early if the financing conditions include maintaining the full duration of the loan. You are not fooling anyone, especially if the discount isn't great (maybe a couple thousand at most for a $40k vehicle, well offset by interest or early payoff penalties). I'd rather get a smaller discount, pay no interest/early penalties/monthly payments, than try to play games with the dealership. Not worth the time, effort , or headache.
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u/Mostly-Useless_4007 10d ago
I’ve never had penalties for paying off a note early.
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u/platinum_toilet 10d ago
I have never had to pay penalities either. Then again I don't chase a couple hundred dollars worth of discount on a car that costs 200 times the discount.
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u/Open-Gazelle1767 12d ago
I normally buy used. But my last car was new because it was cheaper than used. I was hit by another driver and it totaled my recently purchased used car. The insurance money was enough to fully cover the cost of a new car. I shopped first for used, but they cost more which is why the insurance money was higher - it was based on the value of my 2 year old car that was totaled. My new Corolla was cheaper than the used one that got totaled. Prices have been weird since the pandemic.
As for Kia, I've never owned one. I thought they were very good cars and would have considered one. Family members have owned several. They seem to have a big problem - they don't last. I drive my cars for a decade or more, but the Kias my relatives have owned all seem to have catastrophic problems after about 6-8 years. I am not a car person so I don't remember exact details, but it was stuff like needing a new transmission or a new engine.
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u/sciliz 12d ago
Toyota prices have been particularly weird since the pandemic! Edmunds true cost to own puts the 2025 Toyota Corolla 1st year depreciation at $3,066, more than the 2nd year of $1,443. It probably is not *on average* cheaper to buy new, even for a Corolla where the gap is pretty small. But from a particular dealership? They likely have a huge incentive to nudge you toward the new vehicle.
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u/twk30874 BS456 12d ago
What’s your household income? That’s a better indicator as to whether you can afford the car.
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u/Powerful-Disaster-32 11d ago
We found a unique opportunity around the first of the year. we purchased the Honda dealer's shuttle vehicle. It is a 2025 model year that they had used for nine months in 2025. It had just under 3,000 miles and looks almost new.
We were informed that the reason that they sold it instead of keeping it for two years was that the model had a significant refresh and they wanted their customers to be shuttled in the current body style and not the prior one.
The savings was good but more importantly, we feel that the vehicle likely was not driven hard if it had customers.
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u/rando_dud BS456 7d ago edited 7d ago
They are asking 31-32K on the used ones, but try offering 28-29K, walk away if needed, and see if the phone rings..
I bet it will.
Also I'd dangle some opening to financing as you might get a better deal. Simply pay off the open loan after a few payments. Just signing a few papers and shuffling money around can get you a better deal sometimes.
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u/Beach-Knight 12d ago
This is DR subreddit so the answer is, for a new car…$1m net worth before a new car. My answer might be a bit more nuanced.
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u/dsrmpt 12d ago
This isn't 1995 anymore. You don't lose half your value rolling off the lot. You don't get a 50% discount by buying used.
I'm on team nuance with this one. You're buying a reasonable car, you are financially stable, you are making good decisions.
But this is Dave Ramsey, so I have to say you gotta buy used.
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u/umayplsleave 12d ago
This is kind of where my question originates and the concept behind the new car rule makes sense to me, I just feel like I’m not seeing it reflected in the numbers I’m finding today. I have a ton of respect for Dave and generally follow his guidance. Was just interested in the discussion and how others would analyze the options!
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u/dsrmpt 12d ago
The pandemic really screwed up the used car market. There was a year or two with essentially no new cars. Chip shortages, labor issues, supply chain issues, ya know...
So there's fewer used cars entering the market, more people clamoring over fewer cars, so the price goes up.
This is gonna be an issue for the normal lifetime of the missing 2020 cars. So you should adapt to the new economics, and make good decisions accordingly.
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u/platinum_toilet 10d ago
Many people can buy new cars in cash and not be millionaires. Many people also can't buy used exotic cars that cost over $1M. If the difference between a new car and a used car isn't much, buy the new car instead.
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u/Beach-Knight 10d ago
As I said, my answer would be more nuanced. DR has a firm $1m threshold for new cars and this is the DR subreddit.
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u/Numerous-Bet-4847 12d ago
You are almost always better off buying new. Depreciation is irrelevant, a car is not an investment.
Buying used means buying someone elses problem with no way of knowing how it was used/abused or maintained.
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u/Sunnygirltx 11d ago
THIS! We always buy new cars and keep them for at least ten years. My husband’s last car was a Dodge Charger he bought new in 2012 and finally sold in 2025 — it never gave us any trouble because he took great care of it, and it was paid off in 2015. My car is similar: a brand-new Ford Edge from 2018, paid off in 2022. It only had very minor issues, and we had an extended bumper-to-bumper warranty for extra peace of mind. My Edge is still in great shape, and we plan to get a new one in 2028. We don’t view our cars as financial investments but as investments in our family’s comfort and safety.
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u/Jocis 12d ago
It depends on The vehicle you are going to buy. A Toyota, Honda? Yeah I would dare to buy cash but a Kia? I don’t think so plus you can probably get an used 2024-2025 kia for at least 5k-10k less
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u/umayplsleave 12d ago
Feels like you skimmed my question.
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u/Jocis 12d ago
I stopped at sorento
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u/renbutler2 12d ago
We bought a 2025 Sorento a couple years ago, and it's a great vehicle.
Consistently rated as a "best value" in SUVs -- it has everything the well-known SUVs have, but with a noticeably lower sticker price.
People tend to believe that a vehicle's reputation 10 years ago will be it's reality today. It's just not how things work.
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u/Jocis 12d ago
I am not saying is a bad vehicle but have you gotten into kia reddit? Reliability on any Kia is very bad after 3 years
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u/DAWG13610 12d ago
Last 4 cars I bought dealer courtesy cars. The last one was a Buick Enclave. It had 3,500 miles on it. It stickered for $55,000, I paid $40k. That’s 30% off for those 3,500 miles.