Dave Ramsey Guarantees If You Have A Car Payment, 'You Will Be Broke Your Whole Life' – Here's How He Says You Can Become Rich

Dave Ramsey is famously vocal about his hatred of car payments. He's said it repeatedly across his TikToks, books and radio show: car payments will keep you broke. His reasoning? They're the biggest monthly expense most people take on for something that loses value faster than almost anything else you own.

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Ramsey didn’t hold back in one of his more memorable TikToks: "I guarantee you'll be broke your whole life as long as you stay in car payments because it's the most expensive thing you buy that goes down in value." Cars, he points out, depreciate fast – losing up to 60% of their value in the first five years.

In another video, he points out that the average car payment in the U.S. is $507 a month for 84 months. Ramsey highlights what this money could do if you stop "screwing around with car payments." From age 30 to 70, that $507 invested monthly would grow to $5.6 million. 

Ramsey also draws on data from his extensive interviews with millionaires, who he says are overwhelmingly against car loans. According to his research, 90% of millionaires haven't had a car payment in decades. Instead, they drive paid-off vehicles – typically four years old with around 41,000 miles. 

He argues that the millionaires everyone envies skip payments, buy used cars outright and invest the difference.

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In TikTok, he contrasts a home as "the most expensive thing people buy that goes up in value." The average annual rate of home price appreciation currently stands at 5.37%. This rate challenges Ramsey's frequently referenced "5-year rule," which advises buying a home only if you plan to stay there for at least five years. The current appreciation rate suggests that even shorter periods of homeownership could still lead to financial gains.

While Ramsey's point is compelling – there's no denying that car payments can eat into your ability to save and invest – it might be a little extreme to suggest that a car payment guarantees lifelong financial struggles. For many, a car isn't just a luxury … it's a necessity. Living without one simply isn't an option, depending on where you live or what you do for work. In these cases, the question isn't if you should have a car payment but how to manage it wisely.

Financial experts often recommend that your total transportation costs, including car payments, insurance and gas, shouldn't exceed 10% of your monthly income. By sticking to this guideline, you can balance the need for a reliable vehicle without derailing your financial goals.

While it's true that cars lose value rapidly – unlike appreciating assets such as homes – finding a balance is key. Ramsey's focus on avoiding car payments might work for some, but life often requires flexibility. Financing a car with a low-interest rate could make sense in certain situations, especially if it prevents draining your savings. Despite Ramsey’s guarantee, not everyone with a car payment will stay broke forever. 

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