Trying to get rich without dealing with a massive car payment?
Congratulations! You’re normal.
When most people buy a car, finances barely cross their minds. They wander into a dealership, fall in love with how new their car smells and sign the paperwork for an absurd monthly payment.
But here’s the thing…
That brand new car you’re dreaming of is one of the worst financial decisions you can make. Not only will your car lose value as soon as you drive it off the lot, but your car payment will hinder your ability to save and invest money.
By learning how to buy used cars wisely, you can begin practicing some of the best wealth building habits around. Buying used keeps more money in your pocket and accelerates you toward financial freedom.
Let’s break down exactly how to buy a used car that works with your financial goals:
- Why Buying Used Cars is a Wealth Building Strategy
- Understanding Depreciation (And How It Wrecks Your Wealth)
- Setting a Budget (The Right Way)
- How to Find the Perfect Used Car
Why Buying Used Cars is a Wealth Building Strategy
Purchasing a used vehicle isn’t cheap. It’s the opposite.
Every dollar spent on an inflated car payment is another dollar that can’t be invested into your future. Instead of saving for retirement or building an emergency fund, you pour money into something that loses value.
This is why so many financial experts recommend buying quality used cars instead of new. If you’ve ever heard about Dave Ramsey baby steps you know buying a car without going into debt is critical to financial success. The logic is simple. Spend less money on depreciating assets and use the rest to buy assets that go up in value.
Used cars offer you that opportunity. They allow you to spend less money on your vehicle and invest the rest.
Buying used cars is so powerful that the numbers don’t even lie.
Did you know the average car payment for new vehicles was $748 as of Q3 2025? Used vehicles were $532 on average. That’s over $200 less each month that you can invest!
If you invested that $200 wisely each month, you’d be well on your way to financial independence.
Instead of trying to keep up with the Joneses with a brand new set of wheels, buy used and watch your wealth grow!
Understanding Depreciation (And How It Wrecks Your Wealth)
This is something new car buyers don’t like to think about…
Depreciation.
When you drive a new car off the lot, it loses value nearly immediately. KBB reports that the average new car loses 20% of its value in the first year. And that number jumps to nearly 60% after 5 years.
Let that one sink in for a moment.
If you bought a $45,000 car brand new, you could be looking at $18,000 for that same car just 5 years later. That’s $27,000 lost!
And you still have to make payments the entire time.
Depreciation is the reason you should never buy new if you care about your wealth.
When you buy a 2-3 year old car, someone else takes the massive first-year depreciation. You get a car that still has plenty of life and value left without taking a huge financial loss yourself.
Easy Peezy.
Setting a Budget (The Right Way)
Before you start looking at cars, you need a budget. Not the “can afford this payment” budget, but the full picture type of budget.
Most people ruin their car buying experience by focusing solely on monthly payments. “Sure, $350/month for 6 years, what could go wrong?”
Here’s the problem with that type of thinking.
Monthly payments can be deceiving. Say you can afford $400/month for a car. You decide to buy a new car for $20,000. At 6% interest, your monthly payment will be… you guessed it $400. Fantastic right? Well not really.
Because if you drive that car for 84 months (that’s 7 years in case you weren’t paying attention), you’ll end up paying nearly $11,000 in interest.
CarsDirect reported that nearly 22% of new car loans are now 84 months or longer. That means that 1 in 5 new cars on the road have loan payments for over 7 years.
That is CRAZY!
Instead of fooling yourself with low monthly payments, set a realistic budget when purchasing your next vehicle:
- Try to keep the total cost of your car below 15% of your take-home income.
- Save up for a large down payment (the more you give yourself the better)
- Look for loans that are 48 months or less
- Factor in insurance, gas, and repairs
How to Find the Perfect Used Car
Alright! Now that the budget is set, let’s talk about cars!
You can have the worst car buying experience by blindly looking for “used cars.” Instead, you want to find a vehicle that meets both your budget and your lifestyle.
Start by doing your research. There are certain makes and models out there that hold value better than others. Do some digging to find cars that are known for longevity and affordable maintenance expenses. Certain brands like Toyota, Honda, and Mazda tend to hold their value better.
Once you find some cars you like, always buy a vehicle history report. This tells you if the car has any past accidents, title issues, or odometer problems.
Next, watch for these things:
- Mileage – Less Mileage is always better
- Maintenance history – Low mileage with no service history is sus
- Pre-purchase inspection – Always get a third-party mechanic to inspect the car
- Certified Pre-Owned – These cars are inspected by the manufacturer and come with some kind of warranty.
And one last thing…
Take your time. Never force yourself into buying a car because you “think you should.” The best deals go to those who are willing to wait them out.
Bringing It All Together
Buying the right used car can help you stick to your financial goals and save you hundreds of dollars every month. By learning how to buy used cars wisely, you can set yourself up to build wealth the right way.
Here’s your Recap:
- Buying used cars keeps more money in your pocket
- Cars lose about 20% of their value in the first year
- Calculate a total budget and keep your loan terms short
- Do your research on makes and models that retain value
- Don’t let your emotions make the decision for you
Cars don’t improve financial situations. But buying used can be one of the best habits you learn to build wealth.
