Dave Ramsey Is Still A Giant Moron When It Comes To The Car Market
One of the big problems we have in the U.S. is looking to people with money and thinking that because they have money, they have all the answers. One of the worst examples of this is Dave Ramsey, self proclaimed financial…I don’t know. We’ve talked about how bad his advice is before. I guess some people didn’t get the memo as he’s still out here doling out questionable financial advice about cars. Take this recent episode:
$72,000 In Debt For A Kia?!
A woman from Florida called into Ramsey’s show expressing concern over her husband’s recent car purchase. The husband — who makes $90,000 a year and is the sole income earner right now — wanted an SUV and went to purchase one for $32,000. He paid that SUV off and after an unspecified period of time, the dealer contacted him with an upgrade offer, saying he could trade in the SUV and get an EV. Apparently the offer was good enough for the husband to bite as he ended up buying a Kia EV6 in April 2022.
2023 Kia EV6 GT | Jalopnik Reviews
A few things about this stand out. For one, the wife says she was under the impression that the upgrade offer was something that would be an equal trade, leading me to believe that the dealer got him on the trade which isn’t mentioned.
Second, she says he purchased the EV6 for $72,000. EV6 pricing doesn’t reach that high, which also tells us that the dealer screwed him on the purchase and likely marked it up, especially given the timeframe that he purchased it in. Now the wife says they’re stuck paying $1,200 a month (not including insurance) on an EV that they still owe $62,000 on. She says that they’ve been trying to get rid of it, but that they’ve only been offered $40,000 for it, leaving them $20,000 upside down. She says the reality of the situation didn’t kick in until months later and the husband regrets the decision calling it “dumb.” This is when Ramsey’s cluelessness about the car market kicks in.
Ramsey couldn’t accept that a car could depreciate that much in such a short timeframe. Except it can. The EV6 has the double whammy of being a Korean EV; that’s double depreciation. It’s why you can find EV6s just a year or two old with low miles going for just over $30,000 in a lot of places. Even with this fact, Ramsey wouldn’t accept this and has his co-host check the values of EV6s. He does this while remarking that either the husband is lying to justify keeping the EV6, he’s just not good at the car-buying thing or both. Ramsey then continued showing just how clueless he is with a wild suggestion.
He suggested to the wife that they try and sell the EV6 for $50,000 which, lets stop and consider that for a moment. If dealers aren’t willing to give them more than $40,000, where exactly does Ramsey think a buyer will come from that will give them $10,000 over what’s presumably the market value on a vehicle from a segment that loses half its value in just three years? Oh, but Ramsey’s world-class financial advice gets better.
He then told the wife, to cover the hole of what they owe on the EV6, they should take out a loan for $10,000-$12,000 from a local bank or credit union to cover it. He also suggested that they borrow $10,000 to buy a $5,000 car and called it a “stupid tax.” Then use the husband’s income to pay that off and get rid of some of their $2,000 credit card debt. At the end of the segment, he tells them to attend his Financial Peace University and offers to pay for it.
In no way should they listen to any of Ramsey’s advice. The reality of the situation is the husband just got got by the dealer. Given the timeframe, it sounds as if he was bit by the EV bug and the dealer talked him into getting a marked up EV6 when they were flying off the lots. And now that the EV luster has worn off and the market has cooled, they’re in a messed up financial situation. With how screwed up this situation is, their best bet is to either suck it up and pay it off when they can — which is possible because the husband makes good money — or take a loss and sell it private party and then use that money to pay down a good chunk of the loan and go from there with refinancing or rolling the remaining debt into a cheaper car. Whatever the end result is, they’re going to be in some mess for awhile and they should probably speak to an actual financial advisor, not someone who plays one on TV.
