Ramit Sethi says Americans replace cars too often. A $47k car costs $47,244 per year if you keep it one year, but only $9,000 per year if you keep it five years. Longer ownership dramatically cuts what you actually pay.
Just over $47,000 (stated as $47,244 in the example).
$23,622 per year.
1 year: $47,244/year; 3 years: $15,000/year; 5 years: $9,000/year.
How long do you plan to keep the car before you get another one? This is really important. This is totally neglected when people make decisions about their big purchases. There's also this unspoken expectation in America that we should get a new car every three to five or six years. What the hell is wrong with you? Yes, getting a good deal is great, but if you sell that car after just a few years of owning it, you will have lost a lot of money. Just take a look at how much you'd be saving if you held onto your car for two years. For example, the average cost of a new car in 2024 is just over $47,000. You paid $47,244 to use that car for a year. But if you waited an extra year, the car's cost per year decreases to $23,622 per year. 3 years $15,000 a year 5 years only $9,000 a year.
