The 5 Best (And Worst) Cars You Could Ever Buy (Financially Speaking, Of Course)

Tyler Gardner (0:00)

Don't ever find yourself optimizing for its own sake. Don't make frugality your identity. Build a life where you know exactly what you value, then ruthlessly eliminate everything else, and spend what remains without guilt and without apology. Identify your no's, then find your yes, and drive it home.

Hello, friends. This is Tyler Gardner, welcoming you to another episode of Your Money Guide on the Side, where it is my job to simplify what seems complex, add nuance to what seems simple, and learn from and alongside some of the brightest minds in money, finance, and investing. So let's get started and get you one step closer to where you need to be.

Quick note before we get into it. May's pre-order incentive for my book, Real Wealth, is now live. When you pre-order this month, I'm sending you two chapters that didn't make the final cut. Chapters I genuinely love and wish I could have kept. Delivered digitally in early June. Pre-ordering also locks you in for every monthly incentive between now and the December 1st release. Go to tylergardner.com/book, click the button that says claim my bonuses, upload your receipt, takes two minutes, and you're in. Now on with the show. I want to talk today about the second most expensive thing you will ever buy.

Not your house, not your retirement, the things sitting in your driveway right now, quietly losing value at a rate that would make a financial advisor physically ill if you applied the same logic to your portfolio.

Your car.

The average American spends roughly $12,000 per year on vehicle ownership when you add up the payment, insurance, gas, maintenance, and depreciation. $12,000 per year. For most people, that is more than they put into their 401k, which is a sentence I would like you to sit with for a moment before we continue.

Now, I'm not here today to tell you that cars are evil or that you should be taking the bus. I live in Vermont. The bus situation here is not going to carry me through a February morning. I am here to tell you that the car decision, specifically which car you buy, whether it's new or used, and how you finance it, is one of the most consequential financial decisions most people make on a semi-regular basis. And most people make it almost entirely on a motion while wearing the financial equivalent of a blindfold. So today we're going to try to remove at least part of that blindfold. We're going to look at some actual data, depreciation curves, insurance premiums, maintenance costs, fuel economy, reliability ratings, and I'm going to give you the five worst cars you could buy from a purely financial perspective, and the five best. And I promise you, by the end of this episode, you are either going to feel very smug about your current vehicle, or mildly devastated and ready and able and willing to write me a nasty note telling me I'm a complete ding-dong. Possibly both simultaneously, depending on what's in your driveway. And as always, before we get into it, if this podcast has been helpful to you in any way, if it has made you think or laugh or share it with a friend who might need the reminders, please consider leaving a review on Apple or Spotify, as it helps me know that I'm not just crafting 40 minutes of content each week for an audience of bloodhounds who, I should mention, have never once left a review despite being present for every single recording.

And one more thing before we get into the framework, at the end of this episode, I'm going to tell you exactly what I drive. Not what I recommend, what I actually drive. The vehicle that is sitting in my driveway right now, that I just signed for 48 hours ago. And I will tell you up front, it is not on the best list. It is not even close to the best list. It is the kind of vehicle that would make my own financial advisor look at me with a quiet disappointment of a person who has heard this before. But I'm going to explain exactly why I drive it, and I think if you listen to the whole argument, hopefully you'll understand, maybe even agree. Possibly. That's at the end. First, the framework.

How to actually think about a car purchase.

Before we get to the lists, I want to give you a framework because I think most people are evaluating cars on exactly the wrong variables. When you walk into a dealership, or more likely when you start browsing online at 11 o'clock at night in a moment of aspirational weakness, you're typically thinking about three things. How it looks, how it drives, and whether you can technically afford the monthly payment. These are all, I say this with respect, the wrong things. The variables that actually determine what a car costs you are depreciation, insurance, fuel, maintenance, and potential financing. In that order, the sticker price is almost irrelevant compared to the total cost of ownership over five to ten years. A $25,000 Toyota Corolla and a $45,000 BMW 3 Series will cost you very different amounts over a decade, and the difference has almost nothing to do with the $20,000 gap at purchase.