Dear Dave,

Could you explain why buying a new car at 0% interest isn’t a good idea?

Raina

Dear Raina,

The only way you have a chance of getting 0% interest on a new car is if you have perfect credit and pay full MSRP (manufacturer’s suggested retail price). But, if you walk onto a car lot with cash, and haggle with the salesperson a little bit, they’ll knock a bunch off the sticker price. If you can buy the car for less than the 0% interest gimmick, how is that 0%? See what I’m saying? The cash buyer pays less.

Besides, you shouldn’t even consider buying a brand new car, unless you’re debt-free and have $1 million or more in the bank. You lose a ton in value the second you drive a new car off the lot. How is that 0%? A new car also loses about 60% of its value in the first four years after you buy it. How is that 0%?

The whole 0% interest gimmick tricks a lot of unsuspecting folks into buying something they don’t need and can’t afford!

—Dave

* Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 16 million listeners each week on 600 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.