Buy A Car Sooner To Avoid Increased Prices Due Tariffs?

Summary

Podcast Summary: The Ramsey Show Highlights Episode: Buy A Car Sooner To Avoid Increased Prices Due Tariffs? Release Date: June 3, 2025

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Introduction and Context

In this episode of The Ramsey Show Highlights, the Ramsey Network delves into the pressing question many consumers face: Should you accelerate your car purchase to avoid potential price hikes due to tariffs? Hosted by financial experts Jade Warshaw and Ken Coleman, this episode provides insightful advice on navigating the complexities of car buying amidst economic uncertainties.

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Caller’s Financial Situation and Query

At 00:10, a caller reaches out with concerns about purchasing a new car. The caller and her husband had initially planned to buy their next vehicle next spring. However, apprehensions about possible tariff-induced price spikes have prompted them to consider moving the purchase up.

Caller:
"My husband and I were planning on purchasing a new car next spring, but we are wondering if we should move that purchase up and buy now based on the fact that car prices might spike because of the tariff."
(00:10)

She further elaborates on their financial options, mentioning vested company stock, long-term investments, and a substantial amount in a high-yield savings account.

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Advice from Jade: Financial Assessment and Timing

Jade Warshaw begins by assessing the caller’s financial readiness:

Jade:
"Do you have the money now?"
(00:24)

The caller details their financial resources, including stock options and a savings account earmarked for vacations and sinking funds, which have inadvertently become an emergency reserve.

At 03:07, Jade provides a structured approach:

1. Financial Allocation:

   • Suggests letting the stocks vest as planned and considering transferring investments to mutual funds rather than single stocks for better diversification.
     Jade:
     "Move it to mutual funds or move it to whatever your next big thing is, investment wise. But I'd put it in mutual funds, not single stocks."
     (04:15)

2. Assessing Immediate Need:

   • Emphasizes the importance of purchasing the car based on necessity rather than fear of future price increases.
     Jade:
     "Don't do anything out of fear. Are we ready to buy the car today?"
     (06:08)

3. Prioritizing Financial Goals:

   • Reiterates that if the car isn't urgently needed, it's prudent to wait, allowing financial plans to proceed as initially intended.
     Jade:
     "If you're like, hey, we don't need it yet, then don't do it."
     (06:25)

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Ken’s Insights: Tariffs and Market Predictions

Ken Coleman complements Jade's advice by addressing the uncertainty surrounding tariffs and their impact on car prices:

Ken:
"We have no idea what the tariff situation is going to be a month from now. We don't know what it's going to be two months from now."
(01:32)

He underscores the unpredictability of tariffs and cautions against making impulsive financial decisions based solely on media reports:

Ken:
"The media is pushing for people to make these purchases... I think it's risky."
(01:37)

Further, Ken distinguishes between new and used car markets, clarifying that tariffs will directly affect new car prices but not used ones:

Ken:
"The tariffs themselves will not directly affect the price of a used car."
(02:22)

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Media Influence and Consumer Behavior

Jade and Ken discuss the significant role media plays in shaping consumer perceptions and driving urgency in the marketplace:

Jade:
"Media pressure is real."
(07:01)

Ken:
"There's an old phrase they use in broadcast journalism: If it bleeds, it leads."
(07:08)

They caution listeners against succumbing to media-induced fear, advocating for informed and rational decision-making instead.

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Future Market Opportunities for Used Cars

Looking ahead, Ken provides a strategic outlook on the used car market, predicting opportunities for savvy buyers:

Ken:
"I can promise you a year from now, there are going to be some people who are driving around a car payment of 700 or more. And here comes Ally and her family with Kazash."
(07:53)

He highlights the likelihood of an influx of overextended car payments, creating a surplus of used cars available at discounted prices. Jade echoes this sentiment, emphasizing the cyclical nature of the car market and the balance that eventually restores itself:

Jade:
"These things have a way of balancing themselves out a lot of times."
(08:41)

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Conclusion and Final Advice

Jade and Ken collectively advise against making hasty financial decisions driven by uncertainty or media rhetoric. Instead, they encourage listeners to evaluate their financial readiness, prioritize needs over fears, and take advantage of future market dynamics to make beneficial purchasing decisions.

Jade:
"Whether you do it today or tomorrow or next spring, you have the money. And don't do anything out of fear."
(06:25)

Ken:
"There will always be a very nice used car that is available at a discount."
(08:54)

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Notable Quotes with Timestamps

• Ken Coleman:
  "We have no idea what the tariff situation is going to be."
  (01:32)

• Jade Warshaw:
  "Don't do anything out of fear. Are we ready to buy the car today?"
  (06:08)

• Ken Coleman:
  "There will always be a very nice used car that is available at a discount."
  (08:54)

• Jade Warshaw:
  "Media pressure is real."
  (07:01)

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Key Takeaways

1. Assess Financial Readiness:
   Before making significant purchases, evaluate your current financial situation, including available savings, investments, and income stability.

2. Avoid Fear-Based Decisions:
   Make purchasing decisions based on necessity and financial readiness, not on external pressures or fears of future price changes.

3. Understand Market Dynamics:
   Recognize the difference in how new and used car markets are affected by tariffs and economic shifts.

4. Leverage Future Opportunities:
   Anticipate market changes to find advantageous deals, especially in the used car sector, when others may be overextended financially.

5. Trust Expert Advice:
   Rely on insights from financial experts rather than succumbing to media-induced urgencies.

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This episode of The Ramsey Show Highlights provides a balanced perspective on car purchasing decisions amidst economic uncertainties, empowering listeners to make informed and financially sound choices.

Transcript

[Dave Ramsey]

Brought to you by Y Refi Refinance your defaulted private student loans [e-mail] Ramsey.

[Caller]

My question is, my husband and I were planning on purchasing a new car next spring, but we are wondering if we should move that purchase up and buy now based on the fact that car prices might be a spike because of the tariff.

[Jade]

Interesting. Do you have the money now?

[Caller]

And I'd love your opinion on where we should pull it from. We do have a few different places we could pull from. Let's get the money now. Okay. So if we bought the car a year from now, which was our initial plan, my husband has some stock that was given to him when he started his new job and that stock will be vested next spring and be at the long term gain position. Ah, so that was where we were going to pull the money from to buy the car.

[Jade]

How much?

[Caller]

If we wanted to buy now, It'll be about 35,000 brand new. I, I don't think we'd buy brand new. I don't know. Well, I think we could, but I, I'm not asking you buying like two years old.

[Ken]

Well, I'm not suggesting that you do. I was just curious because your question is based on tariffs. And so there's two points I want to make really quick. Jade will continue to guide you here, but on this tariff issue as the sole reason to do this, and that's what you've presented. Number one, we have no idea what the tariff situation is going to be.

[Jade]

None.

[Ken]

A month from now. We don't know what it's going to be two months from now. Really. We do not know.

[Jade]

But media is pushing. Media, you're right. Media is pushing for people to make these purchases. Now I've seen the articles everywhere and.

[Ken]

By the way, it's already too late.

[Jade]

Yeah.

[Ken]

So if you're going to get a car that the cost will be affected by tariffs and most cars will. We just don't know what that's going to look like in a year from now. It could look very, very different. And so this rush to move funds around, I think it's risky. Is the first thing I wanted to make the statement on the tariff. The second thing is that the tariffs themselves will not directly affect the price of a used car.

[Jade]

A used vehicle. Yes, because it's already been made. It's been manufactured.

[Caller]

No, the demand will go up for used cars.

[Jade]

The demand could go up.

[Ken]

It might. That's why I said directly. So, you know, I just want to make sure because Jade's right, you see all these articles and it starts to freak you out and you go, okay, first of all, the actual tariffs. Will. Will. Will raise prices on newly manufactured cars. Okay. So if you're buying a used car, that's a separate issue.

[Jade]

That's right.

[Ken]

You understand what I'm saying, Will? It will demand change certainly, but it's not going to be a direct cost on the tariff. So I, I wouldn't be wringing my hands. Number one is the whole point I'm trying to make. Back to Jade on the like where you'd pull it from because I think you got to be smart about that too.

[Jade]

Yeah. So the initial thought was hey, we were thinking around. About spending around 35,000 on something I. What Ken and I would suggest as used. Unless you tell us something about your net worth that will make us change that. And you were going to use that vested stock next spring. If you were to do it today, tell us what that would look like. Would you be spending the same amount of money and where would the money come from?

[Caller]

Yeah, I would probably spend around the same. We could still sell the stock. The stock that is from my husband's company. It just would be short term gain. And we also have some other investments just like S&P 500 investments that we could. So that is long term.

[Jade]

Okay.

[Caller]

But it has a much higher gain. Or we have about $30,000 in just a high yield savings account.

[Jade]

Okay.

[Caller]

That is labeled for other things. And we could relabel it and is it by a car?

[Jade]

What's it labeled for? Is it your emergency fund?

[Caller]

No, we have a separate emergency fund, this 30,000. It kind of comes from two accounts. One is vacations.

[Jade]

Okay.

[Caller]

That are for next year. So we haven't, you know, I mean actually started planning it or. And then the other half of it is from what his. What started out is sinking funds. But each month we haven't ever had to pull from the sinking funds to actually. So they're intended for. So it's kind of become an emergency fund for the emergency fund.

[Jade]

Got you. Next question is what's your guys income?

[Caller]

Not including the stock that vests every quarter? 185.

[Jade]

185. Okay. So the 30,000 to spend that on another used vehicle is totally fine within the parameters of what you have here. I would, my thought would be to go ahead and let the stocks vest and then pull them out later on in the spring as you were going to. Whether you use it for this vehicle or not. Just because we would, we wouldn't say to Invest in stocks. So I'd move it to mutual funds or move it to whatever your next big thing is, investment wise. But I'd put it in mutual funds, not single stocks. So that's play number one. And play number two is. Yeah, if you have. You have the money today, it's sitting in additional savings. And if you and your spouse both decide, hey, we have this money, it. It's kind of earmarked for vacation. It's kind of earmarked for nothing. Do we want to go ahead and use this money to spend it on a vehicle today? Do we need the vehicle today? If you guys decide that there's nothing wrong with that, I wouldn't do it.

[Caller]

We don't need the vehicle today. The reason we want to do it next year is our oldest will turn 16 next year.

[Jade]

Got it.

[Caller]

And we have one big family car. And then we have the very first car that I ever bought 19 years ago. That will make a great teenage car.

[Jade]

Got it.

[Caller]

The other car, we drive around, so we want. So just wait.

[Jade]

Yeah. Because I, what I was going to say next is you don't do this out of fear. You do it out of.

[Caller]

Right.

[Jade]

Are we ready to buy the car today? You know, that's the reason you do it. And so if you're, if you're like, hey, we don't need it yet, then don't do it. Let these stocks vest. Regardless of what you do. I'm pulling it out of those stocks as long once. Once I can, or I'm, you know, transferring it to mutual funds, that sort of thing. But.

[Caller]

Right.

[Jade]

Yeah. Either way, whether you do it today or tomorrow or next spring, you have the money. And. And don't do anything out of fear.

[Ken]

Yeah. I was just doing a little research. I wanted to get the general opinion on used car prices. And again, this can change in a matter of months. Ally. But I wanted to tell you, I think the experts are predicting. Take this for what you will. That it's going to be relatively stable in car pricing. So I was listening in. I love Jade's advice. Don't let this money burn a hole in your pocket because you feel like we got to do this and that.

[Jade]

Media pressure is real. It'll.

[Ken]

Oh, my gosh.

[Jade]

It's.

[Ken]

Of course you aren't clicking on it if it doesn't concern you.

[Jade]

Yeah.

[Ken]

There's an old phrase they use in. Stacy told me this because she has her masters in broadcast journalism. If it bleeds, it leads.

[Jade]

Oh, 100%.

[Ken]

And that's true of just about Any topic.

[Jade]

And then all the car commercials are going. We're going to stand by our payment. We're not raising our payment. Even if terror. You know, they're. Everybody's kind of talking about it, and it's making you look around and go, well, maybe we should go with them. They're not raising their prices. Right. So.

[Ken]

And one little nugget on this, because I think this is worth saying, and actually, I'm kind of intrigued to see what you're the money saver of the two of us, for sure. Here's what I've learned. A year from now, when they actually want to buy, they're going to be some people who overextended themselves 100%. I just promise you.

[Jade]

Always. There always is.

[Ken]

I can't promise you what the interest rate will be. I can't promise you what Trump's going to do on terrorists. But I can promise you a year from now, there are going to be some people who are driving around a car payment of 700 or more. We know this from the data, and they got to unload it. And here comes Ally and her family with Kazash.

[Jade]

Kazash.

[Ken]

Kazash.

[Jade]

Yes.

[Ken]

$5,000 ago. I can get a cashier's check.

[Jade]

Yep.

[Ken]

And I can frame it. I can spray some perfume on it. What you want. And there's some people who need to get out of that car. I know that's always an opportunity for somebody who is in a cash position to. And I'm. And I'm. Steal a used car.

[Jade]

Yep. You're right, Ken, you're not wrong. I mean, we've seen the default rates on car payments. They've been steadily rising since.

[Ken]

And guess what that means. A year from now. Would you predict there's going to be a storm there? These things go in cycles.

[Jade]

Yeah, it's. It's happening now. I would say. I don't know if I'd call it a storm, but I would say that these things have a way of balancing themselves out a lot of times, if you will.

[Ken]

The point is, there will always be a very nice used car that is available.

[Jade]

That's right.

[Ken]

At a discount.

[Jade]

That is great.

[Ken]

You know what I mean?

[Jade]

Yeah.

[Ken]

So I'd be paying attention to Facebook and all where people are like, gotta get rid of my car. And then you come in like. Like on the white horse, you know, saving the day.

[Jade]

That's right.

[Ken]

With that cashier's check.

[Jade]

I love it. I love it.

[Dave Ramsey]

Why refi. Refinances delinquent private student loans for struggling borrowers. Learn more at Y r e f y.com Ramsey.