Suze Orman, the renowned financial guru, has long advocated buying cars and keeping them for long periods of time, a strategy that fits in with current trends in the auto industry. In a recent interview with Go Banking Rates, Orman emphasized the financial wisdom of long-term car ownership.
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“When I buy a car, I keep it for at least 10 to 12 to 15 years or more,” Orman said. “I’ve owned my car for 12 years now, and I have no plans to get rid of it for the next few years.”
Orman’s approach reflects the changing behavior of American car owners. According to S&P Global Mobility, the average age of cars and light trucks in the U.S. will reach a record high of 12.6 years in 2024, up from 12.5 years in 2023. This trend represents a significant increase from two decades ago, when the average vehicle age was just 9.7 years.
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She also criticizes the practice of frequent car upgrades, particularly leasing. “I don’t buy a car every three years like most of you do,” she said. “I don’t lease a car every three years like most of you do, just to impress people you don’t even know at a stop sign with money you probably don’t even have.”
While Orman’s advice may seem conservative, it’s increasingly relevant given the current auto market and rising car payments. According to Experian, the average monthly car payment for new vehicles was $735 in the first quarter of 2024, up 0.4% from the previous year. Used car payments also rose 0.4%, reaching $523 per month.
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These high payments are largely due to the rising cost of vehicles. According to Kelley Blue Book, the average price of a new car was $48,247 at the end of 2023. Even used cars cost an average of $26,091, highlighting the significant financial commitment that comes with purchasing vehicles.
The financial implications of buying versus leasing are substantial. An MST analysis of 2024 found that leasing resulted in a total outlay of $16,622.19 over 39 months, compared to $18,910.09 for buying. However, buying builds equity, with the vehicle retaining a value of $11,512.48 at the end of that period.
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Despite these high prices and payments, car ownership is still widespread in the U.S. A report from Forbes Advisor found that 91.7% of U.S. households owned at least one vehicle in 2022, and 22.1% owned three or more.
As vehicle costs continue to rise and economic uncertainties persist, Orman’s approach to car ownership may become increasingly attractive to consumers looking to maximize their auto investment while minimizing long-term costs. By avoiding the cycle of frequent upgrades and high monthly payments, consumers can potentially save thousands of dollars over the life of their vehicles.
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This article by Suze Orman says: Keep Your Car ’15 Years or More’ Instead of Leasing a New One Every 3 Years Just to Impress Strangers. Originally appeared on Benzinga.com
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