Ramit Sethi Reveals the Most Expensive Sentence You Can Say When Buying a Car

In a recent video post on his YouTube channel, “I Will Teach You to Be Rich,” personal finance personality Ramit Sethi discussed why “I can afford the monthly payment,” is the most expensive sentence you can say when buying a car. He shared footage of real car buyers (not actors) detailing their regrets over financing a car.

No money expert worth your time would recommend taking on an auto loan if you can comfortably afford to buy the car up front — that's without touching your emergency savings, retirement nest egg or investments. This may be a bit perplexing, though.

Learn Why: 9 Classic Cars That Can Be Costly to Own and Maintain

Consider This: 14 Subtly Genius Things All Wealthy People Do With Their Money — That You Should Do, Too

If it can be financially savvy in certain scenarios to take on a mortgage loan when buying a house, why is this never the case when purchasing a car? Here are five reasons.

1. Your Ability To Afford the Monthly Payment Is Misleading

The main issue is that you’re not looking at this purchase in the bigger picture of your total spending. The various essential expenses of driving total hundreds of dollars a month with or without a loan.

“Eight hundred dollars a month for a car payment means that you’re probably spending $2,000 a month, all in,” Sethi said.

How did Sethi get to this figure? How does an $800 a month promise suddenly become a $2,000-a-month commitment?

Sethi broke down the math, and unfortunately, it adds up. When you tally up just the monthly loan payment on a car, you’re overlooking the essential costs of owning a car, with or without financing. Its biggest expense is the payment, but it's outweighed by insurance, gas and upkeep in the form of maintenance and repairs.

2. The Cost of Insurance Averages $209 a Month

As of July 2026, the national average rate for auto insurance was $2,512 annually, according to U.S. News & World Report.

You may think, “Well, once you divide that by 12 it’s not really that much money.” Are you sure about that? Twelve payments is $209.33 per month. And it could be a lot more if you live in states with particularly steep rates, like Louisiana or Florida, which U.S. News & World Report called two of the most expensive states to insure a car in.

Plug in the average monthly cost of insurance and you’re now paying $1,012 a month for your $800-a-month car.

3. The Cost of Maintenance/Repairs

Car repairs are inevitable and routine maintenance is essential. The less you maintain, the more severe or frequent the cost of repair. Carfax data published in November 2025 found that 41% of vehicles nationwide are past due for crucial maintenance to integral parts or systems. The average cost of maintenance is $34 to $167 a month — $400 to $1,200 a year — according to Consumer Affairs, while the Kelley Blue Book puts average repair costs at $838.

Some drivers may just be forgetting about maintenance or not taking it seriously. But in a society where our cost of living is outpacing our wages, a lot of people are putting off maintenance because they can’t afford it.

4. Gas Is Over $4/Gallon

Most of us need cars for our work commute. And most of the time our boss isn’t picking up the tab for gas, which, depending on the geopolitical and economic climate, is either unbelievably expensive or simply not cheap.

On Nov. 10, the national average gas price was $3.98, according to AAA. The average driver buys 575 gallons of gas per year, according to The Motley Fool. You’re spending around $2,289 per year or about $191 a month on gas.

5. Your $800 Monthly Payment Ends up Being up to $2K

Factor in all these expenses, excluding maintenance and repairs, and your $800 monthly car payment is actually closer to $1,200 a month or — depending on factors such as your risk profile and where you live — as high as $2,000.

Additionally, you’re spending far more than the vehicle’s MSRP.

As of Nov. 10, the average auto loan rate on a new car ranged from 4.4% to 16.11% per U.S. News & World Report. So a $36,000 Subaru with a rate of 6.5%-7% would end up costing $42,000 over six years. And by the time you’ve paid off that loan, that car’s value has plummeted.

This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.

More From MoneyLion:

• How Middle-Class Earners Are Quietly Becoming Millionaires — and How You Can, Too

• Mark Cuban's $14,600 Case for Skipping Daily Coffee in Favor of Investing

• Claiming Social Security at Age 70 Boosts Your Check 24%—But There's a Big Catch

• Discover a Smarter Way to Keep Unexpected Expenses From Derailing Your Budget