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

0:00Don'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.

0:49Quick 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.

1:26Not 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 are 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.

2:09I 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 emotion 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.

2:56And 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.

3:39And 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 upfront, 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 the 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.

4:19Possibly. 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.

5:10In that order, the sticker price is almost irrelevant compared to the total cost of ownership over 5 to 10 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. Toyota's 10-year maintenance cost runs approximately$4 ,500 to$6 ,000. BMW's 10-year maintenance costs run approximately$17 ,000 to$20 ,000. That gap, roughly$13 ,000 over 10 years, not counting the purchase price difference, not counting the insurance premium difference, not counting the depreciation difference, exists before you have a single interesting problem.

6:04By year seven, BMWs often face what mechanics call the big ones. Cooling system overhauls, oil housing gasket leaks, suspension airbag failures, a single major BMW repair, such as a turbocharger replacement or transmission electronic fault, can cost upwards of$4 ,000, which is more than some Toyotas cost to maintain for five years straight. I'm not telling you BMW makes a bad car. I'm telling you BMW makes an expensive car, and the expense doesn't end at the dealership. With that framing in place, here are the worst offenders in ascending order of financial damage. Number five, any luxury German car over five years old.

6:53BMW, Audi, Mercedes-Benz. I want to be precise here because I think the framing matters. I'm not saying don't buy a new German luxury car, although I have opinions about that too. I'm specifically talking about buying one that's over five years old, which is exactly the price point that makes these cars look like a bargain and is exactly where the financial trap snaps shut. Here's what happens. A three-year-old BMW 5 Series that's stickered for, let's say,$65 ,000 is now sitting on a used car lot for$32K. Looks like a deal. Someone else has already taken the depreciation hit. It has leather seats, ambient lighting, and a sound system that makes your garage sound like Carnegie Hall.

7:39And the previous owner absorbed all of that depreciation. So you're getting a luxury car for half price. What is not to love about that? Well, what's not to love is that the warranty has expired. BMW engines often have under trays and specific bolt patterns that require more time to access, and dealership labor rates for certified technicians are significantly higher than standard shops. A standard BMW oil change costs between$150 and$250, compared to$50 to$80 for a Toyota. And that's just the oil change. That's the routine event. The non-routine events, the ones that arrive without warning, usually sometime midweek, are where it gets genuinely, I'll say, creative.

8:28Consumer Reports data shows that European luxury marquees, including Audi, BMW, Land Rover, Mercedes-Benz, Porsche, and Volvo, cluster at the bottom of their maintenance cost rankings, representing the most expensive brands to own over time. The gap between these brands and something like a Toyota or Honda isn't marginal. It's thousands of bucks per year once the warranty expires. So the German luxury car over five years old is the financial equivalent of buying a beautiful old house with a history of plumbing problems. It looks magnificent. The bones are excellent. And approximately every eight months, something is going to happen that will make you stare at a repair estimate with the stillness of a person reconsidering their entire life narrative to date.

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12:17So go to copilot.money slash Tyler, use code Tyler2, that's Tyler and the number 2, for two free months. That's copilot.money slash Tyler. Number four. I know this is going to get some comments. The Jeep Wrangler. I want to be careful here because I know the Jeep Wrangler occupies a unique cultural position in the American automotive landscape. People do not merely own Wranglers. They belong to them. They identify with them. There are hand gestures. There's a wave. There is a community built entirely around the shared experience of owning a vehicle that is objectively impractical and doing so with the serene confidence of people who have decided that impractical is actually the point.

13:06I understand this. I respect this. The Wrangler is genuinely fun and genuinely capable and has a romance to it that a Toyota RAV4 will never replicate, not in a million years, not even if Toyota hired a poet to write the marketing copy. But we are talking about finances today, and financially, the Wrangler has some issues. We'll start with the fuel economy, approximately 18 miles per gallon in a vehicle that people buy specifically to drive aggressively outdoors. So if you drive 15 ,000 miles per year at 350 a gallon, you're spending roughly 2 ,900 annually on gas. In a 30 mile per gallon sedan on the same mileage, you're spending about 1 ,750.

13:54That's a difference of over a thousand bucks a year, every year for the privilege of a boxy silhouette and removable doors that you will remove approximately twice and then leave on because it's Vermont and it's cold for eight months a year. Over five years, the fuel premium alone is nearly$6 ,000. That's real money. That's what personal finance people call a lifestyle tax. The price you pay for the gap between what you want and what makes sense. Reliability also deserves a mention. J.D. Power's 2025 vehicle dependability study placed Jeep near the bottom, with Chrysler, which shares the Stellantis parent company, also ranking among the lowest.

14:38The Wrangler specifically has known issues with transmission, electrical systems, and perhaps most Wrangler of all, a death wobble at highway speeds that is exactly as alarming as it sounds. So if you want a Wrangler, if you want to take those Instagram photos, I'm not here to stop you. But buy it used, drive it joyfully, wave at other Wrangler owners with a specific hand gesture that means we both have made a financially questionable decision, and we are at peace with it. Number three, the Range Rover. Any model. The Range Rover is the automotive equivalent of a first-class airplane seat. Extraordinary while you're in it, devastating when you see what it costs.

15:22Let's start with depreciation, which is where the Range Rover truly distinguishes itself. The Land Rover Range Rover depreciates 61.7 % over five years, according to IC Cars, one of the worst depreciation rates of any vehicle on the market. That's not a typo. A$90 ,000 Range Rover is worth roughly$35 ,000 in five years. You've lost approximately$55 ,000 in value on a depreciating asset while also paying insurance, maintenance, and fuel. The depreciation alone works out to roughly$11 ,000 per year, every year before you've had a single problem. Land Rover also ranks among the most expensive brands to maintain over a 10-year period, with Consumer Reports data placing it at the very bottom of their maintenance cost rankings, worse than Audi, worse than BMW, worse than Mercedes-Benz.

16:20Not to mention the electrical system on a Range Rover is a subject that comes up frequently among Range Rover owners themselves, always with the same slightly haunted expression of someone describing an event they're still processing. It is extraordinarily sophisticated. It is extraordinarily temperamental. And there's a reason that Range Rover in the shop is its own genre of automotive complaint. And that reason is a complex web of sensors and modules that communicates in a language that only Land Rover certified technicians can translate at Land Rover certified technician prices. The Range Rover is a magnificent vehicle.

17:02It is also a wealth transfer mechanism disguised as an SUV. Number two, any brand new luxury truck unless you actually need it. And most people do not need a brand new luxury truck. Here's where I anticipate the most pushback. And I want to be precise about my argument because I am not anti-truck, as you'll see at the end of this episode. Trucks are genuinely useful machines. If you are a contractor, a farmer, someone who regularly tows equipment, someone who hauls materials for work. A truck makes complete economic sense. You're using it as a tool, and tools justify their cost. But the data is clear that the majority of truck buyers do not use their trucks as tools in any meaningful sense.

17:49Studies consistently show that the majority of full-size truck owners rarely or never use the truck bed for hauling in any meaningful way. The average full-size truck tows nothing most of the time while getting roughly 18 to 20 miles per gallon in a vehicle that now costs$60 ,000 at the base trim. The F-150, America's best-selling truck for 49 consecutive years and best-selling vehicle of any kind for 44 straight, which tells you everything about American psychology and nothing about financial rationality. starts at around$35k for a basic work truck and rapidly escalates to$65 ,000 plus for the trims most people actually want to buy.

18:38New car depreciation averages around 45 % over five years across all vehicles. So for a$60 ,000 truck, that's roughly$27 ,000 gone in five years before you've accounted for gas insurance or a single repair. The new truck buyer is paying a significant premium for something they could accomplish with a used truck at half the price, a rental truck twice a year at$100 a day, or simply by acknowledging that the truck they bought is a lifestyle vehicle, pricing it accordingly, and making peace with that decision. There is nothing wrong with a lifestyle vehicle. There is something financially significant about calling it something else.

19:20And number one, a financed Tesla. I want to be very careful here because I think Tesla makes a genuinely impressive car. And I also think the financial case for a financed Tesla is genuinely alarming in ways people don't fully account for at the point of purchase. Let's run a couple numbers. You finance a Tesla Model Y, currently around$45 ,000 to$50 ,000 depending on trim. At 7 % interest over 60 months, your total repayment is somewhere around$59 ,000 to$65 ,000. You've paid roughly$14 ,000 in interest on a depreciating asset before insurance, before charging costs, before the part where we talk about what happens when something goes wrong.

20:07Tesla insurance is notoriously expensive. Tesla's pricing has fluctuated significantly, and depreciation on used Teslas has been severe, making it hard to make a case for used Teslas at current pricing. The insurance premiums reflect the repair costs, which are high because Tesla has a proprietary repair network, meaning that when you need bodywork or a significant repair, your options are limited to Tesla-certified shops, which creates exactly the pricing pressure you'd expect from a market with limited competition. The depreciation story on Tesla has been equally dramatic. The Tesla Model S loses approximately 65 % of its original value over five years, according to IC Cars data, one of the steepest depreciation curves of any vehicle in any category.

20:56The Model Y and Model 3 have fared somewhat better, but still depreciate faster than comparable gas vehicles, partly because Tesla regularly cuts new car prices, which is wonderful for new buyers and catastrophic for people who financed a Tesla six months earlier and are now underwater on a loan for a car that's worth meaningfully less than what they owe. The electric vehicle ownership math can work, but it works best when you buy with cash or minimal financing, when you own the vehicle long enough for the fuel savings to offset the higher purchase price, and when you have realistic expectations about what the repair and insurance economics look like, the financed Tesla at 7 % driven for three to four years before trading in is about the least favorable version of this math available to a consumer.

21:51Now, quick note on this list before we move on. An honest caveat. The Jeep Wrangler's depreciation is a little better than average. Wranglers hold their value reasonably well compared to most vehicles, which is worth acknowledging. The financial case against it rests primarily on fuel costs and reliability, not resale. And the new truck depreciation number varies meaningfully depending on trim level and market conditions. So during the COVID supply shortage, trucks did hold value you unusually well. Now, the broader point stands if you're not using it as a tool, you're paying tool prices for a lifestyle vehicle.

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25:31Prices subject to underwriting and health questions. Now, let's get to the five best cars you could ever buy, again, financially speaking. These are the vehicles that make your accountant emotional with respect and gratitude. Number five, a used Honda Civic three to five years old. The Honda Civic has an average annual repair cost of$362. Compare that to an average of$526 for compact cars and$652 for all vehicle models. The Civic specifically averages around 368 annually in maintenance. It gets 36 miles per gallon, it is extraordinarily reliable, and when you buy one that's three to five years old, you've let the original owner absorb the steepest part of the depreciation curve, which for a Civic represents the most significant financial discount available in the used car market.

26:25A 2021 or 2022 Honda Civic in a reasonable condition can run$15 ,000 to$20 ,000. You'll drive it for 10 to 15 years with nothing more than oil changes, tires, and the occasional brake job. The total cost of ownership over that period, including purchase price, is competitive with virtually any vehicle on the market at any price point. The Honda Civic is the index fund of automobiles. It's not exciting, it will get you where you're going, it will not make you feel anything in particular about yourself, and in 15 years you will have spent dramatically less money on transportation than the person who bought the luxury SUV in the next parking space down, who is now at the dealer getting a quote on something else that's expensive.

27:12Number four, a used Toyota Camry, three to five years old. The Camry is like the Civic's older sibling with slightly more interior room and an identical financial logic. Toyota's average annual repair cost across all models is about$440 per year, again, compared to$652 for the industry average. It's a gap of roughly$210 a year, every year for as long as you own the vehicle. The Camry holds its value with a stubbornness that borders on the philosophical. It's one of the most reliable vehicles in RepairPal's entire database, it gets 32 miles per gallon, and perhaps most importantly for the financially minded among us, it is boring enough that insurance companies charge you much less for it because the data shows that people who drive Camrys are not the people showing up in actuarial tables in interesting ways.

28:05Boring equals cheap insurance. Cheap insurance is money you keep. Money you keep is money you can invest that compounds. That's the whole game. A 2020 or 2021 Camry runs 20 to 25 ,000 used, drive it for 10 years, sell it for 8 ,000 bucks, and your total cost of ownership is extraordinarily competitive with any vehicle in any category. Number three, the Mazda CX-5 used. If you genuinely need an SUV, and I want to gently interrogate whether you genuinely need an SUV before we proceed, because sometimes I need an SUV is a complete sentence, and sometimes it is the beginning of a longer conversation about identity, the Mazda CX-5 is a financially defensible answer.

28:54It gets 28 miles per gallon on the highway. It has a lower insurance premium than a comparable Honda CR-V or Toyota RAV4 because Mazda's repair costs are slightly lower, and insurers know this. Its depreciation curve is reasonable. The interior quality is genuinely impressive. Mazda has spent a decade building cars that feel more expensive than they are, which is the exact opposite of what luxury brands do. A 2020 or 2021 CX-5 in the$22 ,000 to$27 ,000 range gives you a genuinely capable SUV with excellent reliability, solid fuel economy, and a total cost of ownership that won't cause you to do arithmetic at red lights in a cold sweat.

29:36The CX-5 is what happens when a car company decides that the best marketing strategy is to build something really good and charge a fair price for it. I know, crazy. Number two, the Toyota Prius, any year. The Prius has spent two decades being the punchline of a joke told by people who haven't done the math. So let's do the math. The Prius gets 50 plus miles per gallon. You drive 15 ,000 miles per year at 350 a gallon, your annual fuel cost is approximately$1 ,050. In a 25 miles per gallon average vehicle, that number is$2 ,100. The difference, over$1 ,000 a year, and over 10 years accounting for some fuel price variation, you're looking at$10 ,000 to$12 ,000 in fuel savings on a car that costs$25 ,000 to$28 ,000 new and holds its value better than almost anything in its class.

30:29Hybrid vehicles are among the best segments for retained value, losing approximately 40 % of their value after five years, significantly better than the 45 % industry average for all vehicles, and dramatically better than the 58 % average for electric vehicles. And Toyota dominates the hybrid rankings. Now, the hybrid battery concern, the one people raise as the killer objection to the Prius ownership, has been largely resolved by 20 years of real-world data. Toyota Prius batteries routinely last 150 ,000 to 200 ,000 miles. Replacement costs have dropped significantly. That concern did make sense in 2004.