Suze Orman Says Owning a Car or Two May Be Unavoidable, but There's a $7K Mistake When Trading in Your Car
Sat, August 22, 2026 at 7:00 PM GMT+3 5 min read
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Buying a new car is expensive enough without bringing thousands of dollars of debt from your old one along for the ride. Yet that's exactly what a growing number of Americans are doing, and personal finance expert Suze Orman says it's a mistake drivers need to avoid.
"For many of us, having a car is a necessity," Orman wrote on her website recently. "For some families, two are needed." But nearly 30% of vehicles traded in toward a new car still have a significant unpaid loan balance. Citing Edmunds data, Orman said the average amount still owed on those trade-ins earlier this year was nearly $7,000.
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Rolling Old Debt Into a New Car
When drivers owe more than their vehicle is worth, they have what's known as negative equity. At the dealership, that remaining debt can be rolled into the loan for the next vehicle, meaning buyers can start their new-car ownership already thousands of dollars underwater.
Unless there's a compelling reason to change vehicles, such as a compact car no longer working for a growing family, Orman wants people to resist.
"Adding debt from an old car loan to a new car loan is a really bad financial move," she wrote. "It should always be your goal to borrow as little as possible for a car. Period. Full stop."
What's particularly striking is the age of the vehicles being traded. Orman said the average negative-equity trade-in is just four years old.
She also isn't convinced by the argument that an expiring warranty makes buying another car necessary. "Come on, that's just an excuse," she wrote, adding that today's cars are built to remain reliable much longer. Edmunds' findings showed that even some makes known for reliability were being traded while their owners still carried substantial loan balances.
Orman's alternative is decidedly less exciting than getting new keys. It's to simply maintain the car you already have. Spending $250, $500 or even $1,000 or more annually on maintenance can help extend its life and potentially save far more than repeatedly financing newer vehicles.
Give Yourself Years Without a Car Payment
Ideally, Orman wants drivers to reach a point where they spend three to five years driving a paid-off car. That's when the money that used to disappear into a monthly payment can start working toward other goals.
She suggests continuing to put that amount into savings for a larger down payment on the next car, building emergency savings or increasing retirement contributions.
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And that same idea of redirecting money toward assets instead of another car payment can extend to investing. If you're interested in real estate, Arrived offers another option without requiring enough cash to buy an entire rental property.
Arrived's mission is to make real estate investing accessible to everyone. Whether you have $100 or $1 million, you can buy fractional shares of professionally selected rental properties without managing renovations, tenants, maintenance or contractors yourself. Arrived handles the day-to-day work, while properties are selected with the goal of generating rental income and increasing in value over time. Investors can earn dividends monthly. Start investing in real estate through Arrived with just a few clicks and let the company handle the rest.
For Orman, keeping a car longer creates room for those kinds of choices. "Being smarter about how long you keep driving the car you have makes all of that possible," she wrote.
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This article Suze Orman Says Owning a Car or Two May Be Unavoidable, but There's a $7K Mistake When Trading in Your Car originally appeared on Benzinga.com
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