Gen Z college graduates looking to celebrate their diploma with a new car are making a huge mistake, according to one personal finance expert.

A clip of Dave Ramsey, the financial guru famous for his tough-love approach, recently resurfaced in which he provides straightforward advice for a woman who wants to buy a Tesla Model Y right out of college.

“Number one mistake people make when they graduate from college - buy a new car,” Ramsey said. “A new car loses 75 percent of its value in its first four years.”

Ramsey’s advice was in response to a 23-year-old listener, Ava from Massachusetts, who was “obsessing” about buying a new Tesla Model Y after graduation with money she had saved.

The financial expert, who owns around $850 million in real estate and whose company brought in $300 million in 2025, said only those with a net worth of $1 million or more should buy a new car.

“Quit obsessing over new cars,” he said. “That’s going to make you broke the rest of your life.”

Cars lose considerable value, as soon as they are driven off the dealership lot. A new car drops in value by 10 percent in the first month, according to vehicle history data firm Carfax. The average new car loses around 30 percent of its value after five years, according to the company.

The decline is steeper for the 2026 Tesla Model Y, which will lose around 66 percent of its value in five years, according to vehicle pricing company KBB.

College graduates buying new cars will pay an average of $49,758 in 2026, according to KBB. Electric vehicles cost around $7,000 more. Monthly payments on a new car reached an all-time high of $770 in the first quarter of 2026, according to personal finance site LendingTree.

Payments that high can put the average college graduate in a financial jam, especially if they struggle to find work after graduating.

Ramsey suggested that those leaving college opt for a vehicle that’s five or six years old. This lowers the monthly payment to an average of $531 - or $239 less than a new car, LendingTree said.