The cost of owning a vehicle in the US has increased by 16%, causing financial stress for some vehicle owners. Learn about monthly vehicle costs and ownership expenses by generation and family status, and find tips for buying a car without financial stress.
Questions Answered in this Article
- What is the average cost of owning a car in the United States, and how much has it increased between 2019 and 2022? Answer: The average cost of owning a car in the United States has increased by 16% between 2019 and 2022, according to the U.S. Bureau of Transportation Statistics.
- How many Americans plan to purchase a new car within the following year, and what is the average annual percentage rate (APR) for auto loans? Answer: About 36% of Americans plan to purchase a new car within the following year, and the average annual percentage rate (APR) for auto loans is 6.07%.
- What is the average monthly vehicle cost for Gen Z, millennial, Gen X, and baby boomer vehicle owners? Answer: Gen Z and millennial vehicle owners have higher monthly vehicle expenses, with Gen Z and millennial vehicle owners spending $921 and $821, respectively, while Gen Xers spend $433 and baby boomers spend $308.
- What percentage of vehicle owners worry that the cost of fuel or charging their car will impact their ability to pay for other essential goods and services? Answer: According to a survey conducted by The Harris Poll on behalf of NerdWallet, 25% of all vehicle owners worry that the cost of fuel or charging their car will impact their ability to pay for other essential goods and services.
- What are some tips for avoiding stress due to the costs of vehicle ownership? Answer: Some tips for avoiding stress due to the costs of vehicle ownership include budgeting for all associated costs before buying a car, shopping around for an auto loan before purchasing a car to save money, and considering buying a used car to save money in the long run.
The Rising Cost of Vehicle Ownership in the US: How to Avoid Financial Stress
According to the U.S. Bureau of Transportation Statistics, the average cost of owning a car in the United States has increased by 16% between 2019 and 2022. A recent survey conducted by The Harris Poll on behalf of NerdWallet reveals that this rise in cost is causing concerns among American vehicle owners. The survey, which involved 2,060 U.S. adults between January 31 and February 2, 2023, found that 25% of those who own a personal vehicle worry that fueling or charging their car will impact their ability to pay for other essential goods or services.
The Cost of Vehicle Ownership in the US
The cost of owning a vehicle is a concern for some owners, but a recent study shows that about 36% of Americans plan to purchase a new car within the following year. However, the average annual percentage rate (APR) for auto loans is 6.07%, which can drive up the overall cost of vehicle ownership.
According to the study conducted by NerdWallet, 43% of vehicle owners feel that $1,000 in monthly vehicle costs is too high, while 10% of owners exceed that limit. Gen Z and millennial vehicle owners are more likely to have monthly bills over $1,000, with 20% and 18%, respectively, compared to 6% of Gen X owners and 3% of baby boomers.
On average, younger generations have higher monthly vehicle expenses, with Gen Z and millennial vehicle owners spending $921 and $821, respectively, while Gen Xers spend $433 and baby boomers spend $308. As a result, 35% of Gen Z vehicle owners find that their vehicle expenses make up a significant part of their monthly budgets.
The study also found that vehicle owners with children spend an average of $792 per month on their vehicles, while those without kids spend an average of $430.
The Mounting Stress of Vehicle Ownership Costs
The rising cost of vehicle ownership is causing stress for many vehicle owners, with 23% reporting that ownership costs are a source of stress, according to the study. Additionally, 25% of all vehicle owners worry that the cost of fuel or charging their car will impact their ability to pay for other essential goods and services, such as rent, food, and utilities.
One reason may be that not all vehicle owners consider all of the associated costs of ownership when purchasing a car. Many focus only on their monthly payment or out-the-door price, which includes taxes and fees, but not ongoing ownership costs like gas, maintenance, and insurance.
NerdWallet auto writer Shannon Bradley emphasizes the importance of budgeting for these costs when purchasing a car. As she points out, ongoing ownership costs are not typically included in the out-the-door price and can add up significantly over time.
Tips for Buying a Car without Financial Stress
To avoid experiencing stress due to the costs of vehicle ownership, it is essential to budget for a vehicle before buying it. Monthly vehicle costs go beyond loan payments and insurance and include gas and upkeep expenses.
One can also consider shopping around for an auto loan before purchasing a car to save money. According to NerdWallet auto writer Shannon Bradley, reducing a $30,000, 60-month car loan from a 10% rate to an 8% rate could save you $1,700 in total interest paid over the life of the loan.
Buying a used car can be the simplest way to save money in the long run. In NerdWallet’s study, 48% of respondents planning to buy a car in the next 12 months indicated they planned to buy a used car, while 68% planned to buy a new one. According to Kelley Blue Book, the average new car price in January 2023 was $49,388, compared to an average used car price of $26,510, resulting in savings of over $22,000 that could lower overall financial stress.
Ultimately, one can minimize stress when buying a car by budgeting for all associated costs and researching options before purchasing.
Summary
- The cost of owning a car in the United States has increased by 16% between 2019 and 2022.
- A survey by The Harris Poll on behalf of NerdWallet found that 25% of vehicle owners worry that the cost of fueling or charging their car will impact their ability to pay for other essential goods or services.
- The average annual percentage rate (APR) for auto loans is 6.07%, which can drive up the overall cost of vehicle ownership.
- Gen Z and millennial vehicle owners have higher monthly vehicle expenses than Gen X and baby boomers, with 20% and 18%, respectively, having monthly bills over $1,000.
- Younger generations spend more on their vehicles than older generations, with Gen Z and millennial vehicle owners spending $921 and $821, respectively, while Gen Xers spend $433 and baby boomers spend $308.
- Vehicle owners with children spend an average of $792 per month on their vehicles, while those without kids spend an average of $430.
- The rising cost of vehicle ownership is causing stress for many vehicle owners, with 23% reporting that ownership costs are a source of stress.
- Many vehicle owners don’t consider all the associated costs of ownership when purchasing a car, which can lead to financial stress.
- To avoid stress due to the costs of vehicle ownership, it’s important to budget for all associated costs before buying a car, shop around for an auto loan, and consider buying a used car to save money in the long run.
