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Miami Herald
14-07-2025
- Automotive
- Miami Herald
The real cost of car ownership in the US
Owning a car is not a luxury. It's more of a necessity that helps you get to work, college, or school. Cabs and ridesharing apps are notoriously unreliable. Public transport takes a huge chunk of your workday, and you'll have to adjust your schedule to theirs. Convenience, however, comes at a price. There is, of course, the cost of the car itself. Then there are recurring expenses that also determine the cost of car ownership, including insurance, fuel, maintenance, and parking, and the list goes on. Car ownership costs worldwide have surged over the past few years. Americans, too, are finding it increasingly challenging to own and operate a vehicle. The increasing prices of cars, along with taxes, hidden fees during the purchasing process, parking expenses, maintenance costs, and more, are becoming overwhelming. While we may passionately debate whether cars are depreciating assets, it's clear that they are often a necessity in today's world. The best approach is to understand the various costs associated with car ownership and select the option that best suits our budget, reports. Real Cost of Car Ownership in the USA 2025: A Breakdown As of 2025, the average annual cost of owning a car in the U.S. has reached approximately $12,297, translating to about $1,025 per month. Apart from fuel, insurance, maintenance, and repairs, the cost of car ownership can also include depreciation, financing charges, taxes, and fees that may go unnoticed. These costs add up to the average monthly cost to make it a significant amount. Approximate additional costs that may be considered are: Depreciation: ~$4,680 (38%)Financing Charges: ~$1,030 (8%) Here is a detailed breakdown of the true cost of car ownership in the USA based on internal research by the Way team. It highlights key aspects that can help you plan your budget and savings accordingly. Parking Costs Monthly parking fees are a major yet often overlooked component of vehicle ownership. According to recent data, parking costs vary dramatically across the U.S., adding a significant burden in urban areas. If you live in New York City, parking alone can cost more than many used cars each year, over $7,400 annually. Even in lower-cost major cities, you're still likely paying $2,000–$3,000 annually if you park downtown. The graph and table below will give an idea of the cost variations across major American cities: Parking costs across major U.S. cities Washing your car at home can often be challenging. Most car owners in America wash their cars only once a month, which falls short of the recommended twice a month. Even if you spend conservatively and get your car washed only once a month, this is what you can expect: Here's what to expect: Fuel costs are one of the most dynamic and regionally variable expenses in car ownership. (Electric vehicle (EV) owners can skip this part, as they typically save significantly compared to gasoline-powered vehicles.) For a commuter driving 12,000 miles per year in a car that gets 25 miles per gallon (mpg), fuel costs would be approximately $1,560 annually, assuming a gas price of $3.25 per gallon. If the driver has a higher mileage of 15,000 miles per year, the costs can rise to $2,235. Additionally, gas prices can fluctuate based on your location, whether you live in a rural or urban area. The five-year gas price chart shows a post-2022 peak, followed by relative stability in the $3.00–$3.50 range through 2025. Maintenance is a non-predictable cost category, as it varies based on driving habits, vehicle type, and location. Note that this value is for routine maintenance and minor repairs for newer vehicles. Typical driving conditions and proactive maintenance habits may vary for each car owner. The estimated range may go up to $1,200–$1,800/year for major repairs or vehicles with higher mileage or older ones. It is often difficult for older vehicles to acquire parts, and unexpected repairs may be required. Insurance is one of the most variable car ownership expenses in the U.S., heavily influenced by location, driver profile, and coverage type. Annual auto insurance costs average between $2000 and $5000, starting with full coverage, depending on the vehicle type and usage. Imported vehicles and auto parts were subject to a 25% tariff this April, which will significantly impact car ownership costs in the U.S. in 2025. Tariffs have also steeply increased the vehicle prices of foreign brands by $4,000 to $10,000. Estimates indicate that the tariffs on new vehicles in the U.S. could also potentially increase the prices by $1,000 to $3000, depending on the vehicle's make and model. Even vehicles assembled in the U.S. are affected, as some auto companies utilize imported car parts that incur high tariffs year over year. The cost of auto repairs has surged as tariffs have increased the prices of imported parts, including engines, transmissions, and other car components. The surge may also lead to a shortage of imported parts as automakers will struggle to match customer demand. Insurance companies will most likely increase the cost of insurance premiums to cover the higher payout. Reclaiming replacement parts will also depend on the price of car insurance, which will surge by 10% this year. This story was produced by and reviewed and distributed by Stacker. © Stacker Media, LLC.
Yahoo
11-04-2025
- Automotive
- Yahoo
6 Financial Sacrifices People Have Made To Afford Cars — And What To Do Instead
Car ownership is now the gut-wrenching trade off for millions of Americans. Drivers are using emergency cash, deferring healthcare and working two jobs to keep their cars running as auto and interest rates have become increasingly difficult to afford. Consider This: For You: Unfortunately, many customers discover — often too late — that nightmares of debt accompany their dream automobiles. This article highlights the lengths people will go to get their cars and how to avoid making decisions that may ruin your finances. Many consumers are taking out expensive loans to buy vehicles. According to Experian, the average car loan was $40,927 for a new vehicle in late 2024, and the average monthly payment was $737. This is worrying, as it can lead to long-term financial problems when consumers owe more than their cars are worth. Affordability is the answer to this problem as far as the consumers are concerned. Tom Holgate, EVP of auto finance and insurance at said the number one rule when applying for a car loan is affordability. 'If you lose part or all of your income, consumers should wonder if they will still be able to make payments,' Holgate said. Before signing an expensive loan, review your budget and look for a cheaper one. Furthermore, you should investigate making a more significant down payment to lessen the loan amount and the monthly payments. Read More: Many consumers use car payment extensions to make the payments more manageable. According to Experian, the average car loan lasts over 72 months — six years. A longer loan term typically means lower monthly payments but more in total interest over the lifetime of the loan. If you must extend the loan term to afford the monthly payments, the vehicle is too expensive for you. Consider looking for a cheaper vehicle or waiting to purchase until you've saved a larger down payment. People are cutting things like groceries, healthcare and housing to pay for car payments. At times, this sacrifice can have a great impact on overall quality of life and even long-term financial health. Cheap food and postponing medical checkups are just some of the choices some consumers are making to cut costs to pay their car payments. If you require a personal vehicle, consider buying an affordable model or one of the dependable used options instead of a new one. Before deciding how much to spend on a vehicle, make a detailed budget, including all your income and necessary costs — including what you'll be paying on the vehicle. Instead of cutting important expenses such as food and healthcare, reevaluate your transportation needs and see whether you have other alternatives. While picking up a side gig can be a good way to pad your savings, Holfgate said it may not be a sustainable option. Side gig income can vary by the gig you choose, the time you dedicate to it and even the time of year. If you want to up your income by taking on gig work, don't let it interfere with your primary job or personal life, and be aware that you may not always make enough to cover your car payment. Opt for a vehicle you can afford without the extra work, if you can, and let your side gig income be bonus money rather than needed money. '[Credit cards] may give some short-term relief, but if they are not appropriately managed, they lead to … growing debt,' Holfgate said. If you're not able to pay off the credit card in full every month, you'll end up paying much more in interest, whether you're using the card to make your car payment directly or on other essentials to free up money for your car payment. Use credit cards wisely, and do not carry a balance over from one month to the next. Consult with a credit counselor and set up a debt management plan if you have debt. Lower-quality vehicles or opting to bypass features you want may be cheap now but may cause problems later. Higher maintenance costs and lack of safety features, in particular, can end up costing you far more over the long term. Do your research and get a reliable vehicle that fits your requirements without exceeding your financial constraints. Check vehicle reliability ratings, then look at certified pre-owned options that include warranties. If you're considering an older or high-mileage vehicle, it is best to factor in the associated maintenance costs and verify them with a reliable mechanic. Choose a car that will give you good value for money and will last — all while keeping costs down. More From GOBankingRates Mark Cuban: Trump's Tariffs Will Affect This Class of People the MostHow Far $750K Plus Social Security Goes in Retirement in Every US RegionHow To Get the Most Value From Your Costco Membership in 202525 Places To Buy a Home If You Want It To Gain Value This article originally appeared on 6 Financial Sacrifices People Have Made To Afford Cars — And What To Do Instead Sign in to access your portfolio
