Any seasoned car owner knows there are costs to owning a car in addition to the price tag you pay to drive it off the lot. You must pay for gas, insurance, maintenance, repairs, car washes, and any modifications or customizations you want done.
According to a 2023 AAA report, Americans are paying over $12,000 in ownership costs, an average of $1,015 a month, in addition to the monthly car payment they are already paying.
This is a significant increase from the numbers in 2022, when Americans paid only $10,728 a year, or an average of $894 a month.
The Reason for Car Ownership Cost Increase in 2023
Why the drastic increase? Several factors play into this. AAA says you can thank the higher new vehicle prices that 2023 brought. This also comes with increased finance charges, which have increased by a whopping 90% since the previous year.
Other reasons include car depreciation costs, a jump in new car prices compared to used car prices, and automakers' focus on producing higher-costing vehicles this year.
How To Cut Car Ownership Costs in 2024
There are a few different ways that you can save money on car ownership. A super simple option is to call around and get new quotes for your car insurance policy. I did this and cut our car insurance cost in half without sacrificing coverage limits.
If you're in the market for a new car, you can negotiate the terms of your financing, pay a larger down payment, or opt for an older model to lower your monthly costs.
It's also wise to make sure that you understand the cost of car ownership before taking the keys to a new car. Calculate your budget, account for additional expenses such as gas and maintenance, and then rebalance your budget to ensure that you can comfortably afford your chosen new car.