Despite the fact that new cars sales have dropped, Americans continue to buy them. The total cost of owning an automobile is increasing due to rising prices for gas, electricity, and cars. NerdWallet conducted a new survey online to find that 25% of vehicle owners (defined as people who own a vehicle) worry about the cost of fueling their vehicle or how it will affect their ability pay for other goods and services.
Approximately 1 in 4 vehicle owners (26%) say that vehicle expenses account for a large percentage of their monthly budget.
One-fourth (25%) of vehicle owners worry about the cost of fueling their vehicle or charging it. This could impact their ability pay for other goods and services.
About 25% of vehicle owners only shop for auto insurance every year.
One-in-five (20%) Gen Z vehicle owners (age 18-26) say that they spend $1,000 per month on their vehicles.
America is a car-loving country with over 4 million miles worth of roads across the nation. Our survey revealed that 51% American vehicle owners believe the vehicle they own/lease says a lot of about their personality.
The survey revealed that 53 percent of Americans plan to purchase or lease a personal car within the next 12 months. The survey found that 48% of potential buyers/leases plan to purchase/lease used cars, while 68% plan to lease/buy a new vehicle. Some may also plan to rent/buy more than one car span>
According to the survey, 70% of future purchasers/leases plan to lease/purchase a traditional-fueled vehicle. Only 37% of 10 people (37%) intend to buy/lease hybrid vehicles, while 31% (31%) are planning to lease/purchase an electric vehicle. At 38%, millennials (aged 27-42) are more likely to plan to buy an electric vehicle than their older counterparts. This compares to 29% of Gen Xers (43-58) and 14% for baby boomers (59-77 span>
Six in ten (60%) of those who intend to buy/lease a car in the next twelve months plan to do so through a dealer, which is the most preferred option. A fifth (20%) of all buying plans include online dealerships.
Cost of ownership
Americans can be hurt by the high cost of car ownership. Vehicle owners account for around 14% (26%) of their monthly budgets. Rising gasoline prices are one key reason. The U.S. Energy Information Administration reports that gas prices will average $4.06 per gallon by 2022, a 51% increase on the $2.69/gallon price in 2019.
The average monthly cost of vehicle ownership includes vehicle payments, maintenance, and insurance. Our survey revealed that it was $556. After withholdings and state and federal taxes, the average American household’s monthly income is $4,537. This means that vehicle costs could account for 12% of a household’s monthly take-home income.
According to the survey, vehicle owners of younger generations spend more on auto expenses each month than do older generations. Gen Z average monthly vehicle costs are $921 while millennials spend $821. These are significantly higher than the average monthly vehicle costs for Gen Xers or baby boomers who spend on average $433 and $308 per months, respectively.
The survey revealed that 43% of vehicle owners consider a monthly auto loan bill of $1,000 or more too expensive. However, 10% of vehicle owners report total monthly vehicle expenses exceeding $1,000 after adding fuel, maintenance, and insurance. Gen Z and millennial car owners are more likely to spend $1,000 or more each month than their older counterparts (20% and 18% respectively, compared to 6% and 3% of the baby boomers span>
Shannon Bradley, an autos writer for NerdWallet, says that an automobile’s “out-the-door” price includes the car’s price as well as any taxes or fees, such as warranties or gap insurance. Car buyers can see the total cost of financing or paying for their car by focusing on the out-the door price.
Avoid stressing about costs
These bills are not only draining your bank account, but they also cause stress and anxiety. The survey revealed that 25% of vehicle owners worry about the cost of fueling their vehicle or how it will affect their ability to pay other essential goods and services such as rent or groceries.
This is a concern for many. 23% of vehicle owners feel stressed by the vehicle’s cost. The baby boomers are least likely to feel stressed about their vehicle costs. This compares with 28% of Gen Z owners as well as 30% of millennial owners.
There are many ways you can cut down the cost of buying and owning a car. Preapproval for an auto loan can be obtained before you visit a dealer. This gives you greater bargaining power during car shopping.
Bradley says that car buyers often accept the lowest rate and loan offered to them by dealerships. It’s always a good idea for car buyers to compare rates with multiple lenders. Give the dealership the lowest rate and give them a benchmark to beat .”
For those with high-rate loans, auto loan refinance is an option. They could save hundreds to thousands of dollars if they can find the right interest rates and terms for their loan.
An EV could be a good option if you are looking to reduce your gas consumption. An analysis by NerdWallet of the 2022 AAA study found that an annual supply of gasoline for a car is $1,500 less than an annual supply of electricity to power an electric vehicle. If you have a higher loan or lease payment, an EV can save you hundreds of dollars each year.
NerdWallet’s analysis of auto insurance rates shows that the average driver pays $179 per monthly for full coverage. This includes liability, uninsured motorcyclist, comprehensive, and collision coverages. The minimum coverage required under state law reduces to $57 per month.
Our survey found that almost three-quarters of five (57%) of car owners were satisfied with their current insurance provider. The most satisfied age group with their insurance is the baby boomers (78%). This is more than just satisfaction among Gen Z, millennial, and Gen X insurance owners at 28% 43% and 57% respectively.
While not everyone is satisfied with their auto insurer, the majority of vehicle owners don’t shop for insurance often. 26 percent of vehicle owners only shop for insurance once or more a year. According to Ben Moore, an NerdWallet insurance expert, “Comparing car insurance quotes is the best way to get a low rate.” It’s much easier than ever. Many insurance websites allow potential customers to get an instant quote. Online comparison sites can pull quotes .”
Americans know that shopping around can help you save money. The survey revealed that only 33% of Americans (63%) believe it is possible to save money by switching insurance providers.
We asked Americans about their auto insurance knowledge and 66 percent of them knew that credit scores can affect the cost. A poor credit score could have a greater impact on an individual’s auto insurance rate that a DUI. California, Hawaii and Massachusetts prohibit insurance companies from using credit scores for setting rates.
According to the survey, half of Gen Zers (50%) and half (54% respectively) believe that buying/leasing a car is the best time to shop for auto insurance.
The best time to look for car insurance is after you have filed a claim or been cited for a traffic violation. Rates will likely rise with your current insurer. Moore states that all drivers should shop around for a policy as insurance rates are expected rise this year. Consider the discounts that you might be eligible for from a new insurer. Numerous companies offer huge discounts to new customers. However, these savings may drop when you renew, leaving you with a higher rate span>
The survey revealed that 41% of Americans (41%) believe their state’s minimum auto coverage is sufficient. The state minimums must meet liability coverage requirements, but not comprehensive or collision coverage. Drivers won’t be covered for any damage to their vehicles by their insurance companies if they only have the state minimums.
It’s not enough to compare insurance rates regularly. You might be able to combine homeowners and auto policies for more savings. Or, you may be able to lower optional coverages to save money.
It is also important to understand what your coverage includes. Your insurance plan could be compromised if you only get the minimum legal coverage. If you hit a telephone pole, your insurance policy wouldn’t cover you. This insurance would include collision coverage, which isn’t required by the state minimums.
The Harris Poll conducted this survey online in the United States for NerdWallet between Jan. 31 and February 2, 2023 among 2,060 U.S. citizens 18 years old or older. 1,781 of these individuals have a personal vehicle. A Bayesian credible interval is used to measure the sampling precision of Harris online surveys. The sample data for this study is within +/-2.8 percentage points using a 95% confidence limit. Contact us for more information about the survey methodology including subgroup sample sizes and weighting variables.
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