Owning cars has never cost so much – 5 ways to make them more affordable

kupicoo / iStock.com

Many people view their cars as a source of pride and enjoyment, but when the costs start to mount, they can quickly become a source of stress.

I’m a Mechanic: Here’s What I Drive and 3 Cars I’d Never Own
Learn: How to get cash back on your everyday purchases

For 2023, the average total cost of owning and operating a new car is $12,182 per year, which is $121 more per month than a year ago, according to AAA.

Those costs stem from a record high MSRP of $34,876, along with factors such as high fuel and financing costs, AAA found.

Also, there have been double-digit percentage increases since 2020 in categories such as parking and tolls, insurance and maintenance and repairs, according to a New York Times analysis of data from the Bureau of Labor Statistics.

But that doesn’t mean car owners should just sit back and accept higher prices. There are still ways to make car ownership more affordable, or at least manageable.

Advance planning of total cost of ownership

If you haven’t bought a car in a while, you can overcome the high costs by looking beyond the sticker prices.

Tom Josepian, Chief Financial Officer of Soapy Joe’s Car Wash, said, “It’s easy to forget the secondary costs of owning a car, like insurance, gas and maintenance. This is even more important in luxury brands where the car may only use premium fuel, an oil change can cost $400+ and insurance coverage can easily exceed your home insurance.’

Finding out in advance what the maintenance schedule looks like, for example, can help you anticipate additional costs.

“I myself was surprised to find that the nice ‘comfortable ride’ of my new car was due to extremely soft tires that needed to be replaced after 18,000 miles,” said Josepian.

Planning ahead can also mean thinking twice about what you can actually afford to spend in the long run, rather than whether you’re technically in a position to qualify for a car purchase. You may find that it is better to buy a used car to save some money.

Used cars can also be expensive, with prices up 40% since 2020, Times analysis finds; but they are beginning to decline, according to Edmonds.

“Even if you can afford to buy a new car, it often makes more sense to buy a car that is one to two years old, especially if you plan to keep your car for five to seven years. Also, try to buy a car so that any car loan is paid off in four years or less. This helps keep your car costs in proportion to your income and ensures you have a few years to save up some money for another car,” added Josepian.

More bang for your buck: These cars will last you twice as long as the average vehicle

Lower your car insurance rates

One way to save money on an existing car is to lower your car insurance rates.

“It requires negotiating skills with your insurance provider to see if and where you can reduce costs,” Josepian said. “Taking a defensive driving course, reducing or changing your coverage, or even shopping around for another provider are a few creative approaches.”

Another idea could be to increase your insurance deductible. While this could potentially mean paying more if you have an accident, it can also lower your monthly or annual premiums.

And if you’ve planned ahead, like buying a car that doesn’t stretch your budget in the first place, then you could be in a better position to pay the higher deductible if needed.

Stay up to date with support

Another way to keep car costs down is to keep up with maintenance. Certain maintenance actions, such as oil changes, can be preventative and save you money in the long run, Josepian advised. But you also need to keep up with maintenance by knowing what your car needs so you don’t pay more.

“Knowing what service needs to be done based on what’s in the owner’s manual is always helpful so you don’t overpay for services that aren’t yet due. Check the service schedule and always follow that plan unless there’s a problem,” said Lauren Fix, sector analyst and industry expert at The Car Coach and Car Smarts.

She also recommends using online maintenance marketplaces such as CarAdvise or Openbay to find the best service prices.

And while buying support packages can help you avoid uncertainty and potentially save you money if you need enough service work, you may also end up paying more that way. So if you’re on a budget, you might decide to proactively save for maintenance costs instead.

“Instead of buying a service contract, you can set aside money every week,” Fix said. “Then the money will be available instead of using a credit card at a high interest rate.”

Refinance your car loan

Buying a new or used car is often more expensive overall than it was in years past, as monthly payments now typically include high interest costs. But you can potentially save money by refinancing your car loan.

For some engines, you may need to wait to see if interest rates start to fall before you refinance. However, others may be able to refinance now and still get a better rate than their original financing costs, for example if you’ve since improved your credit score.

In the Times’ analysis of car prices, the article shares the story of one driver who bought a car in 2019 at 12% interest and was able to refinance at 6.6% a few months later after improving his credit score. This type of relocation can potentially save you thousands of dollars over the course of your loan.

Improve fuel economy

Finally, you can save money on fuel costs by driving more efficiently. You can’t control the price of gas, but you can control how much gas you use. Road calming can be one way to save money while making your drive more relaxing.

As FuelEconomy.gov notes, reducing aggressive driving — such as speeding and rapid acceleration/braking — can save gas. The government site also notes that driving above 50 mph reduces gas mileage, so the race to your destination can be costly.

Additionally, maintenance actions such as keeping your tires properly inflated can help you maximize your fuel economy.

Overall, these steps can help you better manage the high costs of car ownership. Still, there’s only so much you can cut back on short of ditching the car altogether.

That’s why, in addition to finding ways to make car ownership more affordable, it’s important to consider how car ownership fits into your overall finances before being drawn in by the appeal of a vehicle.

More from GOBankingRates

This article originally appeared on GOBankingRates.com: Cars Have Never Cost So Much to Own — 5 Ways to Make Them More Affordable

Leave a Comment

Your email address will not be published. Required fields are marked *