The High Cost of Car Ownership

The cost of owning a car is now running close to $1,000 a month for many households. The average new-car loan payment is nearly $750 a month, and the average insurance cost is around $200 a month, up from $130 a month in 2020.

And insurance premiums are likely headed much higher. A recent report from Insurify suggests that car insurance premiums could rise 19% on average if the proposed changes in tariffs become a reality. Most cars sold in America have lots of foreign-sourced parts, and tariffs on aluminum and steel would also contribute to rising costs; insurance premiums reflect the cost of repairing/replacing those potentially more expensive parts and materials. Insurify expected a 5% premium increase for 2026, before tariffs became an issue.

The already too-high cost of car ownership is flashing some warning signals. In 2024, the number of vehicles that were repossessed because owners fell behind on loan payments, and the number of car loans that fell into default, were at their highest levels since 2009—the Great Recession—according to Cox Automotive.

If your house is feeling the stress of car ownership, I think it’s time for a major rethink. Especially if your household has more than one car.

Now let’s talk about when you have two cars for commuting and family logistics. I am going to ask you to dig deep and really consider if you could get by with one less car. I appreciate what a lifestyle change this may be, but sticking with something just because it is what you are used to is not a good enough reason to keep two cars. If your house is financially stressed, why wouldn’t you at least have a thoughtful conversation about what might be possible and what you might be able to save?

Let’s start with whether you both need a car seven days a week. Might there be a way to share the car? If one, or both of you, does some work from home, might it be feasible to share a car and coordinate who gets the car on a given day? If public transportation is a viable option, this idea should definitely be on the table for discussion.

And on the topic of working from home, the savings from being able to get rid of a car if you had to commute less might be a good way to frame a chat with your boss about being allowed to work from home a day or two a week. Any employer that says it cares about the financial stress of its employees should be open to whether this might be a viable option, which can measurably help employees save a ton of money.

And cast a wide net on potential carpooling colleagues. Doesn’t have to be someone you know or in your group. Maybe there’s someone a few streets over who you didn’t even know worked at the same place. Switching off days (or weeks) for who drives might make it practical to get rid of one family car.

Is that second car mostly for kid transport? What if you carpooled more? Is the second car more for weekend mayhem of chores, kids' activities, etc? Again, might you be able to figure out a system to get it done with one car?

Maybe not. But my goodness, if you are feeling financial stress, how would you not jump at the chance to remove $1,000 or more in monthly spending? Even if you end up renting a car a few times a month, or you use ride shares more, I bet you can still save more than $500 a month by getting down to one (or no) car. And that’s not even factoring in the cost of maintenance.

I also think one-car households that are feeling financially stressed might want to do the math on what could be saved by going carless. If you live in a city with ample public transport, this is clearly viable. Even if you rent a car a few times a month to do big shops, or a getaway, you will still likely come out so far ahead financially that it’s a lifestyle trade-off to consider.