The True Cost of Car Ownership: Is It Better to Be Without?

For many people, having a vehicle is a necessity these days. They need to be able to commute to work and take their children to school and extracurricular activities. Going grocery shopping, running errands, and other essential outings factor into the equation as well. Some people may be able to rely on public transportation, ridesharing, carpooling, and other options at times, but those solutions aren't available to everyone, and they're not an option in all situations.

With all that being the case, the majority of Americans now own their own vehicles. Of course, vehicle ownership doesn't come without a price, and that price seems to be creeping higher with each passing year. That leaves many wondering if owning a vehicle is truly necessary.

Would it be better to be without? Perhaps turning to the previously mentioned alternatives would be less costly. Maybe falling back on a one-way car rental when the other options fall short would be more practical. Take a look at the average prices of vehicles right now and the other factors that influence the long-term cost of ownership to help you make that determination.

Average Cost to Buy a Vehicle

First, let's delve into the basic cost of purchasing a vehicle, which largely depends on whether you buy a new or used model. Right now, the average price of a new vehicle in America is $48,000. Some vehicles fall below that norm whereas high-end vehicles may exceed it by a considerable margin. For a used vehicle, you can expect to pay about $27,000, but that depends on the age, make, and model of the vehicle you choose.

To break that down even further, consider monthly payments. Once interest is added to the mix, average monthly payments for a new vehicle hover around $725 whereas those for a used model run about $500. Your actual payments may be higher or lower depending on several factors, including the dealership you go through, your loan provider, your credit score, and your down payment.

Insurance Coverage

In addition to the basic purchase price of a vehicle, there are several other costs to think about. One of them is insurance. Almost every state requires drivers to maintain insurance coverage on their vehicles. Minimum coverage requirements vary by state with the average cost of insurance being about $2,000 per year for new vehicles and $1,500 annually for used models that are 3 to 5 years old.

Car insurance isn't mandatory in Virginia and New Hampshire, but those states have requirements of their own. In Virginia, drivers who forgo insurance coverage must pay a $500 fee with each vehicle registration renewal. New Hampshire drivers who want to opt out of insurance coverage must prove that they have the means to cover another drivers' injuries and losses if they cause an accident.

Fuel and Maintenance

From there, you have fuel and maintenance costs to consider. Gas or diesel ranges from $2,000 to $3,000 per year depending on your vehicle, how much you drive, and fuel prices. Maintenance runs about $1,000 annually for a newer vehicle and $1,500 for a used one.

Those are the average costs for conventional vehicles with internal combustion engines. Hybrids and electric vehicles work a bit differently. With an electric vehicle, you won't have gas prices to worry about. Still, keeping it charged could cost anywhere from $400 to $800 per year depending on the model and how many miles you drive. With a hybrid, you may burn less fuel, but charging could run you between $200 and $400 annually.

Maintenance costs vary for hybrids and EVs, but they can range from $300 to $1,200 per year. There's also the cost of replacing the battery for an electric vehicle after 8 years or so. That could cost another $5,000 to $15,000.

Other Ongoing Costs

Those are some of the basic costs vehicle owners generally face. Other expenses come into play as well. For one, there are taxes, registration, and license plates to consider. Those vary greatly depending on the age of the vehicle, where you live, and other factors. They can add up to between $200 and $600 per year. Repair needs that arise beyond routine maintenance may range from a few hundred dollars to several thousand over the course of 5 years, and they tend to grow beyond the 5-year point as a vehicle sustains more wear and tear.

Depending on where you live and where you travel, tolls and parking costs may also enter the mix. Some people don't have to deal with those added expenses at all. Others may pay anywhere from a couple hundred dollars to a couple thousand per year. Professional washes and detailing may factor into the equation as well along with many other expenses.

Looking at Other Options

Now, let's take a look at some of the alternatives. If public transportation is an option, you'll need to pay for each ride or buy an annual pass. That may cost anywhere from $70 to $120 per month or $840 to more than $1,400 annually depending on where you live, how many times you have to travel, and other considerations. Ridesharing via Uber or Lyft can cost $600 to $1,000 per month or so for daily commutes or around $300 monthly for occasional rides. Again, though, those options aren't available to everyone.

Maybe you live in a walkable community where you don't really need a vehicle to get to work, school, and other places. It could be that you work from home and take full advantage of the online world for everything you need. In either case, you may only need a vehicle on occasion. If so, renting a car when the need arises may suffice. That could cost you anywhere from $50 to $150 daily plus the cost of fuel and insurance.

Is Owning a Vehicle Worth the Cost?

Whether owning a vehicle is worth the cost for you depends on several factors. Those include how often you need to leave home and how far you travel. If you only need to travel short distances and public transportation or ridesharing is readily available, you may not need to buy a vehicle. That's also the case if you rarely travel at all or you live in a community where everything is well within walking distance. In situations like those, renting a vehicle when you need to travel beyond the typical boundaries could be a more affordable solution. Otherwise, buying a vehicle would probably be the more cost-effective option.

Hey there! My name is Wojtek and I am very happy that you came to my travel blog. I've been traveling the world for a few good years now and I still want more.

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