You might think your car costs you a few hundred bucks a month — a loan payment, some gas, maybe insurance. But the reality is far more expensive.
In fact, for many households, owning a car now costs close to $1,000 per month.
Let’s break it down.
The True Monthly Cost of a Car (2024-2025)
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Average monthly loan payment: $750
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Average insurance premium: $200 (up from $130 in 2020)
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Gas, maintenance, registration, and repairs: Easily $100–$200/month
Total: $950–$1,150 per month per vehicle
And that’s just for one car.
And It’s About to Get Worse
Insurance rates are projected to rise another 19% if proposed tariffs on foreign car parts go through. Why? Because most vehicles built in the U.S. still rely on foreign-sourced parts, and tariffs on steel and aluminum drive up repair costs — which insurers pass on to you.
So the already-high cost of car ownership? It’s still climbing.
Repossession & Default Are Spiking
If you’re feeling squeezed, you’re not alone.
In 2024, car repossessions and loan defaults hit their highest level since the 2009 recession, according to Cox Automotive.
That’s a red flag. It means people are buying cars they can’t afford — and the math isn’t working out.
Two Cars? Time for a Serious Rethink
If your household owns two or more vehicles, now’s the time to ask the hard question:
Do we really need more than one car?
Yes, it’s a lifestyle shift.
Yes, it requires coordination.
But if you’re financially stressed, it’s a conversation worth having.
Imagine removing $1,000 or more in monthly expenses. That’s like getting a huge raise — without changing jobs.
Questions to Consider:
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Do you both need a car 7 days a week?
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Could you alternate days or work-from-home schedules?
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Could one person use public transportation or carpool?
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Is one car mostly used for weekend errands or kids’ activities? Could you consolidate or coordinate better?
Even If You Occasionally Rent or Ride Share…
Let’s say you go down to one car and need to rent a vehicle or use Uber/Lyft 3–4 times a month.
You’re still likely to save $500–$800 a month, even with those extras.
And you’ll avoid maintenance, depreciation, and the rising cost of insurance and registration.
Could You Go Fully Car-Free?
If you live in a city with decent public transportation, going car-free may be surprisingly doable — especially if you:
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Work remotely or hybrid
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Live near grocery stores or delivery services
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Use rentals or car shares for occasional needs
Even renting a car twice a month and using ride shares occasionally could cost far less than $12,000/year — the real cost of car ownership.
The Bottom Line
It’s time to stop viewing cars as a fixed cost. They’re a choice — and for many, a very expensive one.
Food for thought: If you were to invest $1,150/month for 7-years (the average car loan length), never invested another dime and let that money work for you for 30-years, you would have approximately $972,052 (based on an 8% return).
If you’re financially stressed, cutting a car might be the single biggest money move you can make.
Not forever. Not for everyone.
But worth seriously considering.
Because freedom isn’t just about being able to drive — it’s about being able to afford the life you actually want.
