Could You Live Without a Car? See How Much You Can Save

car-keys-selling
©Shutterstock.com

When you have somewhere to be, there’s nothing easier than tossing your stuff in your own car and driving there — all while listening to your favorite music and keeping the temperature in your personal Goldilocks zone. The tradeoff is cost, of course, because buying and owning a car, truck, van or SUV is expensive.

See: 40 Cheap Upgrades That Will Make Your Car Feel Like a Luxury Vehicle
Learn More: The 29 Biggest Car Mistakes That Will Cost You

You might feel married to your ride, but is divorce out of the question if breaking up with your wheels could save you a life-changing amount of money? Because that’s exactly what might happen if you decided to ditch your car and use public transportation instead. Let’s explore.

All the Wrong Records Are Being Broken

The toll of the ongoing microchip shortage is evident in the average price of a new car, which has now topped $47,000 for the first time in history. According to Kelley Blue Book (KBB) it’s a record $47,077, to be exact. That’s a year-over-year increase of nearly 14%.

Presuming you’ll be financing, the average monthly payment for a new car is now $636, according to Edmunds — another all-time high. To make matters worse, according to KBB now is an especially lousy time for deals and discounts, as dealers are responding to tight inventory mostly by holding prices at or above MSRP. Incentives are also the lowest on record — just 3.9% of the average transaction price.

Make Your Money Work for You

In the used car market, records are being smashed more than broken. KBB recently reported that the average used car now costs more than $28,000 for the first time in history — a record $28,205 — an increase of 28% over the year before. The average monthly payment for a used car is now a record-shattering $520 per month, up from $437 just one year ago.

Discover: 30 Cars With the Highest Resale Value

Then, There’s the Rising Cost of Ownership

If you buy a car, you’ll have to budget for a whole lot more than just your monthly payment. According to the most recent data from AAA, the average cost of vehicle ownership is now approaching $10,000 per year — $9,666 or $805.50 per month. The biggest factor by far is depreciation, which accounts for 40% of that cost, more than even gas and maintenance.

Here’s part of the breakdown for the average cost of vehicle ownership:

  • Fuel costs: 10.72 cents per mile driven
  • Maintenance, repairs and tire costs: 9.55 cents per mile driven
  • Finance charges: The average interest rate for a vehicle loan is 4.12%

All in all, owning a car costs 83 cents per mile if you drive 10,000 miles per year, 64 cents per mile if you drive 15,000 miles per year, and 55 cents per mile if you drive 20,000 miles per year.

Learn: 17 Hidden Auto Costs Your Dealer Will Never Tell You About

Make Your Money Work for You

Don’t Forget All the Other ‘Little’ Costs

So, there’s the $636 monthly payment that the average car buyer makes every month for the vehicle loan, along with the $805.50 associated with the costs of ownership and depreciation. That’s $1,441.50 a month until you pay off the loan, but by that point the cost of repairs will have risen as your car ages and begins to fail just as your warranty expires.

Until that day comes, you’ll have to contend with expenses like full-coverage insurance, which AAA says costs an average of $1,342 annually. Taxes and fees for registration and licensing will run you $669. Then, there’s the cost of finance charges for your loan, which, as previously stated, averages 4.12% — that comes out to an average of $712 per year. The aforementioned cost of depreciation runs the average driver $3,900 annually.

Go Green: Electric Vehicles Are About to Be Cheaper Than Gas Cars

A Cheaper, Safer Alternative

According to the American Public Transportation Association (APTA), the average American family could save $10,000 by taking public transportation and learning to live with one less car. The average household spends 16 cents of every dollar on transportation, according to the APTA, 93% of which goes to purchasing, maintaining and operating vehicles. Buying and owning cars, trucks and SUVs is the average household’s biggest expense after housing.

Make Your Money Work for You

In terms of indirect costs, you’re very likely to save money on health care by foregoing your car for public transportation. According to the APTA, public transportation is 10 times safer per mile than traveling by car — taking public transportation reduces your chance of being injured in an accident by 90%.

Compare: Uber vs. Lyft: Pros and Cons of Each Rideshare Service

Just before the pandemic, PSECU, the largest credit union in Pennsylvania, conducted a study that compared the costs of the most common kinds of public transportation. While it was unique to the Keystone State, the results were representative of the country as a whole.

Keeping in mind that the average car payment alone is now $636 — and not counting the hundreds of dollars in ownership and maintenance costs — here’s what the alternatives will run you:

  • Bus/subway: $60 per month
  • Taxi/rideshare: $500 per month
  • Trains: $1,200 per month

More From GOBankingRates

About the Author

Andrew Lisa has been writing professionally since 2001. An award-winning writer, Andrew was formerly one of the youngest nationally distributed columnists for the largest newspaper syndicate in the country, the Gannett News Service. He worked as the business section editor for amNewYork, the most widely distributed newspaper in Manhattan, and worked as a copy editor for TheStreet.com, a financial publication in the heart of Wall Street's investment community in New York City.

Best Bank Accounts of May 2022

Untitled design (1)
Close popup The GBR Closer icon

Sending you timely financial stories that you can bank on.

Sign up for our daily newsletter for the latest financial news and trending topics.

Loading...
Please enter an email.
Please enter a valid email address.
There was an unknown error. Please try again later.

For our full Privacy Policy, click here.