Name
Cash Bids
Market Data
News
Ag Commentary
Weather
Resources
|
Owning a Car Is Getting More Expensive. Here's How to Save.The world's post-COVID spike in inflation, which largely lasted from 2021 through 2023, hit consumers in just about every corner of their pockets. One of the worst pinches came in the automotive market, where new and used cars alike rocketed higher in value as surges in demand smacked hard against global supply-chain disruptions and component shortages. The good news? A touch of respite—vehicle prices have been slowly retreating for some time. The bad news? Other factors are pushing the total cost of car ownership higher. Read on as we look at what's pumping up the price of owning a car, and provide a few suggestions for bringing down that burden. The TeaList prices on vehicles, new or used, weren't exactly cheap prior to the pandemic. But Americans who sought out a fresh ride in the ensuing years were treated to some real sticker shock thanks to the effects of both COVID lockdowns and, eventually, Russia waging war on Ukraine. WealthUp Tip: If you really need to save money, take a closer look at your budget—these are 20 expenses you could try to cut back on. "Supply chain issues had significantly reduced the availability of key components needed for new vehicle manufacturing, which coincided with higher demand, driven by people seeking alternatives to public transportation and more stimulus cash on hand," says the Bank of America Institute. "As a result, there was a steep drop in domestic inventories, which resulted in a surge in the sticker price for new vehicles. And with consumers unable to find or afford a new model, they moved into the used market, steeply increasing prices there, too." How steep? The average transaction price for a new vehicle sat around $39,000 in early 2020. By the time price peaked near the end of 2022, that number had soared to nearly $50,000. Used cars, meanwhile, listed at a shade under $20,000 on average in early 2020, eventually finding a ceiling a little above $28,000. In other words, new and used vehicle prices jumped by 28% and 40%, respectively, in just a couple of years. Since then, supply-chain issues have waned, and inflation generally has cooled. Indeed, car prices have actually come down from their peaks—as of May 2024, the average prices of new and used cars had dropped to $48,839 and $25,670, respectively. That's great news for consumers, to be sure, but it's far from the entire picture. Indeed, Bank of America Institute points out several factors that have made the total "all-in" cost of auto ownership even more expensive despite relief in list prices:
BofA notes that this might explain why owners are keeping their vehicles for longer, with the average age of a vehicle in the U.S. coming to 12.5 years in 2023—2.5% higher year-over-year, and 40% higher compared to 2001. WealthUp Tip: Being frugal is good. But there are many ways to take it too far. Unfortunately, whether you have to buy a new car or have the ability to hang on to yours for longer, you're still bearing at least some of these burdens. Here's how you can lighten the load. The TakeThere's no single way to make the cost of automobile ownership drop like a rock. However, by putting a few tactics to work, you can pile up small savings into a significant cost reduction throughout your time owning your car. Here are a few thoughts that address some of the resurgent drivers of inflation mentioned above: Financing
Insurance
Maintenance & Repairs
Riley & Kyle Like what you're reading but not yet a subscriber? Get our weekly financial insights and updates delivered to your inbox every Saturday morning by signing up for The Weekend Tea today! You can also follow WealthUp on Flipboard for more great advice and insights. On the date of publication, Kyle Woodley did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here. |
|