Budget Struggles: How Car Ownership Impacts Your Wallet and Well-Being

Let’s begin by examining how many Americans are buying cars they can’t afford, how much of their income goes to their car-related expenses and whether these costs impact their ability to afford other essentials.

Over 25% of drivers admitted to owning a car that’s out of their budget. This sentiment varied by demographic, with women (32%) more likely than men (24%) to admit it. By generation, Gen Z (32%) experienced this the most, followed by millennials (28%), Gen X (29%) and baby boomers (24%).

People who leased a car were significantly more likely to face these financial burdens (46%) than were vehicle owners (26%), possibly because a long-term car lease can cost more than buying a car. Regardless of ownership status, drivers allocated an average of 20% of their monthly income to car-related expenses, leaving less money for other essentials. Auto loans were also a significant expense for one in 10 drivers — who said they spend over 30% of their monthly income on car payments.

Among the drivers we surveyed, 40% reported that they haven’t been able to afford other life essentials due to their car expenses. Over one in eight have found themselves living paycheck to paycheck due to the financial strain of their cars, making it their largest financial burden. When asked if the statement “Buying a car set me back financially” resonated with them, 33% of drivers said yes — especially Kia (46%) and Nissan (44%) owners.

Car expenses have also increased over time for 52% of drivers, especially among those who own GM vehicles (80%). Over half of Volvo (64%), Audi (62%), Toyota (58%) and BMW (56%) owners reported increased car expenses as well. Our findings underscore the need for drivers to make informed financial decisions when it comes to vehicle ownership, perhaps opting for a car brand that isn’t their ideal choice but that better fits their budget.

Now, let’s uncover the financial challenges drivers face in keeping their vehicles in good working order. We found out how many drivers struggle to afford necessary car repairs and upgrades, the primary hurdles they encounter in managing car expenses and how they make the costs more manageable.

The graphic above shows how nearly two in five of our surveyed drivers haven’t been able to afford car repair costs and necessary upgrades, especially Volvo, Mercedes-Benz and Ford vehicle owners.

Fuel was the primary factor straining drivers’ budgets, according to 58% of respondents. Additionally, 41% said their car insurance premiums were financially burdensome.

As a result of financial strains, almost one in six drivers had to postpone important car maintenance or necessary repairs. This was a much bigger problem among drivers who said they couldn’t afford their cars (75%) than those who said they could (23%).

Financial constraints also forced many drivers to make sacrifices in other areas of their lives, including dining out (25%), vacations (17%), food delivery (13%), social activities (12%) and new clothing (12%). In light of that, drivers have found various ways to make ends meet and afford car expenses.

Overall, drivers most often turned to DIY car maintenance (31%), fuel rewards programs (26%) and emergency savings (21%). Some resorted to working a second job (16%), which was even more common among drivers who couldn’t afford their cars (33%). We also found differences among generations: Gen Zers (11%) were the most likely to prioritize car expenses and pay other bills late, while millennials (21%) took the lead in learning basic auto mechanic skills.

With so many people cutting comforts out of life in favor of their vehicles, our survey revealed that car ownership today has emotional impacts as well. The next part of our study explores how owning a car affects drivers’ ability to invest or save for the future, their overall well-being and stress levels.

Almost half of the drivers we surveyed (46%) have found it more difficult to save or invest because of their car-related expenses. Beyond their financial health, car costs have also cast a shadow over 18% of our respondents’ well-being. Overall, 20% of drivers reported feeling “very” to “extremely” stressed. Those who said they couldn’t afford their cars were far more likely to feel stressed (36%) than those who said they could (13%).

Despite this, just 8% of drivers expressed regret about their car purchase, with the highest rates of regret among Audi (23%), Mercedes Benz (20%), BMW (16%), Ford (12%) and Tesla (10%) owners. Those who could not comfortably afford their cars were the most likely to experience buyer’s remorse (26%).

As for those drivers who could afford their car expenses, here are some strategies that have helped them stay on top of their finances: 

“I paid off my loan early, and I take public transportation to work so I don’t have to drive as much.” – Male millennial driver

“I bought a pre-owned vehicle well under my means, am paying that off as quickly as I can and cutting unnecessary expenses in half.” – Female millennial driver

“I try to do repairs myself, and I use cars until they start to give me problems. I also refinanced my car when there was about $2,000 left on the loan, which helped me in those last few months of payments.” – Male Gen X driver

“I bought an older car with cash, so I don’t have any monthly payments. I do most of the repair work when necessary.” – Male baby boomer driver

“Do your own car maintenance; it’s easy and can save thousands. Use credit card rewards and gas station bonuses to save on gas. Use GasBuddy to find the cheapest gas. Make sure you maintain your car; oil is cheap, but engines are expensive. Always look for cheaper insurance; nothing is stopping you from making insurance companies compete for your business. Buy a car you can afford, meaning your car payment should be less than 10% of your income. Haggle when buying; it’s not illegal to do so.” – Male millennial driver

These insights from drivers who have successfully managed their car expenses could offer valuable strategies for those looking to make their car ownership more sustainable.

With so many people exceeding their budgets and a significant portion of their income dedicated to car expenses, our survey showed that drivers are striving to make informed decisions when it comes to car ownership. Understanding all aspects of car ownership, like warranties and maintenance costs, is key in these decisions. The struggles to afford necessary repairs and maintenance result in sacrifices across various aspects of life, impacting savings, overall well-being and stress levels. While the auto industry may not become more affordable anytime soon, budget wisely and make informed buying choices to prevent your car from overtaking your finances.

Methodology

We conducted a survey of 1,000 drivers to explore the strains that car ownership puts on a person’s budget. Among them, 91% were car owners and 9% leased cars.