Hidden costs of car ownership are crushing Americans

Ask your financial advisor how much zoning abolition will help your budget.

Car owners should be the first people rushing to the podium at a local planning commission meeting, demanding an end to single-use zoning. Spreading out the land uses makes personal vehicles the only viable option for most Americans to get around. 

Cars are depreciating assets. They go down in value over time, but require a ton of money to own and operate. 

The average monthly payment for new vehicles hit a record high of $730 in the first quarter of this year. A whopping 16.8% of consumers who financed a new vehicle in 2023 committed to a monthly payment of $1,000 or more—a new all-time high.

Buying a car:

The average price is around $38,000 for a new car, and around $20,000 for a used car. But then Edmunds tweeted this yesterday:

Maintaining a car:

Age and condition matters a lot, but generally $500 to $1,000 per year. This includes oil changes, tire rotations, brake pads, and other routine maintenance.

Fueling a car:

Gas prices averaged about $3 per gallon in 2021, and spiked to $5 per gallon last June. A typical car gets around 25 miles per gallon, so if you drive 12,000 miles per year, you'll need around 480 gallons of gasoline, which will cost around $1,440 per year.

Insuring a car:

The cost of car insurance can vary significantly depending on the make and model of the car, the driver's age and driving record, and the location. But the national average is $1,600 per year.

Storing a car:

If you don't have a garage or driveway, you may need to pay for parking or storage. The cost of this can vary depending on location and time of year. In some urban areas, monthly parking rates can be as high as $500 or more.

These are the factors that AAA uses when they report that the actual cost of owning a new car is about $10,000 per year. 

1. The average American household spends about 16% of its budget on transportation, with the majority of that spending going toward owning and operating cars.

2. A report by the Brookings Institution found that people who live in sprawling metropolitan areas drive about 30% more than those who live in compact, walkable areas.

3. In Los Angeles and Houston, traffic congestion costs the average commuter about 100 hours per year in lost time and $1,400 per year in wasted fuel. (And when they add more lanes, more congestion follows.)

4. A study by the University of Utah found that households in areas with better public transportation options tend to spend less on transportation overall, even if they own cars.

5. A survey by the American Planning Association found that people who live in walkable neighborhoods are more likely to have a higher quality of life, be physically active, and have more social connections.

Euclidean zoning, or single-use zoning, separates land uses into distinct areas for residential, commercial, industrial, and so on. This type of zoning often requires large lots and low building densities, which leads to sprawl and makes it difficult to access all the normal things without a car. We call that “car dependency.” Many local governments are now considering alternatives, which is exciting. (See Arlington County, VA’s recent news.) 

Zoning makes the housing go missing

 Ask your financial advisor if zoning abolition is right for you.

“Who tracks all this stuff?”

AAA publishes summaries with estimates about car ownership costing around $10,000 a year, but there’s a lot of averaging going on to get to that number. You might be interested in breaking it down further. There are a ton of public agencies, think tanks, universities, and independent researchers who have done a lot of work related to the costs of car ownership. Most do specific surveys and studies, like “what’s the 10-year trend for auto insurance premiums according to income brackets.” 

• Buying a car: Kelley Blue Book and Edmunds are probably the most reputable sources for new and used car pricing information.

• Maintaining a car: US DOT tracks average annual maintenance costs.

• Fueling a car: US Energy Information Administration has data on average gasoline prices and vehicle fuel efficiency.

• Insuring a car: National Association of Insurance Commissioners tracks average insurance premiums.

• Storing a car: Parking operators, parking organizations, storage providers, real estate organizations, and local governments.

If you’re interested in finding research for making your own infographics or memes, use a web browser like DuckDuckGo to find sources that aren’t typically floating at the top of Google search results like the ones I listed above.