Many people in America are “car poor,” which means they are dumping much of their cash into their vehicle. Just like being “house poor,” this is when you pour money into something you own only to end up being broke. The vast majority of Americans own cars.
Overall, most of us are a part of this society that is draining our bank accounts to get from point A to point B. Take a look at the ways cars keep us poor here.
30. Higher Property Taxes
The car is king in the United States, as evidenced by our sprawling metro areas full of strip malls and drive-thru restaurants. In many urban areas, suburbs are heavily subsidized by property tax investments. Car culture has led to suburb culture. It’s such a popular way of living that many local and state governments heavily subsidize the expansion and maintenance of said suburbs. We all pay higher taxes to keep up with sprawling road maintenance, stop lights, and more for commuter culture. We also pay for subsidizing large property lots, cul-de-sacs, and other suburban development trappings.
Walking and bicycling infrastructure is far cheaper to build than vehicle infrastructure. However, so many people are accustomed to driving everywhere for everything. Even if it’s only a block or two away, there tends to be little public support for walking and bicycling improvements, even in large cities. Large, expensive road maintenance projects tend to be funded year after year without much scrutiny or public input. Why? Because we know we need to fix roads. While homeowners see this spending reflected on their property tax bills, renters face ever-growing rent payments to help property owners keep up.
Ideally, no one would ever drive drunk. However, it still constantly happens in the United States and owning a car is a prerequisite to being able to drive drunk. That moment of poor decision-making costs you thousands in the US, aside from the possibility that you could seriously hurt or kill someone. The average cost of a DUI in most US states is around $10,000 for the legal fees, lawyer costs, possible installation of breath-monitoring devices, and steeply increased insurance costs. Some states will take your license away for up to a year or more for serious DUIs or repeat offenses. Felony-level DUIs are even more expensive.
In addition to the terrible human toll of DUIs, very few Americans can deal with a sudden $10,000 setback, so people who encounter this are at a high risk of having their car repossessed if it’s still on loan or impounded if owned. The loss of a license can cost many job opportunities since many jobs require a standard non-commercial operator license, leading to an endless cycle of poverty. There are myriad reasons to never, ever drive drunk, especially keeping your fellow community members safe. However, for those who make a mistake, the financial costs alone can be truly life-changing.
Many commuters, especially in large or high crime cities, choose to purchase Roadside Assistance packages that allow you to call a number that provides you with a free or low-cost tow and repair. These services typically also offer several free door-unlocking services if you lock your keys in your car, which can be a boon for the busy and forgetful. However, unless provided by your insurance or another promotion as part of a package, roadside assistance can be quite expensive. That is especially true if you don’t use all of its benefits each year. Make sure you’re maximizing your return on investment in the program.
Depending on where you live and the type of service you choose, roadside assistance can cost from $100 to $1,000 per year. While you may gain a sense of peace of mind and some convenience, you need to carefully do the math to ensure that the benefits you gain are worth the service’s cost. Keep track of how many times you use the service each year and how much the service would have cost without roadside assistance. If you see a pattern emerging of the service not paying for itself, you’re setting money on fire each year.
Everyone understands that cars are expensive, and those car payments tend to be relatively high in the US. Most people don’t know how much of those payments tend to go towards interest and how much more you end up paying for a car than its actual sale price that you agreed to once the repayment term is up. While car loans can be as low as 2% interest for people with solid credit histories, many lenders offer rates as high as 9 to 10%. They are especially likely to provide high loans to Black borrowers and low-income borrowers.
The difference in cost of a 2% loan and a 10% loan over the lifetime of repayment is quite literally thousands of dollars. A five-year loan for a $30,000 car at only 2% interest will pay close to $1600 in interest on the loan’s total, so the vehicle’s final price is relatively close to the sticker price. However, at 10% interest, the amount of interest paid balloons to over $8,000! People who must borrow at a high interest rate spend thousands more over the loan’s lifetime and end up vastly overpaying the asking price.
Several US states now require emissions testing on all vehicles, typically every two years and after any major repair that could impact the car’s emissions. Though required by the state, this testing is the sole responsibility of the vehicle owner to pay for. Thankfully the costs aren’t that high, with tests average from $30 to $90, but that still adds up over the lifetime of a car, and cash-strapped owners should be aware of the need for this testing to stay in legal compliance with owning their vehicle. Thankfully, some states do also offer assistance for low-income owners to get free tests.
If a car, especially an older used car, fails its emissions testing inspection, there can be additional hidden costs. Some states have caps of $300 to $500 that car owners can be responsible for to make needed upgrades and repairs to meet the emissions standards. However, others do not have any caps. That could leave car owners on the hook for potentially thousands of repairs required to make the car street legal. Anyone considering buying an older used car should check their state’s emissions testing requirements beforehand to ensure they aren’t going to run into a nasty surprise down the road.
Many people wisely budget for regular oil changes, and some car dealerships even include free oil change programs as part of the new car purchasing experience for the first year or two of ownership. However, many people neglect the wear and tear on tires and fail to account for how expensive tire maintenance can be, even outside of events like blowouts or flats. Tires can be costly in areas like the Midwest with large seasonal temperature swings and salted roads. Tires are also essential in those areas due to the need for traction on ice and snow.
To maintain tires, you need to rotate them regularly to ensure even wearing the rubber tread. While some oil change service providers rotate tires for free, most charge at least a $20 additional fee on each oil change for tire rotation due to the time and labor costs involved. Many people neglect their tires and tend to drive them until they’re more just rubber rings than treaded tires. Nevertheless, the best practice for your safety and fuel economy is to get them replaced at regular intervals. That can cost anywhere from $500 to $750 or more. It depends on the type and size of the tire and where you have the labor done.
Having a low credit score or troubled credit history will cost you more when buying a car. Why? Because of the higher interest rate, a larger total is paid over the lifetime of a loan. However, that is not the only hidden cost of having a low credit score when owning a car. Car insurance companies, as well as home and other personal insurance, actually run a credit check on applicants. Why? To determine their financial soundness as one of the risk factors they use when determining how expensive a driver will likely be to insure.
It can be expensive to be poor in the US. Car insurance is a perfect example of how vehicles perpetuate the poverty cycle. People who have high incomes and good credit scores get a significant “financial stability” reduction on the cost of insurance that can be as much as 20% of the overall premium. Those with a poor credit history and low score not only don’t get this discount but may even incur additional fees or percentages added to their premium for that financial instability. A bad enough credit history forces some car owners to use non-traditional insurance companies. They usually offer lousy terms like incredibly high deductibles.
It would only make sense for early and extra payments to be rewarded by the financial system as evidence that you are working hard and making good on your obligations. Unfortunately, that’s rarely how things work, especially in the US. Auto loans are a perfect example of good intentions with unjust punishment. It has been illegal on home loans for some years now. However, many auto loans can still charge lenders a prepayment penalty for making extra or early payments on their vehicle. It is an attempt to reduce the interest paid over the lifetime of the loan.
Some lenders write it into their auto loan contracts to charge a flat or percentage fee for extra payments applied directly to the loan’s principal balance. They do so in the self-interest of maximizing the amount of interest they receive. To avoid these shenanigans, make sure you ask your auto loan lender if there is any prepayment penalty and shop around until you find a lender who explicitly does not charge those penalties. That way, if you encounter a windfall or receive a raise at work, you can safely pay down your car loan faster without receiving any punishment.
When people are thinking about what they want in a new car, it’s almost always a focus on features, be it heated seats, a fully-integrated operating system in the dash display, a 0 to 60 mph time, or something else. Unfortunately, few people take maintenance and upkeep into account, which is a shame since it can vary drastically from car to car and manufacturer to manufacturer. Vehicles with a backup camera system are far more expensive to repair in the event of a rear-end collision, for example. Simultaneously, cars with a lot of built-in technology can also be more costly to maintain over time.
Imported cars like BMWs or Audis tend to be especially expensive to maintain. Many shops don’t carry their parts on-hand as standard as they would with more common domestic car manufacturers. There can be extra time and cost in many imported car repairs due to needing to track down uncommon and challenging to find parts. The parts themselves often cost more, especially for luxury imported cars like Porsches. Granted, upkeep cost probably isn’t as large of an issue for people driving BMWs and Porsches. However, it’s still essential for any car buyer to research the average repair costs for the specific model and manufacturer they’re considering purchasing.
Just like with a mortgage, there are financing charges associated with car loans that are the combination of the origination fees, processing fees, as well as the total cost of the interest you’ll end up paying over the lifetime of the mortgage. While we’ve talked about the vast difference interest rates can make, they aren’t the only fees associated with car loans and are just a part of the picture of financing charges. While down payments are often associated with mortgages, especially the magical 20% down that allows you to avoid private mortgage insurance, car loans also benefit from down payments.
Many car dealerships now advertise down payment-free financing options. However, in reality, these are a terrible and often predatory idea that will see you paying thousands more over the loan’s lifetime. These financing offers usually come with exorbitantly high interest rates. They also have one-time loan origination fees added to the car’s cost, making the high-interest loan even larger. So, either way, you look at it. There is a sizable chunk of change you need in cash or finance when you want to purchase a car, whether through a dealership or a private sale.
The United States has such vast, wide-open spaces that there are plenty of places without public transportation. Furthermore, even when it does exist, it’s not always reliable. When buses are late, it means trouble at work, so most people are forced to own a car. According to the Department of State, 85% of Americans own cars. Those who don’t own a vehicle typically live in a city like New York with its robust taxi system. Alternatively, they have access to rides when they need them. Sometimes it’s through family and friends or the use of a service like Uber or Lyft.
Some people would see this as a massive advantage to the rest of the world because Americans have the freedom to go anywhere they want. However, it’s also a financial burden. As soon as an American becomes an adult, this is an expense that nearly everyone takes on. The open roads and scenic highways of the United States are a unique national feature that not many other countries share. However, the reliance on the automobile impacts our entire culture. That includes how we deliver services to how we design and build our neighborhoods. In the United States, the car is king.
Have you noticed how difficult it is to get a mortgage or a credit card with a high limit, and yet it’s easy to qualify for a $30,000 car loan? Money is still money no matter where you borrow it from. However, car companies make it extremely easy for people to take on debt. Most people justify getting a car loan because they realize that they need a vehicle to get to work, so lenders take full advantage of American’s need for transportation. Often, this takes the form of high interest rates, sometimes nearly as high as credit card rates, or lousy loan terms that leave people in a tight spot for repayment.
One of the biggest mistakes people make when purchasing a vehicle is not shopping for car financing. They will often ask the dealership to apply for loans on their behalf. It’s far better to look for car loans from your existing bank and credit card companies. They will often give you a much better deal on interest and monthly payments. Unfortunately, many car companies and auto financing outfits are now basically replicating the conditions of the 2000s housing market crash but with auto loans. They are issuing loans they know likely won’t be repaid without considering what this will do to the markets or the people affected.
Many people don’t realize that just because you get approved for a car loan doesn’t mean you can afford it. You still have to make a budget to figure out what you can pay. That puts people in awful financial situations. Car repossessions are on the rise as there has been a sharp spike in people defaulting on their car loans since 2018. As of 2019, more than seven million Americans whose car loans were more than 90 days late were grounds for repossession. At that point, some people need to file for bankruptcy to keep their creditors at bay.
Aside from medical debt, credit cards and car loans are the leading cause of bankruptcy in America. According to Justia, some people have to file for bankruptcy to prevent a company from repossessing their car. Even so, there are still circumstances where a lender can always take your vehicle even after filing for bankruptcy. Thanks to some lenders’ predatory nature, people can wind up with terrible terms and high interest rates that make repossession far more likely. However, when a job is required to earn an income, people are ultimately left with no other choices.
Unfortunately, the United States has one of the worst public transportation systems in the world. Buses are often late and unreliable. Furthermore, the bus stops offer no coverage during inclement weather. There is also a social stigma that only the poorest people ride the bus, making people feel less inclined to take it unless they are truly desperate. The vastness of the US and the continued existence of rural populations complicate the system. It would need to cover incredible distances in some extremely out-of-the-way areas. There is also extreme government resistance to any new spending on transit.
But this attitude may be changing soon. According to the US Census Bureau, the number of car-less households has increased ever-so-slightly from 8.9% to 9.1%. That isn’t a huge change, but it is significant because the number of families with at least one car has increased since the 1960s. This trend could be due to the availability of rideshare apps like Uber and Lyft, which allow even more remote areas to use transit options. Millennials are also becoming more conscious of vehicle emissions affecting the environment and may hold off from buying a car until necessary.
When you’re struggling with money, expensive car repairs can be devastating. In my teens and early 20’s, I was working multiple part-time minimum wage jobs. I drove a beat-up old car that I bought with cash to get to work since I couldn’t afford a monthly car payment. Since I was making little money, I would struggle to save up a few hundred dollars in savings. Then it was almost like my car knew because it would break down, and I needed a repair, which wiped out all of the money in my savings account. Eventually, when I got to my mid-20s, I bought a much newer car because I realized the amount I was paying averaged out to $300 a month for repairs. That is the cost of a new car payment, minus the stress of my car breaking down all the time.
Clearly, I was not alone in my struggles with car repairs. Whenever I would express my frustrations of this cycle, older adults would shrug their shoulders and say, “That’s what savings are for.” Everyone seemed to be complacent with the fact that cars ate up all of their money. Most American households have less than $1,000 in savings and can never seem to get ahead. If something goes wrong with their car, likely, it would also wipe out their savings account. Alternatively, you would need to charge it to a credit card. Someone who uses public transportation would never have to deal with this sort of issue.
If you buy a brand-new vehicle, your car loses 10% of its value as soon as you drive it off the lot. In five years, the car will lose 40% of its original value. It would be a terrible failure of an investment if you were to put that same amount of money in the stock market. Yet people think it’s a completely acceptable way to spend their money. Depreciation happens to every car out there. Even if a car holds long-term value, it usually takes decades for this to happen, and there is no way of predicting the future to see if it will be worth something down the road.
The best way to reduce your losses from depreciation is to buy a car that’s already a few years old with a low amount of mileage. A car’s value has already decreased to the point where you aren’t likely to lose much more money. For example, I bought a three-year-old car from Carvana, a former lease model with 10,000 miles on the odometer. The car’s original price was $36,000, but I got it for $16,000 after taxes and fees. It means the value had already dropped $20,000 in 3 years. According to Kelly Blue Book, my car is only worth $12,500 now that it’s five years old. Losing money is terrible either way, but at least it only depreciated $3,500 from its value instead of $23,500.
Just like everything else in life, once you have used an object for a long time, you start to get tired of it. As the years go on, technology improves, and so do cars. People want to look stylish and hip, so they’re willing to continue buying new vehicles to keep up with appearances. Some professions matter more than others, but some people genuinely feel as though they need a new car to be taken seriously in their field. Others have a “dream car” that they want to get someday when they make more money. Plenty of people will swap out their cars earlier than necessary.
According to a study by CNBC, people typically bought a new car every five years. However, after the Great Recession of 2008, people had to hold onto their vehicles longer. The average went up to 8 years. The average car loan is around five years before you pay off a car. It means that people were keeping themselves in a perpetual state of debt with car loans. Even now, someone may only give themselves a short grace period before jumping back into a new loan instead of paying off the car in full and holding onto it for ten years.
For a long time, buying a used vehicle was seen as a way for people to save money. Unfortunately, now the price of used cars is getting higher. According to a report by Reuters, the increase in the number of people losing their cars is beginning to affect the prices of used vehicles directly. More relatively new cars get repossessed for falling behind on the loan. However, the market is getting flooded with “new” cars that dealerships can charge a premium price tag even though someone already used them. Low-mileage used vehicles can sell for almost as much as new cars.
As people lose their car to the repo man, the demand for cheaper used cars has done up, and so have the prices. For many low-income Americans, they knew they could save up some cash and buy a car at a local dealership. Nevertheless, prices will continue to go up since demand is so high. Obviously, this only makes life more difficult for the poor. Craigslist and other secondary markets can still be a good source of cheap used cars, but there is always the risk of a title with hidden fees or legal issues when purchasing privately for cash.
According to the National Highway Traffic Safety Administration, the United States pays $871 billion annually for car accidents. This amount includes the cost of government assistance, insurance claims, medical care, loss of life, loss of income or lifestyle, and the list goes on. Compare this to England, where the government spends only 2.2 million British pounds on accident prevention, and the actual total of what gets paid for a year of accidents is just $26,000. The number of car accidents per year is also significantly smaller. One can only guess that this is because public transportation is impressive in England, making it possible for most commuters to take a train or bus to work.
Insurance experts say that the average American will be involved in four car accidents during their lifetime to make matters worse. If you have car insurance, you will probably be covered if the accident was not your fault. However, if you make a mistake, it could end up costing you a lot of money. Even if you’re fully covered, being in an accident takes away your time and can be traumatic. Any lingering injury or trauma from a car accident can end up costing a great deal in medical bills, lost work, and more, and that doesn’t even factor in the reduced quality of life.
It’s no secret that gas prices keep getting higher in the United States. According to AAA, prices change all the time, but the national average was $2.43 per gallon when we wrote this article. The average American also pays $386.09 per year on gas. A few years ago, it was closer to $4 per gallon, so it improved by comparison. Gas is, unfortunately, subject to market speculation and is often price gouged in times of crisis and uncertainty like war, recessions, and more. While the supplies of petroleum are still relatively high, speculation makes them incredibly expensive.
However, back in 1970, gas was only 36 cents per gallon. As time goes on, it will only become more expensive to drive. Cars typically have better gas mileage, and people are starting to buy more electric and hybrid vehicles. For the people who are focused on optimizing their mileage, they might be able to save money. Nevertheless, millions of Americans who can’t afford an electric car have no control over how efficient gas mileage is. Those who can only buy older used cars will also pay the full price of extra gas mileage due to lower mileage standards on older cars.
The definition of a “super commute” is when someone has to travel 90 minutes or more to go to work. This trend is on the rise in the United States and has risen by 32% in the past ten years. It is more common for people who live near major cities, but it’s too expensive for them to live there. On the TODAY show, they interviewed a mother who worked as a nurse at a hospital in San Francisco, and she had to commute three hours to work each way, totaling six hours of travel every day, which is quite horrifying.
In this case, it’s not so much that cars are keeping people poor, but the expectation that society puts on people that driving to work is the norm. Moreover, if you need to go long distances to find a better job, so be it. Time is one of the most valuable resources people have. Even if you are a millionaire, you still only have 24 hours a day, just like everyone else. So if you waste several hours each day just getting from Point A to Point B, it can drastically cut down on your productivity and energy levels.
Americans in the middle and upper class typically live in multi-car households. Until 2006, the average number of cars per household was two. It is due to the fact that both partners may have full-time jobs. Even stay-at-home moms need their own vehicle to take their children to sports practice, doctors’ appointments, and grocery shopping. So instead of coordinating with each other’s schedules, Americans choose the most convenient option even if it’s far more expensive. When children reach their teenage years, many families buy a sturdy used car so the student can drive themselves to work, school, social activities, etc.
As someone who grew up in a multi-car household, we saw our extra cars as a safety net. If something went wrong, we always had a backup so someone could give us a ride to work or an additional vehicle to borrow while the other gets repaired. However, in today’s world, you can call an Uber to get a ride if your car needs to get fixed for one day. The cost of paying for a few passages in emergencies is far cheaper than having an actual vehicle per person. However, for many families, the unstable nature of multiple jobs makes a need for numerous cars.
Unfortunately, most people don’t know the difference between a liability and an asset. They wrongly assume that their car is an asset because it is something they are buying that holds long-term value. Once you pay off the vehicle, you can usually get something back if you choose to sell it later. Just because you can resell something later for less than what it’s worth doesn’t make it an asset, however. Cars are a liability. Cars steadily depreciate or lose value, especially new vehicles as soon as you drive them off the dealership lot.
We already mentioned how you immediately lose value in your car through depreciation. It happens to both new and used vehicles, so you are always losing money when you buy a car, no matter which one you buy. An asset is something that holds a value that will make you money. For example, if you buy a fixer-upper house, you could buy the home at $150,000 and put in $50,000 of work. If you sell it later for $250,000, you are netting a $50,000 profit. See the difference? Rich people work on increasing their assets and decreasing their liabilities. It is one of the significant differences in mindset between the rich and poor.
In America, there is a direct correlation between high rent prices and access to opportunities. The more expensive somewhere is to live, the closer it usually is to high-paying work. If you grew up in a poor neighborhood, the businesses in your immediate vicinity might only pay minimum wage. The Atlantic published an article called “How Car Ownership Helps the Working Class Poor Get Ahead.” They explained that there is a direct correlation between poverty and car ownership in the United States. Out of the small percentage of households without a car, they are often living on housing vouchers and would otherwise be homeless.
Once people in low-income areas own a car, they get more access to better neighborhoods and work opportunities. Some people would see this data and conclude that we need to give the poor access to cars. However, this speaks to the American mindset, where it’s normal for everyone to own a car. In countries like England, only 77% of households own a car, but people still get access to good jobs because the public transportation system is far superior to the US. Fundamentally, the US needs to implement either subsidized auto purchasing or more robust public transit.
When you buy a car from a dealership, salespeople will always try to add extra fees to make the car’s price higher. These are upgrades that aren’t necessary. Alternatively, if they are, you could do them by yourself for a fraction of the cost. Remember that once these show up on your total bill, you are also paying interest on these add-ons. Before you buy a car, always check the itemized list of add-on fees. Sometimes, you can completely avoid certain expenses, like the extra key fee. It would be far cheaper to get a spare key made at Home Depot.
To make matters worse, it’s been proven that car salespeople target minorities with these add-on fees. They assume that black and Hispanic people are uneducated or may not speak English as their first language. So they will add on loads of extra fees, knowing they are less likely to dispute the charges than white people. If you are young, they will most likely try to pull this trick on you as well. So always make sure you read your agreements carefully, and dispute anything you find to be unfair. Also, Google is your best friend when you have any questions.
People who buy from dealerships typically trade their old cars in for a down payment. They assume that they are getting a good deal, but the reality is that you lose money every time you hand over your old car to a dealership. The average person loses $2,340 when they trade in a vehicle. Dealerships can easily and cheaply detail and tune up your used car so that they can turn around and ask top dollar for it on their budget lot. It’s in their best interest to lowball you on your used car, so you’ll likely never get anywhere near the Blue Book value for your old trade-in.
Everyone can sell their own car, but they just might not have the confidence to do it themselves. If you have no experience with this, check out Dave Ramsey’s article called “How to Sell a Car.” There are factors to consider, like making sure the payment you receive is valid, if a check or transfer, and legal if in cash. You also have to make sure the title is signed over properly and that you have all fees and issues paid on your registration, so you don’t saddle the next owner with unpaid fines. You also need to dust off your negotiation skills.
Anyone who has anxiety already knows how nerve-wracking it can be to ride in traffic. Some of us tense up, have back spasms and high blood pressure when driving in terrible circumstances. According to Web MD, driving is hazardous to your health and can potentially lead to your death. Distracting yourself by texting while driving, looking at the GPS, or any other distraction is known to cause more accidents than anything else. One-second distractions kill 42,000 people in vehicle accidents every single year. Drunk driving also continues to claim thousands of lives a year, as does driving in dangerous conditions.
Compare this to train-related deaths, which total only 1,000 per year. As you can imagine, most of those deaths happened to drivers who tried to cross a track without noticing that a train was coming. If you didn’t drive, the odds of you dying an early death go down exponentially. For the families whose loved ones have been killed, it can be devastating both financially and emotionally. Additionally, even non-fatal car accidents are incredibly traumatic events that can leave people with severe injuries or even permanently disabled. Such damages are expensive and can also cause a loss of income from not being able to work.
It’s no secret that traffic and parking tickets are a considerable expense. This especially true if you live in a city where it’s difficult to find parking. Police officers try to find reasons to pull people over to meet quotas by giving out traffic tickets. The average cost of a speeding ticket is $152, which can be devastating to someone on a tight budget. If you used public transportation to commute to work, this would be a non-issue. Parking tickets can also be quite expensive, especially during special events or times like snow emergencies, which have fine increases.
To make matters worse, when people can’t afford to pay for their parking and traffic tickets, you may have to go to court to fight the charges. It means taking time off of work, causing you to lose money. Furthermore, if you don’t have time to deal with the issue, they can put out a warrant for your arrest because you haven’t paid your tickets. Like Iowa, some states will also suspend your license over unpaid fines regarding your vehicle registration, even if you manage to afford the registration but leave the ticket unpaid. Losing a license tends to put most people out of work.
Even if you own a car outright, having a car is never free. The average cost of car ownership in the United States is $2,671 per year for insurance, repairs, fuel, and registration. Of course, most people also have to worry about their monthly car payments on top of the regular upkeep. Many lenders are now offering longer-term loans, up to six or seven years, for cars. It means that people have to pay for expensive full auto insurance for several more years since only fully owned cars can drop to the much cheaper liability-only insurance.
The average payment for new cars is $554, while used vehicles are $391. Multiply those figures by 12 months in a year. That means people are paying between $4,692 to $6,648 per year on their monthly payments. If you add on the average cost for everything, most people pay more in the ballpark of $8,000 per year. For someone who makes minimum wage, this is entirely unaffordable. However, it’s still common to see people in low-income jobs driving nice cars. Old, used vehicles have their own set of expenses and tend to be unreliable, costing people jobs.
If you live in a city, you’re already used to the idea of paying for parking or getting a special permit. In rural areas, there is plenty of space to park, and it’s always free. Nevertheless, on college campuses and urban areas, you will still need to pay something to park your car. In some areas, parking passes can be thousands of dollars a year, which adds a considerable amount to your car budget. It may seem absurd to have to pay that much to park a car. However, cities like New York or San Francisco have limited street space. Thus, parking places are in outrageously high demand.
The parking passes price will change depending on where you live, but many places require at least $50 a month to purchase a permit. Some cities will allow you to pay a flat fee to get a permit for the entire year, but it usually costs several hundred dollars upfront. To some people, $50 a month doesn’t sound like a lot of money. However, if you are young and struggling to make ends meet, this can put a massive dent in your expenses. For students at colleges like the University of Minnesota, where a year’s parking pass, if won in a lottery, is over $1,000 per year, parking can also add to student debt.