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Car ownership
How have prices changed since before the pandemic?
The cost of owning a car is up 40.59% since January 2020, according to an index from Navy Federal Credit Union.
That index tracks the cost of new and used cars, repairs and maintenance, insurance, tires, accessories, gasoline, parking, and registration and licensing fees.
Why have the prices gone up?
From 2000 to 2020, the cost of car ownership rose roughly in line with inflation, according to Navy Federal Credit Union's data. But starting in the pandemic, it far outstripped the cost of living overall.
Partly, that reflects the soaring cost of vehicles. Pandemic-induced supply chain disruptions led to a chip shortage several years ago, reducing the supply of new vehicles and prompting automakers to focus on their most expensive, highest-margin vehicles. The average new car now costs more than $50,000 — a record — according to Kelley Blue Book.
The soaring price of new cars raised demand for used cars, pushing the prices for them up, too; on average, used vehicles now run more than $25,000.
Jessica Caldwell, the head of insights at the car buying site Edmunds, points out that today's cars are nicer than they used to be. "It's not as if you're getting the exact same thing just at a higher cost, like a gallon of milk or eggs," she says.
Instead, new car purchasers "are buying something that is bigger, that is nicer, that's more refined, probably has more features in it." But the downside is that budget options are getting harder to find — and for people on a tight budget, that makes it harder to afford a car.
And it's not just upfront prices that sting.
"If you look at the past five years, there's something that keeps spiking every year," says Heather Long, the chief economist at Navy Federal Credit Union. "First it was gas prices; after Russia invaded Ukraine, we all remember the $5 gas price."
And then in 2023 and 2024, she continues, "car insurance really surged, adding hundreds of dollars a year for many Americans."
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More recently, she says, maintenance and repair costs have soared. Tariffs play a role; so does higher demand for parts, as people keep their cars longer to delay the cost of replacing them.
The result is that even though gasoline is now relatively cheap — the national average is just over $3 a gallon — the overall cost of car ownership is painfully higher than it used to be.
What are people doing about it?
Some people are taking on more debt to buy a car — a growing number of Americans owe more on their vehicles than they're worth, Edmunds data shows. Car loans keep getting bigger: More than 19% of all new car loans have monthly payments of $1,000 or more.
Long says that Navy Federal Credit Union has seen a new increase in people seeking personal loans to cover the taxes on their vehicles, a sign of strain. Nationally, auto delinquencies are jumping, another sign.
Many people are keeping their existing cars longer, preferring to repair an older vehicle rather than spring for a new one. (Springing for the repairs is tough enough.)
Or they're making do with fewer cars. Claudia Pineda, a real estate agent in El Paso, Texas, lives with her four children — three 20-somethings and one teenager. Their household has two cars, and Pineda needs one of them every day — her job requires a lot of driving.
But the kids also need a way to get to work. That means that Pineda's "mom car," a 2015 Nissan Rogue, puts in a lot of miles carting young adults to and from their jobs.
It's not ideal. "I feel like an Uber driver who is very underpaid right now," Pineda says. And her kids put in a lot of time waiting around for her when their shifts are done.
But when she priced out the cost of a modest used vehicle, it was simply too expensive. "It takes a big chunk out of your income when you have to pay that much for a vehicle," she says. "And that's just the vehicle. I think about the insurance and the maintenance and the gas. So it adds up."
Pineda is determined to find a silver lining to the situation. She appreciates the time with her kids, and likes trading music across their generational divide — she tries to keep an open mind about their music, and her Gen Z children are learning the words to '90s R&B hits.
"We're doing okay," she says. "Everything is getting paid." But buying a vehicle "feels like it's a luxury at this point, it really does."
Will Americans rethink their love of cars?
Cars carry other costs — but they're often invisible.
"You have your health care costs, which you might not realize are car-related," says Sarah Goodyear, the co-host of the cheekily named "War On Cars" podcast and the co-author of the new book Life After Cars. "If you have high blood pressure, you know, the cars in your world might be contributing to that."
Tailpipe pollution and car noise are both bad for human health. Air pollution is linked to asthma and other respiratory conditions, inflammation and cognitive problems. Noise pollution raises the levels of stress hormones and is tied to high blood pressure and heart disease. And of course, time spent driving is time spent sitting, and a sedentary lifestyle is linked to everything from cancer to dementia.
Goodyear cites a study in Japan that focused on a town that went from being car-dependent to having a train station, and found that residents' health care costs went down an average of $600 per person after the addition of a transit stop.
But there are other costs too — some of them financial, others more intangible. In 2015, one think tank estimated that drivers pay hundreds of dollars a year in taxes for roads, on top of what they pay in gas taxes. There's the cost of time spent driving. The private dollars that go towards parking lots. The opportunity costs borne by people who can't drive and have trouble accessing jobs, education or other activities.
Not to mention environmental damage, or the loneliness that's often pervasive in sprawling, car-centric communities. Or lives lost: In 2019, the federal government calculated that traffic crashes cost the equivalent of $1,035 for every person in the U.S. — or more than $4,000 per person per year if you count "quality of life" costs, like "physical pain, disability and emotional impacts."
Those invisible costs are layered on top of the roughly $12,000 a year the average U.S. household consciously spends on their vehicles.
But so much of America has been designed around cars that it is very difficult to live without them … except in a few pricey places.
"A walkable, bikeable, transit-rich neighborhood like the one I live in in Brooklyn, New York, is a luxury good," says Goodyear. "It is not affordable for the vast number of Americans. And that is just to me criminal, that we have created a built environment where walking is so endangered that you have to be rich to live in a place where it's safe to walk down the street."
This is a modern American paradox: Cars carry the price tag of a luxury good, but living a car-free life is a different kind of luxury, mostly available only in very expensive zip codes.
Goodyear thinks that can change.
"It's extraordinarily expensive to build and maintain the amount of automobile infrastructure that we're talking about," she says. As the price of cars becomes more burdensome, she thinks, more communities could embrace walking, biking or public transit.
Heather Long, the economist, is more skeptical. She thinks drivers are more likely to turn toward smaller, cheaper vehicles, or maybe ridesharing. But she doesn't write off the possibility of change entirely, noting that other countries have managed to embrace more modes of transportation.
Americans spend, on average, 17% of their household budgets on transportation, with the vast majority of that going toward cars. In Europe, where public transit is more widely used, the average is 12.5%.
Pineda, in El Paso, says it would be nice to live someplace where her kids could easily take public transit or walk to work. But that's not where they're living now.
So they're swapping tunes on their many shared drives … and saving up to someday buy another vehicle.
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