Drivers Are Spending 20 Percent of Their Monthly Income on Their Cars

Owning a car has become increasingly expensive for Americans, with two in five drivers in the country spending on average 20 percent of their monthly income on their vehicles, according to a recent study.

A survey by the MarketWatch Guides team asked a sample of 1,000 drivers across the U.S. how much they spend on their cars—including for insurance and gas—and how this impacts their personal finances, as well as their general wellbeing. The results shine a light on the struggle many Americans are facing when it comes to car ownership.

While gas prices have cooled down after reaching a peak of $5.01 a gallon in June 2022 and the price of a gallon of regular fuel now hovers around the $3 mark on average nationwide, the cost of car repairs and car insurance is still going up.

According to the survey, a majority of 52 percent agreed that their car expenses have increased over time. That is due to a combination of factors, including a rise in inflation that has increased the cost of vehicle parts and labor.

According to a recent study by Bankrate, Americans spend 3.4 percent of their wages on coverage for their vehicles. Bankrate analyst Shannon Martin told Newsweek that the increase in car insurance premiums nationwide is due to inflation increasing the cost of vehicle parts and labor, while "car crash fatalities increased by over 10 percent and extreme weather claims become more frequent and expensive."

Auto repair costs have also shot up in the past two years, mainly due to labor and supply shortages and heavier, more complex vehicles.

Two in five drivers, according to the MarketWatch survey, feel their car expenses have affected their ability to afford other essentials, while over one in eight said they found themselves living paycheck to paycheck because of their car costs. One in two feel they aren't able to put away savings or invest because of how much they spend on their vehicles.

One in 10 respondents said they spend over 30 percent of their monthly income paying car loans. Drivers who leased their vehicle were more likely to spend more on their cars than owners, as a long-term lease can often be more expensive than purchasing a car.

But things aren't necessarily much better, financially, for owners. Some 33 percent said that buying a car set them back financially. Nearly two in five said they cannot afford necessary repairs and upgrades for their vehicles, while 25 percent admitted to owning a car that is technically beyond their budget.

Among the 1,000 drivers surveyed by MarketWatch, 91 percent were car owners and 9 percent leased the vehicle they drove.

When it comes to the individual costs that are weighing drivers down, 58 percent of respondents said fuel was the biggest factor straining their budget, followed by unexpected repairs (47 percent), routine maintenance (44 percent), insurance premiums (41 percent), registration and licensing (26 percent), parts and auto loan payments (both 16 percent).