Car ownership in the US is shifting from necessity to luxury
B. Naumkin
39% of Americans can no longer afford a car. With average annual costs exceeding $12,800, car ownership is becoming an expensive luxury. Learn more.
Car ownership in the US is increasingly shifting from a household necessity to an expensive luxury. According to a study by LendingTree obtained by 32CARS, 39% of Americans surveyed said they can no longer afford a car.
The financial strain isn't just from the purchase price—it's the ongoing costs. Average annual car loan payments amount to $7,275 (about €6,700). Insurance adds another $2,277 (roughly €2,100). Fuel costs $2,105 (about €1,940), and maintenance runs $1,184 (around €1,090).
Insurance has seen the steepest rise in recent years, up 37.5% since 2021. That outpaces income growth, which rose 23.9% over the same period. Consequently, even existing car owners are feeling the financial squeeze.
Financial experts typically recommend that car payments stay under 10% of monthly income, with total car expenses capped at 20%. Yet for many Americans, the loan payment alone is nearing that threshold. On average, borrowers spend 15% of their income—$12,841 annually (about €11,800)—on their car.
Buyers are adjusting their habits. 21% have postponed their car purchase; among Gen Z, that share hits 27%. Another 16% settled for a cheaper model, 13% are holding onto their old car longer, and 12% have abandoned the idea of buying altogether.
Seven-year loans lower monthly payments but introduce a different risk: borrowers pay interest for longer and could end up owing more than the car's value. With high insurance and fuel costs, a car in the US is becoming less a symbol of freedom and more a serious line in the budget.
