We’re always looking for ways to save money and energy at home, but sometimes we forget to consider our vehicles. But when you take depreciation, interest, maintenance, and insurance into account, the cost of owning a car nearly eclipses what minimum wage earners make yearly.
According to AAA, if you drive a new vehicle 15,000 miles a year (which is what Americans drive on average), you’re paying $10,728 a year or $894 a month in car ownership costs. If you’re buying a car based on the 20% income rule, you need to make $50k a year to afford it.
Considering the median income in the U.S. was $44,225 in 2022, we know that a $900 car ownership cost isn’t feasible for over 50% of Americans, but they still need to drive regularly.
Fortunately, you can slash their car costs quickly without permanently hanging up their keys.
How to Reduce the Running Costs of Your Vehicle
Parents can get ahead of car-based debt if they teach their kids about money. But If current drivers are looking to reduce their monthly car costs, here are some steps they can take.
1. Drive Safely and Avoid Aggressive Behaviors
If you want to preserve the life of your car (and your own), try driving more slowly and carefully. When driving fast, the engine has to work harder to keep up, and wind resistance can play a small part in fuel costs. Risky driving behaviors, like speeding, reduce fuel efficiency by 15%.
However, in stop-and-go traffic, rapid acceleration on the freeway can make that number go up to 30% or 40%. Leaving a few minutes earlier can save you a lot of money in the long run.
Always remember that manufacturers design cars to get the best fuel economy at the speed limit unless they make a mistake as they did with some of the worst American cars. Smaller cars are more sensitive to being pushed hard to go faster and will often gobble up gas.
2. Raise Your Insurance Deductible (if you Can Afford it)
Deductibles are what you pay before your insurance policy kicks in. A higher deductible can lower your premiums significantly, possibly by 40% or more. However, you can save 15% to 30% per month if you increase your deductible by $250 to $500, which may be worth it.
Keep in mind that a high deductible means you’ll pay more out-of-pocket when you make a claim. Therefore, you should only ask for a higher deductible if you drive less than 15,000 miles a year, take short trips, or you have enough money stashed away in case of an accident.
3. Ditch the Premium Fuel and Gas Companies
Gas prices are up nearly 50% since 2021, forcing millions of Americans to drive less or take public transit. While there isn’t a lot you can do to lower your car’s gas bill (besides buying an electric vehicle), you can save money at the pump if you ditch premium fuel and gas companies.
Just because you don’t recognize the symbol at the pump, it doesn’t mean the gas station is shady. But if you’re concerned, look up online reviews via Google from local customers.
Many small gas stations purchase gas from name-brand oil companies, and they’re the first to slash prices. There’s also a possibility you’re paying more for gas than you have to because you’re buying premium. Check your owner’s manual to see if your car runs on regular fuel.
4. Combine Your Homeowners and Auto Coverage
Many insurers will offer discounts if you combine two or more types of insurance, like auto coverage and homeowners insurance. You may also get a price reduction if you have more than one car insured with the same company or if you’ve been with the same company for years.
While shopping online for the best car insurance deal is the best way to save, you can use competing car insurance quotes to potentially lower your bill. Since insurers want to keep you as a customer, you may get a discount if you threaten to leave unless they match their competitors.
5. Perform General Car Maintenance By Yourself
Mechanics charge a premium for maintenance services almost anyone can perform. Drivers are able to check their oil and coolant levels, change their air filters, and check their tire pressure and tread depth without a professional. You can even replace parts with the right equipment.
For example, the average driver can change the headlight, turn signals, brake, and parking light bulbs. Spark plugs, batteries, and brake pads are easy to replace, even if they look intimidating.
Most cars come with a tire-changing kit, so keep this in your truck for when you need it. Throw in a spare tire while you’re at it because unless you have roadside assistance, you’ll have to pay to tow your vehicle if you get a flat. A simple five or ten-mile local tow can cost $50 to $125.
6. Shop Online for a Better Car Insurance Deal
Combining your homeowners and auto coverage from the same insurer isn’t the only way to save on car insurance. In fact, even when accounting for loyalty discounts, you’ll almost always lower your monthly vehicle insurance bill if you switch insurers, so consider shopping around.
Insurance comparison sites can hook you up with insurance after a serious offense takes place, such as a DUI or speeding. If you’re in the process of reinstating your license, you can purchase cheap SR-22 insurance, which you’ll need in some states to prove you have liability coverage.
7. Ask Your Boss to Work From Home (Full or Part-Time)
Despite what most employers want, the work-from-home trend is here to stay. That’s a great thing for commuters, as full-time remote work can save $5,000 to $15,000 on commuting costs per year, depending on their location. For this reason, ask your boss if you can work from home.
Self-employed people who work from home can write off their car expenses if they use it for business. They can also deduct their internet, phone, utilities, and rent up to a percentage.
If you work from home but don’t need your car for work, switch to pay-as-you-drive insurance. Drivers will be charged based on the number of miles they drive instead of what the insurer thinks they drive. A safe driver can slash insurance costs by $500 yearly with pay-as-you-drive.
Reducing your monthly car costs doesn’t always mean limiting your time on the road. In fact, many drivers can cut down on their bills if they shop around or gain new skills. Simply driving safer can subtract the demerit points on your license, leading to better overall insurance rates.
But that’s not all. Learning how to maintain your car and switching your auto insurer are some of the easiest ways to save money. If you can manage to work from home some of the week (or switch to a remote-only position), you could effectively eliminate all job-based commuting costs.