generic How Much You Can Save Annually by Becoming a One-Car Family
It’s no secret that car ownership is expensive. From fuel to maintenance and insurance, cars can cost you big bucks long after you’ve paid them off. Despite the high costs though, the average household in the U.S. had 1.88 cars in 2017, up slightly from 1.86 in 2009.
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That means despite the potentially high expenses, many families have two cars (or more) in their driveways. While there are several benefits to having multiple family vehicles — the most obvious being more transportation options and flexibility — you may be considering downsizing to save money.
Especially now with used car prices hitting an all-time high, reducing the number of cars in your driveway could be doubly beneficial. You might be able to decrease your annual car costs while also being able to sell your car for a price that would have been almost laughable just a few years ago.
With all that in mind, let’s take a look at all the costs — not just those related to gas prices — associated with car ownership. It’ll paint a clear picture of how becoming a one-car family could lead to big savings in the long run.
Vehicle Financing
Potential savings: $3,600
If you purchased one of your cars within the past few years, you might still be financing it. In fact, with rising sticker prices, some people are locking themselves into loan terms as long as 84 months (also known as seven years). Richard Reina, product training director at CARiD.com, suggests a monthly cost of $300, or $3600/year savings on financing alone.
Fuel Costs
Potential savings: $500
As mentioned earlier, we often think about fuel costs as our biggest operating expense. And even as more people switch to electric vehicles, there are bound to be some fuel costs, even if the fuel source is electricity. So even if you have to drive your first car more due to selling to the second one, Reina says you could save up to $500 per year on fuel costs if the car you keep has better fuel economy.
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Insurance
Potential savings: $750
Insuring a car isn’t cheap, and you’ll be expected to pay monthly premiums regardless of how much you use it. Hence, becoming a one-car family can help you save significantly on insurance. Car insurance varies quite a bit depending on the driver’s age and where you live, but Reina estimates annual savings here of about $750.
Maintenance
Potential savings: $467
Maintenance is also a big expense, especially if you have an aging gas-powered car. Aside from oil changes, there are other expenses such as wiper blades, tires, and engine and oil filters. It all adds up — Reina estimates annual savings of $467 on maintenance.
Parking Passes
Potential savings: $1,200
If you live at an apartment complex, you may have to pay for parking. It’s also common to pay for parking if you work downtown in a big city, and parking can be expensive. Reina estimates annual savings on parking passes to be $1,200 with one less car.
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Perfect Time to Sell
The focus here has been on the cost savings of becoming a one-car family, but what about the income from the sale of your second car? Used car prices remain high as they have been for much of the pandemic, so selling your second family car could provide an immediate payoff.
“New cars are selling for over MSRP, and used cars are selling for near the same price as new cars,” says Jay Zigmont, CFP and founder of Live, Learn, Plan. “Selling a car now can not only get you out of a loan (or lease) but may actually put cash in your pocket,” Zigmont says.
Thus, it’s worth checking the Kelley Blue Book value of your car, especially if it is relatively new and has low mileage. Either way, it’s a good idea to check as you may find that the payoff far outweighs the potential downside of having one less vehicle.
Check Out: How To Find the Best Deals on New Cars, Used Cars and Leases
Downsides of Downsizing
As for the potential downsides to becoming a one-car family, it’s only reasonable to consider the cons before you go from eight wheels to four.
The most obvious drawback of becoming a one-car family is having flexibility. “The downside would be that you may have to use ride-sharing apps such as Uber or Lyft if the car is in use by another member of your family,” says Sean Burke, vice president and director of institutional money management at Stuart Estate Planning Wealth Advisors. “This has a cost which can vary depending on where you live and how far you have to travel.”
As Burke mentions, how costly it will be to use rideshare services will depend on where you live. They are inevitably more convenient and cost-effective in large urban centers than in rural areas. Urban areas also have services like Zipcar, which can be more cost-effective than owning for those who drive infrequently. If you live in a secluded rural area, that may not be an option, so where you live is a big factor here.
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This article originally appeared on GOBankingRates.com: How Much You Can Save Annually by Becoming a One-Car Family
