By Haden Kirkpatrick, Esurance Head of Marketing Strategy and Innovation
Despite the majority of cars being parked 90 percent of the time, cars are the second biggest expense in the average American's budget. Aside from the actual purchase of the vehicle, owners also must pay for maintenance, insurance, repairs, gas, and cleaning costs. And don’t forget parking!
If you're looking to cut your spending, we've got you covered with this list of tips to slash some of the major auto costs and keep more money in your pocket.
1. Buy or Lease a Pre-Owned Vehicle
In 2018, the average cost of a new car is $31,455. That's plenty for an asset that loses value as soon as you drive it off the lot.
Buying a pre-owned car can save you tens of thousands of dollars. This consumer report breaks down some of the best used cars by price. A 2015 Toyota Corolla comes in between $12,475 and $15,400, less than half the price of a new car.
Leasing a car is a great option for people who are looking for a lower monthly payment. Lease agreements usually allow you to start with a smaller down payment than financing a car, and when your lease ends, you return the car. If you want to keep the car at the end of the lease, you may be able to buy it out at a price you agree to when signing the lease agreement.
When buying or leasing a pre-owned car, it's critical to do your research and know the car's history. Test drive it to see how it runs and make sure that the owner has the proper documentation before you buy. Having a mechanic inspect it before buying could save a lot of headaches.
2. Lower Your Insurance Rate
Car insurance is mandatory in most states. That means there should be plenty of insurers ready to compete for your business. Start by comparison shopping. Shop around for the plans that'll provide the coverage you need for the lowest rate. Insurers may offer different discounts based on your professional status or driving history.
Once you've found the right policy, make a point of calling your insurance provider each year to see if you qualify for any new discounts or if a change in your circumstances could lower your rate.
3. Be Smart About Gas Prices
Gas prices are every driver's nemesis. They fluctuate with the seasons and your location. Driving less will always be the best way to save on gas, so try incorporating more biking or walking into your routine wherever you can, especially for short distances.
You can also save money on gas by skipping regular stations and opting for warehouse membership gas stations, like Costco or Sam's Club. A recent search on GasBuddy, a site that helps you find cheap gas around the country, shows that in Portland, OR, Chevron stations charge $3.79 per gallon most frequently. The same site listed a Costco location in Portland with a gas price at $3.05.
A fuel-efficient car, like a Toyota Prius or a Chevy Volt, will also save you money at the pump (while an all-electric car means you could drive right past it). Finally, keep your tires properly inflated and increase your speed slowly (rather than gunning it) to reduce how often you need to fill up.
4. Use Tech to Monitor Your Driving
Some mobile apps and tools could help monitor your driving habits. A telematic device, for example, easily plugs into your car and collects data like how many miles you drive, how fast you drive, and how hard you brake. Installing one of these devices can not only give you insights into your fuel consumption, it can also save you money on insurance. Some auto insurance companies, like Esurance, have designed mobile apps that perform similar functions, allowing you to not only monitor your driving habits, but also earn car insurance discounts for driving safely.
5. Look to the Future
It's looking more and more like self-driving cars are the way of the future. Over the next few decades, personal car ownership may become less necessary as autonomous vehicles take to the roads and become our new taxis. A recent Esurance report found that a family that forgoes car ownership in favor of driverless ridesharing could save up to $4,100 in annual transportation costs. Adjusting to a car-less lifestyle may be a challenge for some, but in the long run, it'll likely be the most affordable mode of transportation.
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