Society of Certified Senior Advisors: Saving Money on Your Car

Your car is one of your biggest expenses. Luckily, there are a lot of ways to tamp down on costs.

Winston Churchill once said, “Never let a good crisis go to waste.” While he had a world war on his hands, our battle with COVID-19 is the crisis of our times. As many of us transition to working from home, get groceries and goods delivered and drive a whole lot less than we used to, it is a great opportunity to rethink how much we’re spending on wheels.

Have you looked at how much cash you’re dropping just to get around? The average American car owner spends approximately $9,282 per year on their car, which comes out to $773.50 monthly, according to AAA research agency. A lot of factors go into the cost. Type of vehicle, miles driven, and cost of insurance are a few. It is entirely possible to shave down that monthly bill.

Should Older Adults Lease a Car?

You may never have considered leasing a car instead of buying one. But there are a handful of reasons that it may be the best bet, especially as we age. CarProShow cohost Jerry Reynolds shares his advice.

Monthly payments are lower than buying the same car.
There is no or little money down, so you keep a chunk of change.
A lease is easier to get out of in the event you need a mobility van or want to switch cars.
A leased vehicle comes with few extra expenses because it will be under warranty, and some companies cover the cost of maintenance.
A leased car will likely be a newer model and come with safety features such as emergency stopping and blind-spot warnings.
It’s easier for heirs to terminate a lease contract than to sell your car.

Car Payment

If you didn’t pay cash for your car, then you’ve got a monthly payment. “Finance costs accounted for more than 40% of the total increase in average vehicle ownership costs,” in the AAA study, reported John Nielsen, AAA’s managing director for Automotive Engineering & Repair. You could call your lender and refinance your car loan. If you can’t get a lower rate, extending the term of your lease will cut what you owe each month, although you’ll be paying more interest overall. Leasing a car that is wreaking havoc on your bank account? You could go to a site such as Swapalease or Leasetrader to find someone to take over your contract.

Or, you could buy a car that costs a lot less. Pickups and SUVs are all the rage, but buying one is like purchasing a small house — only your car depreciates, and quickly. Most vehicles lose 30% of their value in the first year. You can avoid that loss by buying a vehicle that’s a couple of years old. Do you really need that pickup? They’re the most expensive vehicle to own, at approximately $10,839 per year. Switch to a small sedan for $7,114 on average per year. Oh, but you live in snow country and you have to have a 4WD? Think again. According to Consumer Reports, using snow tires in winter beat out AWD cars that are more expensive to buy and service.

Car Insurance

Owning a car that is cheap to insure — i.e. one that is safe (think Honda CRV, Toyota Corolla and the like) — is a great way to keep insurance costs down. You can also pull your driving record by ordering a copy from the Department of Motor Vehicles. Check if there are any violation points or outstanding tickets. When your record is spotless, see if your insurance company will lower your rate.

Most people like to keep the same insurance company for all their needs, forever. That’s a mistake. Some insurance companies offer great rates to 30-year-olds, but are not such a good deal for older folks. And all companies tend to raise rates over time because they know we all have a lazy gene and we don’t want to check around. Read Mr. Money Mustache’s blog on this topic. Call around every year (your birthday is a good time) to check rates with several different companies, and check for discounts like good driver, home and car bundling, loyalty and special savings by occupation if you are a public servant or engineer.

If you drive an older model vehicle, you can often cut costs in half by dropping collision and comprehensive coverage that pay for damage to your vehicle if you cause an accident. Could you replace your car if it was totaled? Are you willing to bet on the odds that you won’t need to replace it? You can also increase your deductible, which is what you pay out of pocket. Research finds that, on average, increasing the deductible from $500 to $1,000 saves $200 per year.

You’re probably driving less nowadays, and that can lower your insurance premium. Consider a pay-per-mile program offered by Metromile, Allstate, Esurance, Nationwide and Mile Auto. You’ll plug a measuring device into your car’s diagnostic port and pay by the mile.

If your car doesn’t have an anti-theft device, check how much it costs to install one and find out how it would affect your rate. OnStar or LoJack may make sense, or you may get the same discount for etching your Vehicle Identification Number (VIN) onto the windshield. Finally, most states require insurers to lower rates for older drivers. Sometimes, that requires taking a driving skills class, offered online through AAA and AARP. Classes cost about $25; in some cases, what you save will be less, so know the math before you enroll.

Maintenance and Repairs

Don’t scrimp on maintenance, but don’t overpay. Follow the owner’s manual for scheduled maintenance. Most cars have reminders that light up for oil changes, and your mechanic should alert you when other servicing is due, but you’ll want to keep records and know when major servicing is due.

Avoid the dealer for maintenance and repairs. Locate a good mechanic you can trust (word-of-mouth or Nextdoor nextdoor.com are good places to start). There may be some advantages to taking your car to the dealership, but low pricing is not one of them. And before any repairs, check a site such as CarMD to estimate the cost. That way, you can discuss the estimate with your mechanic knowledgeably.

Gas

According to experts, you don’t need to buy premium unless it’s required for your car (find the information in your owner’s manual). A car with great fuel economy is naturally going to cost less. You can use a free app like GasBuddy to find the cheapest fuel near you, but it’s not worth driving a few miles out of your way for pennies on the gallon. Your driving habits will have a much bigger impact: the worst thing you can do is accelerate rapidly. Driving aggressively increases fuel consumption by 30%.

Your tire shop should inflate your wheels for free any time. Most tires come with sensors that will tell you when one is low, or you can do a visual check. Keeping tires properly inflated helps with both fuel economy and even tire wear. Tires should also be rotated about every 5,000 miles (a free service at most places where you buy tires), or whenever your oil is changed.

You may not need, or want, to take all of the steps above to cut down on your expenses. But most people find that by changing a few things — such as shopping for insurance — they can substantially reduce their monthly auto bill. And that can put enough wiggle room in your budget for a better night’s sleep, or even a vacation down the road.