For many Americans, the cost of simply getting to work, school or the grocery store is becoming financially overwhelming. Rising car payments, soaring insurance premiums, higher gas prices and expensive repairs are combining to push household budgets to the breaking point.
The pressure is felt nationwide, including in the District of Columbia, where transportation costs are climbing alongside housing and food prices. According to insurance data analyzed by Bankrate, drivers in Washington pay an average of $888 per year for minimum auto coverage and about $2,873 annually for full coverage car insurance, or roughly $239 per month for comprehensive protection.
Those figures represent only part of a growing financial burden facing drivers.
Across the country, consumers are confronting rising loan payments, higher fuel prices and mounting repair bills. The combination is forcing many households to reconsider whether they can afford to own a vehicle at all.
Davine Greene, a 24-year-old nursing student in Fort Lauderdale, Florida, said the financial strain of car ownership ultimately pushed her into bankruptcy.
Greene purchased a Kia K5 GT in November 2023. Her monthly car payment alone is $830, while insurance costs another $280 per month. Tires, maintenance and other expenses have added thousands more.
“This car is the bane of my existence,” Greene told The New York Times. “Probably the worst decision I’ve ever made, like, financially speaking.”
Greene said she never missed a payment. But the mounting expenses drove her debt to more than $80,000, not including student loans. She filed for bankruptcy last week.
Nationally, vehicle prices surged during the pandemic when supply chain disruptions limited production and manufacturers focused on higher-priced models. At the same time, rising interest rates made auto loans significantly more expensive.
According to the Federal Reserve, the average interest rate on a 60-month new car loan from banks reached 7.22 in November.
Higher borrowing costs have translated into sharply rising monthly payments. Edmunds, an automotive research firm, reported that the average monthly payment for a new vehicle reached $774 in January, compared with $588 in January 2021.
An increasing share of buyers are taking on even larger loans. More than 20% of new car borrowers agreed to payments exceeding $1,000 a month by the end of last year, a record level according to Edmunds.
Loan payments are only one part of the financial strain.
When fuel, insurance, maintenance and repairs are included, the total cost of owning a vehicle has risen more than 40% since January 2020, according to an affordability index compiled by Navy Federal Credit Union.
Heather Long, chief economist at the credit union, told The New York Times that the pattern has left many consumers struggling to keep up.
“Americans are frustrated by Whac-a-Mole inflation,” Long said. “It’s difficult to plan and leaves middle-class and moderate-income consumers constantly on edge about what will shoot up in price next.”
War Leads to Rising Gas Prices in the U.S., More Challenges
Recent geopolitical developments have added another layer of pressure.
Gasoline prices across the United States jumped rapidly as tensions in the Middle East pushed oil prices higher. The average price of gasoline rose to $3.63 a gallon nationally, up from $2.93 only a month earlier before tensions escalated, according to AAA.
Economists warn that higher fuel costs ripple through the economy by increasing transportation expenses and shrinking the spending power of workers who depend on driving to reach their jobs.
“When gas prices spike, commuting effectively becomes a pay cut,” one corporate executive told Business Insider.
For workers who depend on driving for income, the effect can be even more severe. Some ride-share and delivery drivers have begun rejecting lower paying trips because rising fuel costs make them unprofitable.
“For a segment of gig workers, increasing gas prices are not only immediately painful, but also can sort of inject some fear in their day to day,” said Elizabeth Renter, senior economist at financial education platform NerdWallet, according to CNBC.
Americans Struggle to Pay Back Loans, Afford Insurance
Higher costs are also showing up in loan data.
Auto loans that were at least 60 days delinquent reached 1.45 percent in the third quarter, nearly 28% higher than three years earlier, according to credit bureau TransUnion. Repossessions are also increasing, and more drivers are trading in vehicles worth less than what they still owe on their loans.
The financial squeeze is forcing difficult decisions for many households.
Angelica Akins, a 32-year-old certified nursing assistant in Michigan, lost her primary vehicle when the engine in her 2011 Chevrolet Equinox failed. Without the credit score or savings required to purchase another car, she relied on ride share services to commute to work.
The rides cost her about $1,000 per month.
“You never know how important things are until you lose them,” Akins said.
Eventually, she moved back in with her mother to shorten her commute and share rides, cutting transportation costs.
Others are holding onto older vehicles rather than taking on expensive loans.
The average age of vehicles on American roads is now nearly 13 years, according to Kelley Blue Book.
Antoine Rhodes, a Houston-based hair stylist, said rising operating costs remain a major challenge even though his vehicles are already paid off.
“I remember being younger, and you could just buy a car outright and keep it rolling,” Rhodes said. “Now there’s these high payments. It’s just crazy.”
Insurance costs are also climbing as more drivers go without coverage.
The percentage of uninsured drivers rose to more than 15% in 2023, up from about 11% in 2019, according to the Insurance Research Council. When uninsured drivers cause accidents, insurers spread the risk across policyholders, which drives premiums higher for everyone else.
“More uninsured drivers also has a downstream effect of skyrocketing auto insurance premiums for everyone,” one social media user wrote on X, formerly known as Twitter.
Car Sales Decrease
Meanwhile, the auto industry faces uncertainty.
Analysts reportedly expect U.S. auto sales to fall to about 16 million vehicles in 2026, down from 16.3 million last year. Tariffs on imported cars and parts have also raised prices and forced manufacturers to rethink supply chains.
Despite the slowdown, wealthier buyers are increasingly dominating the market.
Households earning at least $150,000 annually now account for about 43% of new vehicle purchases, according to Cox Automotive. In 2019 they represented roughly one third of buyers.
Lower income households now account for about one quarter of new car purchases, down from more than one third several years ago.
Erin Keating, executive analyst at Cox Automotive, told reporters that the economics of car ownership have changed dramatically.
“When it takes well over 30 weeks of median household income to afford the average new vehicle, personal transportation shifts from a routine household purchase to a discretionary one,” Keating said.
For drivers like Greene, the lesson came at a steep cost.
As she waits for bankruptcy proceedings to conclude, Greene said her next vehicle will be far cheaper.
“I’m going to pretty much just go for something to get me from point A to point B,” she said.