Many drivers are stressed out by high car loans and insurance premiums. (iStock)
Buying a car is becoming increasingly expensive, with one in 10 drivers spending more than 30% of their monthly salary on a car loan. MarketWatch survey results revealed.
The survey asked 1,000 drivers how their monthly car payment affected their finances and stress levels. About 40% of drivers can’t afford necessary repairs or upgrades to their cars, the survey found.
Auto loans also prevent drivers from meeting other financial needs. His 40% of drivers say they can’t afford basic necessities due to high car prices.
Driver sacrificed spending in many other areas to make ends meet. About 25% stopped eating out, and 13% of those surveyed stopped having food delivered and used the money to pay for car-related expenses.
A high car loan isn’t just a financial burden. According to a MarketWatch research report, 20% of drivers say they are “very” or “extremely” stressed due to overwhelming car costs.
While you may not be able to save money on your car loan, you can reduce your car insurance costs by considering different insurance quotes. Credible makes comparing quotes easy and takes just minutes.
Purchases of new cars are increasing, but insurance is also being affected.
Auto loan delinquencies are on the rise
Car loans have become expensive, and some drivers are unable to make their monthly loan payments. According to , approximately 7.7% of auto loans were delinquent on an annualized basis. Federal Reserve Bank of New York.
“Transitions into delinquency on credit cards and auto loans remain above pre-pandemic levels,” said Wilbert van der Klaau, economic research advisor at the New York Fed. “This indicates increased financial stress, especially among young people and low-income households.”
Loan balances increased significantly in 2023, continuing the growth pattern we started seeing in 2020. Auto loan balances increased by $12 billion in the last quarter of 2023, bringing total balances to $1.61 trillion.
You can save money on car-related expenses by reducing your car insurance costs. Comparing multiple insurance quotes can save you hundreds of dollars a year. Visit Credible today to compare quotes for free.
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Car insurance premiums continue to rise
In addition to expensive loans, drivers are also seeing steadily rising car insurance premiums.
The auto insurance index tracked by the U.S. Bureau of Labor Statistics is 1.5% increase It also rose 1% last month. For the whole of 2023, the index rose by 20.3%.
Insurance costs are rising due to several factors. Mainly inflation, supply chain problems and an increase in accidents.
COVID-19 has caused inflation to rise over the past few years, causing repair prices to skyrocket. Addressing supply chain issues due to labor shortages will further increase repair costs.
When a customer makes a claim and requires expensive repairs, the insurance company passes on the cost in the form of higher monthly premiums. State Farm Explains.
The number of drivers on the roads has decreased due to the impact of the new coronavirus, but now more people are returning to work, so accidents are increasing. Approximately 56% of drivers use video chat or record video. This has led to an increase in accidents and an increase in insurance claims.
Furthermore, more than half of the respondents Another state farm survey People are admitting to reading and sending texts while driving, which is also contributing to the increase in accidents.
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