What It Really Costs To Own a Car in Your 20s vs. Your 40s
The costs of car ownership go beyond the price of the vehicle itself. While the monthly payment may seem manageable, car buyers have to consider the additional costs like insurance, maintenance and repairs. They must also consider the fact that these costs don't affect all drivers equally. In fact, younger drivers can end up paying more than those in their 40s due to things like higher premiums.
To better understand what car ownerships looks like across different decades of life, MoneyLion reached out to experts for their insights.
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Why Car Ownership Is More Expensive in Your 20s
The biggest cost difference between younger and middle-aged drivers is often insurance, according to Joshua Morrison, president of Bad Driving Record.
“While still driving safely and maintaining the same vehicle and coverage, you could easily be paying double, if not triple, what you would when you reach your 40s just because insurance companies price based on group statistics and not on individual drivers."
The National Highway Traffic Safety Administration said this is because drivers under age 25 are the highest risk group for accidents, making the premiums for them higher.
Many younger drivers underestimate how long these higher premiums last, as well.
"If you have no violations, claims or lapses in coverage, your rates should steadily decrease as you get into your mid- to late-twenties, but you likely won't see that significant of a change until you've been driving for several years and have piled up enough years of continuous coverage along with reaching a new age bracket," Morrison said.
The Hidden Repair Costs That Catch Drivers Off Guard
Many younger owners focus on just paying off their auto loans, assuming costs will drop dramatically once the vehicle is paid off. However, that’s when major maintenance expenses often just begin appearing.
Steven Lazaroff, founder of CompareMechanic.com, pointed to expenses adding up on things like tires, brakes and timing components — in other words, “the wear items that don't fail dramatically but show up on a 90,000-mile cycle.”
Given that a full set of decent tires can run between $800 to $1,200 installed; a brake job on both axles is $600 to $1,400 depending on the vehicle; and a timing belt service on most Asian sedans is $800 to $1,500, Lazaroff said younger drivers are often hit with major sticker shock.
"These costs are not optional, not covered by warranty and they all hit somewhere between years four and seven of ownership,” Lazaroff said, which is when younger drivers assume a car is paid off and basically free to keep.
Why Drivers in Their 40s Often Have an Advantage
By their 40s, many drivers benefit from lower insurance rates, longer credit histories and more savings to absorb unexpected repairs. They may also be better positioned to comparison shop and avoid emergency repair decisions.
"The single most underrated cost-control move is finding a mechanic you trust before anything breaks,” Lazaroff said. This is because drivers who have a relationship with a shop “know the going rate for common services in their area and get a second opinion on big-ticket repairs consistently spend the least over the life of the vehicle."
Calculate the Total Cost of Ownership
The smartest comparison between owning a car in your 20s and your 40s is the total amount the vehicle costs over several years.
"Stop thinking about the monthly payment. Think about five-year total cost of ownership. Purchase price, plus interest, plus insurance, plus fuel, plus maintenance, plus depreciation, divided by 60 months." Lazaroff said.
Age Matters in Vehicle Ownership
Age affects vehicle ownership costs more than many drivers realize. Younger drivers should budget for insurance premiums that may stay elevated until their late 20s and plan ahead for major maintenance expenses that typically arrive between years four and seven of ownership.
The key at any age is looking beyond the monthly payment and understanding the full cost of ownership before buying.
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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