5 Car Costs Wrecking Your Budget Worse Than Rent
Are you squeezed in a car title that's costing you more than it keeps you earning?
For most people, it’s necessary to own a car, but that doesn’t mean it always makes economic sense. Some car expenses can end up costing more than your rent if you’re not careful. These costly fixes are what experts say to watch out for to make sure you’re not sinking way more than you need to into your car.
Here are five ways you're burning money on your ride that would be better put toward your future.
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1. Financing
It’s hard to afford to buy a car outright, so you might choose to finance your car over time. The problem is that the interest on these loans can quickly build up.
“Most car buyers under 30 are financing at subprime rates and that changes the total cost of the vehicle entirely,” said David Weisselberger, founding partner and managing attorney of Erase The Case. “A lender charging 18% APR on a $25,000 loan will collect over $12,000 in interest by the time the note is paid off. Younger buyers rarely see the total interest figure disclosed upfront in plain terms. Over a 60- or 72-month term, the car ends up costing far more than it appeared to at the dealership.”
2. Insurance
The price of car insurance can make some people think owning a car isn’t worth it. Forbes reported that the national average cost of car insurance is $2,434 per year. The price can also vary by age. The average 25-year-old pays more than the national average at $2,842 per year. Car insurance prices have been on the rise in the past few years due to the price of parts and labor.
“In the past six years, insurance rates have increased by more than 50% on average,” said Melanie Musson, an auto industry expert with AutoInsurance.org. “Repair and maintenance costs have risen from an average of about $310 in January 2021 to about $450 today.”
3. Fuel
The national average gas price has gone from $3.18 in May 2025 to $4.53 in May 2026, according to AAA. Everyone is feeling the rise in gas prices, and it can definitely start to add up especially with long freeway commutes in traffic, where traffic jams create a lot of stop-and-start inefficiency.
4. Repairs
You can never predict when repairs are going to strike and they seem to get more expensive every time. If recurrent repairs, maintenance and general upkeep all land on your ledger at the same time, it can become a costly bill to carry.
The average cost of a single car repair is about $840, according to Kelley Blue Book. That can definitely equal or surpass your rent budget quickly.
5. Upgrades
You might think improving an element of your car will help its longevity, but in the short term, those costs can really eat into your budget.
While it is usually worth it to make real upgrades — particularly regarding safety, stopping or energy — you also have to calculate the sunk cost of doing so, particularly on older cars. You don't want new parts to outlive the auto itself, and your rent should always be covered first unless the car is too dangerous to responsibly drive.
This is even more key with the nonessentials. If your stereo can wait till the end of the year to achieve new subs of woofing, sink that money into a tax-advantaged investment account first, where it will earn interest all year long.
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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