The True Cost of Car Ownership for Young Adults in 2025
The True Cost of Car Ownership for Young Adults in 2025
For many young adults, owning a car feels like a rite of passage—a symbol of independence and freedom. But as costs rise and budgets tighten, it’s worth asking: is having a car really the most cost-effective choice right now?
How Much Does a Car Really Cost?
Owning a car isn’t just about the sticker price. According to AAA’s 2025 “Your Driving Costs” report, the average annual cost of owning and operating a new vehicle is $11,577, or roughly $965 per month. This includes depreciation, insurance, fuel, maintenance, and finance charges¹. Depreciation alone—the loss in value over time—accounts for $4,334 per year2.
Even if gas prices are lower and loan rates drop, car ownership can quickly strain your budget. Add insurance, registration, and unexpected repairs, and it’s clear why some people are reconsidering owning a car.
Transportation Costs Hit Hard
For young adults earning under $35,000 a year, transportation costs can take up a significant portion of income. While owning a car gives flexibility, it also consumes money that could otherwise go toward rent, student loans, or saving for the future.
On the flip side, relying on public transit or rideshare services can cost as little as 5–10% of monthly income, depending on location and travel habits. For young adults living in cities with good public transit, skipping a car entirely can save thousands each year.
Alternatives to Owning a Car
There are plenty of ways to get around without the financial burden of a car:
· Public Transit: Many cities offer affordable monthly passes for buses, trains, and subways. Great for commuting and running errands.
· Rideshare Services: Apps like Uber or Lyft are flexible for occasional trips without the costs of insurance, maintenance, or parking.
· Car-Sharing Programs: Services like Zipcar let you rent a car for a few hours or days, ideal for weekend trips or special errands.
· Biking & Scooters: For shorter distances, biking or electric scooters are cost-effective, eco-friendly, and convenient.
Mixing these options can give you mobility without the heavy financial commitment of full-time car ownership.
1AAA: New Vehicle Costs Drop to $11,577 | AAA Newsroom
2 New Vehicle Ownership Costs Drop but EVs Still Face Higher Price Tag
_______________________________________________________
Making the Right Choice
When deciding whether to own a car, consider:
· How often you need to drive—daily commuting vs. occasional trips.
· Your local transportation options—is public transit or car-sharing convenient?
· Budget priorities—rent, student loans, or saving for future goals.
· Lifestyle and convenience—do you need a car for work, errands, or social activities?
Making an informed decision can help you stay mobile while avoiding unnecessary financial stress.
Conclusion
Cars provide convenience and flexibility, but they come with costs such as insurance, maintenance, fuel, and depreciation. For young adults evaluating their transportation needs, it’s important to weigh these expenses against alternatives. Options like public transit, rideshare, car-sharing, biking, or walking can offer practical ways to stay mobile while managing your budget. Choosing the right mix of transportation methods depends on your lifestyle, location, and financial priorities.
_______________________________________________________
Related Reads:
