As we head into 2023, Americans may need to start budgeting even more for car insurance. The cost of owning and operating a car is on the rise, with factors like inflation, higher interest rates, geopolitical issues, and climate factors all contributing to the increase in expenses. In New Jersey and across the nation, motorists are feeling the pinch as the price of insurance and the overall cost of owning a car continue to climb.
A recent study by personal finance website BankRate revealed that New Jersey drivers spend an average of $6,802 per year on their cars, slightly higher than the national average of $6,684. Factors contributing to these costs include insurance coverage, taxes, maintenance, and gas. Georgia tops the list with the highest cost to own a car at $8,249 per year.
One of the key findings of the study is the decline in demand for pickup trucks. While once popular, pickup trucks are now facing a decrease in demand due to their increasing cost, which rivals that of many luxury cars. Sedans are a more budget-friendly option, costing about 60 cents per mile, compared to the $1.06 per mile cost of a half-ton pickup truck.
The Federal Reserve’s decision to hike interest rates in response to rising inflation has also impacted the cost of buying a car. Higher interest rates have made car loans more expensive, adding to the overall expenses associated with car ownership. However, recent signals from the Federal Reserve suggest a possible rate cut in the near future, which could provide some relief to consumers.
In addition to the cost of buying a car, car insurance rates are also on the rise. Many auto insurers in New Jersey are seeking double-digit rate hikes, citing inflation, an increase in the severity of accidents, and rising costs of auto parts and labor. Critics have raised concerns about these rate hikes, calling them corporate greed and urging the state to play a more active role in regulating them.
Despite the rising costs of car ownership, some New Jersey communities offer alternatives to owning a car. Cities like Newark, Hoboken, and Jersey City have robust public transportation systems that make it possible for residents to live car-free. With access to public transit and walkable neighborhoods, some New Jerseyans are finding that they can get by without a car, saving money on insurance, maintenance, and gas.
In conclusion, as we look ahead to 2023, it’s clear that Americans will need to budget even more for car insurance and overall car ownership expenses. Factors like inflation, higher interest rates, and rising insurance costs are all contributing to the increase in expenses. However, with careful planning and consideration of alternatives like public transportation, New Jerseyans and Americans across the nation can navigate these challenges and find ways to manage the cost of owning a car in the coming year.