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 above the national average of $6,684. Factors contributing to these costs include insurance coverage, taxes, maintenance, and gas. Georgia topped the list with the highest cost of owning a car at $8,249 per year.
One of the key findings of the study is that the cost of owning a car in New Jersey could actually be lower than in some Midwestern states. This is due in part to the fact that New Jersey drivers use their cars less, with access to public transit options and walkable areas reducing the need for constant driving. On average, New Jersey drivers cover about 11,000 miles per year, compared to the national average of 15,000 miles.
The decline in demand for pickup trucks is also impacting the cost of owning a car. While sedans cost around 60 cents per mile to operate, half-ton pickup trucks can cost as much as $1.06 per mile. This shift in consumer preferences is partly due to the increasing cost of pickup trucks, which now rival the prices of many luxury cars.
The Federal Reserve’s decision to hike interest rates in response to rising inflation has also played a role in driving up the cost of owning a car. Higher interest rates have made car loans more expensive, adding to the overall expenses associated with purchasing a vehicle. 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 owning a car, car insurance rates are also on the rise. Many auto insurers in New Jersey are seeking double-digit rate hikes, citing inflation, increased severity of accidents, and rising costs of auto parts and labor as reasons for the increases. Critics have raised concerns about these hikes, labeling them as corporate greed and calling for more oversight from the state.
Despite the rising costs, some New Jersey communities offer alternatives to car ownership. Cities like Newark, Hoboken, and Jersey City have been identified as top contenders for going carless, thanks to their robust public transportation systems and walkable neighborhoods. While living without a car may not be feasible for everyone in New Jersey, these options provide a glimpse into a more sustainable and cost-effective way of getting around.
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 increased financial burden on motorists. By exploring alternative transportation options and staying informed about changes in the industry, drivers can navigate these challenges and make informed decisions about their car ownership costs.