Last year presented drivers with challenges caused by high vehicle prices and worsened by steep auto loan interest rates.

But even as car prices begin decreasing, ongoing high interest rates make affordability a challenge for drivers across generations. Jerry’s State of the American Driver report found that for 57 percent of drivers, their choice to buy or not buy a car in 2024 was based on vehicle prices.

Many drivers have other debts, too, which may make affording a down payment and monthly payments harder. A recent Bankrate emergency savings study found that 36 percent of U.S. adults have more credit card debt than emergency savings.

Consider how vehicle expenses have impacted drivers across generations over the last year.

Auto Car Purchase
Key vehicle cost statistics
  • More drivers are focused on vehicle prices. 57% of drivers said high prices heavily impacted their thinking about whether to buy a car. (Jerry)
  • Some buyers are stuck with too-large car payments. 35% of millennials with car payments spent more than 20% of their take-home pay on their car loan. (Jerry)
  • Inflation has impacted savings goals. 63% of Americans say that inflation has resulted in them saving less. (Bankrate)
  • Insurance is expensive across the U.S. The average cost for full coverage insurance is $2,543. (Bankrate)
  • More drivers are considering buying this year. 42% of drivers surveyed reported interest in planning a car in the coming year, compared to 23% last year. (Jerry)

Price drives purchase decision for more than half of drivers

With many having less money saved and interest rates remaining high, the majority of potential buyers are focused on vehicle price. Jerry’s recent study found that 57 percent of drivers reported that high prices were the main reason for buying or not buying a vehicle.

And those hitting pause on a new purchase were not from one age group. Shoppers across generations focused on prices. Of millennials and Gen Z, 60 percent and 68 percent, respectively, were influenced by vehicle prices.

Prices are inching down in 2024. Used vehicle prices are down 4 percent and new down 3.5 percent compared to January of last year, according to Cox Automotive.

Increasing supply drives these changes. New vehicle supply hit its highest level since June 2020 at the start of February, Cox found. Fuller dealership lots will likely create a better shopping experience for drivers this year. Increased supply is already leading to more available purchase incentives, such as car rebates.

“Despite some recent softening in used car prices, the sticker prices for both new and used vehicles are a lot higher than they were just a few years ago and we’re not going back to 2019 pricing on automobiles,” says Bankrate chief financial analyst Greg McBride, CFA.

Of those not planning on buying this year, 86 percent told Jerry they would be open to buying if vehicle prices fell. But small price decreases won’t fix the affordability issue.

As the Federal Reserve has increased rates to fight inflation, high interest rates have created expensive monthly payments for drivers across the credit spectrum. Recent Experian data found that the average interest rate for new cars was 7.03 percent and a whopping 11.35 percent for used.

Buyers are well aware of this reality, too — 48 percent of those not buying in 2024 said falling interest rates could change their minds.

“Higher interest rates haven’t helped but the real culprit in higher monthly payments is the actual prices being paid and amounts financed,” McBride says.

Steep vehicle costs impacting all age groups

In 2022, Gen Z and millennials were 90 days past due on $20 billion in auto loans. However, data from the tail end of 2023 found that the youngest drivers weren’t the only ones struggling with loan affordability.

Federal Reserve data from the fourth quarter of 2023 found that the 30-day delinquency transition rates of all generations have been rising over the past two years.

Ninety-day delinquency rates are rising across generations, too. And while the youngest generation still leads in the transition to severe delinquency, 4.79 percent at the end of 2023, those 30 to 39 follow close behind with 3.61 percent.

Henry Hoenig, data journalist for Jerry, sees the increase in delinquency as a broad problem across generations.

“Gen X and especially baby boomers, they’re gonna have more assets that they might be able to dip into, but nobody really wants to have to get into savings to make their car payment,” he notes.

And as the recent Bankrate survey found, many Americans are struggling to reach their savings goals. Over 65 percent of U.S. adults reported that they’d be worried about having enough savings to cover their living expenses for the next month if they lost their primary source of household income.

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In the news
Data from Fitch Ratings reported auto loan delinquency rates are at their highest level in almost 30 years.


The cost of car ownership has led to tightening budgets

Steep vehicle costs have impacted more than just drivers’ choice to buy or not buy a car this year. The Jerry study found that 58 percent of American drivers cut down spending in other categories because of the high cost of owning a car.

The study also found that 69 and 80 percent of millennials and Gen Z, respectively, had to cut spending due to vehicle costs.

The car affordability crisis is impacting all Americans, forcing many to stretch their budgets to be able to afford driving.

— Travis BowieGeneral manager, auto finance at Jerry

Younger generations are dealing with an especially hard hand financially.

“Factor in high rents, student loan payments and the higher cost of living after three years of high inflation and you have the recipe for a budget that is stretched to the very limit,” McBride explains.

Today, even driving used cars can stress the typical household’s budget.

Picture the median American family, with an after-tax income of $64,240 (according to 2022 U.S. Census Bureau data) and a single used car. The average used car payment is $533 per month, according to Experian. Over a year, it would cost $6,396 — about 10 percent of their total income.

But some households require more than one car. Making two payments would swallow 20 percent of their income. And that doesn’t account for other vehicle ownership costs. Factor in average insurance and maintenance costs for driving about 15,000 miles a year, and the cost rises to 33 percent of the household’s income.

The cost of vehicle ownership also includes unexpected trips to the mechanic. And many Americans struggle to maintain enough savings to afford such costs. According to Bankrate’s emergency savings report, over half of U.S. adults wouldn’t cover an emergency cost, like a car repair, of $1,000 or more from their savings account.

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Bankrate tip
Your car payment should not exceed 10 to 15 percent of your take-home pay. The sum of your vehicle-related costs should stay under 20 percent. Use an auto loan calculator to check where yours falls.

What to do if you’re struggling to afford your car payment

Are you at risk of being delinquent on your auto loan or cutting your spending to afford it? Other options are available. Consider the following ways to manage your car payment if it has become too expensive.

  • Work on your credit score: Most lenders use your credit score as the primary determinant of acceptance. You can improve your credit score by taking the time to pay down debts or exploring self-reporting. Once your credit is in a better position, explore refinancing your current loan to sign off on a more manageable monthly payment.
  • Sell your vehicle: If your all-in vehicle costs are too much for your budget, selling your vehicle and leasing can also be a good route. Leasing instead of buying is often cheaper and can give you time to build up your savings for a future vehicle down payment — especially when rates drop.
  • The study (that was conducted January 2024) was conducted by SSRS on its Opinion Panel Omnibus platform. The SSRS Opinion Panel Omnibus is a national, twice-per-month, probability-based survey. Data collection was conducted from January 19 – January 21, 2024 among a sample of 1031 respondents. The survey was conducted via web (n=1001) and telephone (n=30) and administered in English (n=1005) and Spanish (n=26). The margin of error for total respondents is +/- 3.6 percentage points at the 95% confidence level. All SSRS Opinion Panel Omnibus data are weighted to represent the target population of U.S. adults ages 18 or older.

    Bankrate utilizes Quadrant Information Services to analyze 2024 rates for ZIP codes and carriers in all 50 states and Washington, D.C. Rates are estimates and weighted based on the population density in each geographic region. Quoted rates are based on a 40-year-old male and female driver with a clean driving record, good credit and the following full coverage limits:

    • $100,000 bodily injury liability per person
    • $300,000 bodily injury liability per accident
    • $50,000 property damage liability per accident
    • $100,000 uninsured motorist bodily injury per person
    • $300,000 uninsured motorist bodily injury per accident
    • $500 collision deductible
    • $500 comprehensive deductible

    Our base profile drivers own a 2022 Toyota Camry, commute five days a week and drive 12,000 miles annually.

    These are sample rates and should only be used for comparative purposes.

    The study (that was conducted December 2023) was conducted by SSRS on its Opinion Panel Omnibus platform. The SSRS Opinion Panel Omnibus is a national, twice-per-month, probability-based survey. Data collection was conducted from December 15 – December 17, 2023, among a sample of 1036 respondents. The survey was conducted via web (n=1006) and telephone (n=30) and administered in English (n=1010) and Spanish (n=26). The margin of error for total respondents is +/-3.6 percentage points at the 95% confidence level. All SSRS Opinion Panel Omnibus data are weighted to represent the target population of U.S. adults ages 18 or older.