It’s getting more expensive to own and operate a car in New Jersey and across the nation.
Thank factors like inflation and higher interest rates, which have driven up the price of insurance and the cost of buying a car. There are also geopolitical and climate factors that drive the risk for higher gas prices in the near future.
A study released Tuesday by personal finance website BankRate found that New Jersey motorists on average spend $6,802 a year on their car, versus the national average of $6,684.Georgia had the highest cost to own a car at $8,249 a year.
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"New Jersey ranks kind of in the middle at number 25” out of 50 states, said BankRate analyst Shannon Martin.
For New Jersey, the costs include:
- $2,412 on insurance coverage
- $1,682 on taxes
- $1,214 on maintenance
- $1,494 on gas
This is the first year BankRate ran this kind of study, which relies on cost estimates surrounding a 2022 Toyota Camry with full coverage car insurance, being driven by a 40-year old with a “clean driving record and good credit.”
In 2023, the average cost was roughly 81 cents per mile for a car driven 15,000 miles a year, according to travel club AAA.
“The cost of owning a car in New Jersey could actually be lower than some of the Midwestern states,” said Martin, the BankRate analyst. New Jersey drivers use their cars less because of access to public transit options and walkable areas in the state, Martin said, and on average drive about 11,000 miles a year.
Decline in demand for pickup trucks
If you’re on a budget, you have the option to buy a sedan, which costs about 60 cents a mile, according to the AAA study. But if you have the extra money, a half-ton pickup truck costs $1.06 a mile.
“The once popular pickup truck is now seeing a slight decline in demand as these vehicles have become increasingly expensive, rivaling the price of many luxury cars,” said Greg Brannon, AAA’s director of automotive research.
The Federal Reserve hiked interest rates 13 times since the COVID-19 pandemic in a bid to tame inflation, which rose to a 40-year high in 2022. This month, the Federal Reserve has signaled a possible rate cut in September.
Higher interest rates have added to the expenses associated with buying a car, Brannon said, especially with a loan.
According to credit monitoring company Experian, the average interest rate at the start of 2024 was 6.73% for a new car and 11.91% for a used car; down from a 15-year high seen last year, according to CNN.
In 2019 before the COVID-19 pandemic, the average cost of a 10-year-old car was less than $9,000. It was over $12,000 in 2024, according to online search company iSeeCars.com.
AAA reported last year that the average cost for a new car was nearly $35,000, up 4.7% from the prior year, while annual finance charges roughly doubled to $1,253 a year.
Sky-high car insurance rates
Most of New Jersey’s auto insurers are asking for double-digit rate hikes this year. The highest is Metromile Insurance Co., which is seeking a 63.1% rate increase, followed by Farmers P&C Insurance Co, which is seeking a 43.7% increase.
The higher increases are par for the course for an industry beset by inflation, an increase in the severity of accidents, and more expensive auto parts and costs of labor.
Critics have pushed back, decrying the hikes as corporate greed, and argued that the state could play more of a watchdog role with these increases.
A representative for the New Jersey Department of Banking and Insurance, which has the final say over car insurance rate increases, could not be immediately reached for comment on Tuesday.
Can New Jerseyans live without a car?
New Jersey is known for its sprawling suburbs, and few cities offer the chance to ditch the car entirely.
There are some exceptions. CoworkingCafe — a coworking space directory — last year ranked Newark as one of the top New Jersey communities in which to go carless.
“Given its status as a major transportation center with one of the busiest airports in the nation, as well as a transit system that plugs seamlessly into the greater New York City area, it’s no wonder that Newark’s public transportation is a great alternative to commuting by car,” the study reads.
Other communities such as Hoboken and Jersey City have been top contenders for going carless.
This article contains information from USA Today
Daniel Munoz covers business, consumer affairs, labor and the economy for NorthJersey.com and The Record.
Email:munozd@northjersey.com; Twitter:@danielmunoz100andFacebook
