How to Reduce Your Car Expenses

Car costs are going through the sunroof. But there are ways to save

Margie Zable Fisher,

AARP

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Published December 29, 2023

a dollar sign wiped into a fogged up automobile windshield to signify high costs and expenses

ANDRE RUCKER

Inflation lurks everywhere when you own a car, it seems. Drive across a bridge? That’ll cost you $5. A simple car wash? $22. New wiper blades? Try the “optimal night clarity” model, $70 a pair.

And that’s just the small stuff. Over the 12 months ending in November, motor vehicle repair costs were up 12.7 percent. Auto insurance costs — prepare yourself — were up 19.2 percent. The average monthly payment for a newly originated new car loan rose 18 percent over the past two years to $726, according to the latest numbers from the Experian credit bureau. How come? Because a new car will set you back roughly $48,000, according to national averages.

We asked professionals for their thoughts on ways to keep costs lower when driving and maintaining your vehicle.

Insurance

Shop around … slowly. Seeking competing policy quotes is standard advice; Doug Heller, director of insurance at the Consumer Federation of America, recommends doing this research carefully and methodically. Start with an online comparison site to get a sense of prices, he says. Then go to brand-name insurers’ sites for quotes. You might also consult a “captive agent,” who works for just one insurer (try word-of-mouth referrals), and an independent agent, who represents multiple companies. (Comparison sites include thezebra.com, policygenius.com and valuepenguin.com; you can find independent agents at trustedchoice.com, a directory linked to an insurance trade group.) “Even relatively comparable products from brand-name providers can have wildly different prices,” Heller says. “We’ve seen premiums that are hundreds of dollars different for the exact same coverage.”

Go to school. Taking an online safe driver course might get you a 5 to 10 percent discount on your car insurance, says Benjamin Preston, auto reporter at Consumer Reports. If you get a ticket, which can lead to higher premiums, going to traffic school may minimize the increase. Talk to your insurer to see if that will help, Heller suggests. (Learn about the AARP Smart Driver course.)

Agree to be followed. Many major car insurers have programs that track your driving behavior, rewarding you for safe driving. Discounts vary, Preston says, but can be up to 40 percent. Tracking is done through a device placed in your vehicle or connected to your smartphone, which collects information while you’re driving such as speed, braking, phone usage and time of day. You’re giving up your privacy, however, and your insurer might raise your premiums if it judges your driving to be unsafe.

Ask for a low-mileage discount. If you’ve recently retired or shifted to working from home, your driving mileage may have dramatically decreased, which can lower premiums. “Depending upon the insurance company, low-mileage drivers can expect to see savings in the range of 2 to 5 percent, though some companies don’t give mileage discounts unless you sign up with their driving data tracking program,” Heller says. One exception is in California, he says, where rules can result in savings of 8 percent or more for low-mileage drivers.

Guard your credit rating. Insurance companies in most states are permitted to factor your credit score into your insurance premium. The most important ways to protect it over the long haul: Pay your bills on time, and keep your credit card usage low.

Fuel

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Ease up. Driving 5 to 10 miles more slowly can improve your fuel economy by 7 to 14 percent, according to the U.S. Department of Energy (DOE).

Fill up. A set of tires that’s inflated to only 75 percent of the proper amount of pressure causes a 2 to 3 percent drop in fuel economy, the DOE reports.

Keep it clean. The television show MythBusters found that a mud-caked car traveling at 65 mph got 2 miles less per gallon than it did when it was squeaky clean.

Use a card. A branded gas credit card can save you 5 to 10 cents per gallon, Bankrate says — as long as you avoid interest charges by paying off your full balance each month.

Repairs

Go high-maintenance. “It’s a lot less expensive and easier to maintain a vehicle than it is to repair a vehicle,” says David Bennett, senior automotive manager at AAA. Following your owner’s manual guidelines for oil changes is crucial to keeping your engine running smoothly, he says. Each time you get an oil change, ask the mechanic to check the brakes, lights, tire pressure and treads, belts, hoses and fluid levels. And follow your vehicle’s other guidelines for servicing at specific mileage intervals — for example, replacing your serpentine belt (also known as a drive belt). If you don’t spend the $100 to $150 for a new one at the proper time, the old one can break, causing the engine to overheat and creating thousands of dollars’ worth of damage.

Try DIY for the small stuff. For almost any minor bit of repair or maintenance, there’s at least one video on YouTube that can guide you through the process step-by-step — and help you save big. The website RepairPal, for instance, estimates that a Cleveland-area shop will charge around $80 to change the engine air filter on a Toyota Camry. A replacement filter you can install yourself will run you $15, if you’re willing to get your hands dirty.

Establish a rapport with your repair shop. Word-of-mouth recommendations are a good way to find a reputable mechanic, Preston says. “To establish a rapport, start with something simple, like an oil change,” he says. “If you like the mechanic and feel that this person gives trustworthy advice — including telling you which services aren’t worth your money — keep going back.” Once you’ve got a relationship, it doesn’t hurt to drop off some goodies — bagels, brownies or holiday cookies — for the shop’s workers. Letting them know you’re thinking of them and want to give them a treat goes a long way. Not sure whether to work with an independent repair shop or a dealer? “Generally, labor tends to be less expensive at an independent repair shop,” Preston says. Independent shops are also more likely to offer repairs using parts made by third parties, which tend to cost less than the car manufacturer’s replacement parts, he says.

Buying a car

Estimate the full costs. Online driving cost calculators let you input your state, the year, make, model and mileage you expect to drive after a potential new or used car purchase, and provide an estimate of the annual costs for gas (important for cars that require premium fuel), maintenance, insurance and financing.

A recent check of new midsize sedans from two different manufacturers found that even though one car cost $5,000 more than the other, its five-year ownership cost was less, thanks to better gas mileage and lower repair costs, insurance premiums and depreciation expense.

Shop for your loan first. Get preapproved for financing before you’re ready to get a new vehicle, Bennett advises. “If you’re preapproved from a bank at an interest rate of 7 percent and you ask the dealership if it can beat that, you might end up with 6 percent, which can save you hundreds of dollars over the term of the loan,” he says. Check out dealers’ financing deals. Keep an eye out for financing deals advertised for particular models at certain times — for example, when the next year’s models are hitting showrooms.

Again, get preapproved from your bank or credit union. “The best financing deals go to those with the best credit,” Preston says.

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