The cost of owning and operating a car in New Jersey is rising
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Why Americans will need to budget even more for car insurance in 2023
For this reason, you may pay more for your car insurance in 2023.
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In New Jersey and across the country, it is getting more expensive to own and operate a car.
Factors such as inflation and higher interest rates have pushed up insurance and car prices. Geopolitical and climatic factors also increase the risk of higher gasoline prices in the near future.
A study released Tuesday by financial website BankRate found that New Jersey drivers spend an average of $6,802 a year on their cars, compared to the national average of $6,684. Georgia had the most expensive car owners, at $8,249 a year.
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“New Jersey ranks 25th, somewhere in the middle” of 50 states, said BankRate analyst Shannon Martin.
For New Jersey, costs include:
- $2,412 for insurance coverage
- 1,682 USD taxes
- $1,214 for maintenance
- $1,494 for gasoline
This is the first year BankRate has conducted a study of this kind, based on cost estimates for a 2022 Toyota Camry with full coverage insurance driven by a 40-year-old with a “clean driving record and good credit.”
According to travel club AAA, the average cost in 2023 for a car that drives 15,000 miles annually was about 81 cents per mile.
“The cost of owning a car in New Jersey might actually be lower than in some Midwestern states,” said Martin, the BankRate analyst. Drivers in New Jersey use their cars less because the state has public transportation and highly walkable areas, Martin said, and drive an average of about 11,000 miles per year.
Decline in demand for pickup trucks
If you’re on a budget, you can buy a sedan, which costs about 60 cents per mile, according to the AAA study. However, if you have the extra money, a half-ton pickup truck costs $1.06 per mile.
“Demand for once-popular pickup trucks is currently declining slightly as these vehicles become more expensive and priced to compete with many luxury cars,” said Greg Brannon, AAA’s director of automotive research.
The Federal Reserve has raised interest rates 13 times since the COVID-19 pandemic to curb inflation, which rose to a 40-year high in 2022. This month, the Federal Reserve hinted at a possible rate cut in September.
Higher interest rates have increased the costs associated with buying a car, Brannon said, especially with a loan.
According to credit monitoring firm Experian, the average interest rate for new cars was 6.73 percent and for used cars 11.91 percent in early 2024, down from last year’s 15-year high, according to CNN.
In 2019, before the COVID-19 pandemic, the average cost of a 10-year-old car was less than $9,000. According to online search engine iSeeCars.com, the price in 2024 was over $12,000.
According to AAA, the average cost of a new car last year was nearly $35,000, up 4.7% from the previous year, while annual financing costs roughly doubled to $1,253 per year.
Extremely high car insurance premiums
Most auto insurers in New Jersey are calling for double-digit premium increases this year. The highest increases are expected from Metromile Insurance Co., with a 63.1% increase, followed by Farmers P&C Insurance Co., with a 43.7% increase.
The higher increases are normal for an industry that is suffering from inflation, increasing accident severity and more expensive auto parts and labor costs.
Critics fight back by condemning the increases as greed on the part of companies and arguing that the state could take on a stronger control role over these increases.
A representative of the New Jersey Department of Banking and Insurance, which has the final say on increasing auto insurance premiums, was not immediately available for comment Tuesday.
Can New Jersey residents live without a car?
New Jersey is known for its sprawling suburbs and few cities offer the opportunity to do without a car altogether.
There are some exceptions. CoworkingCafe, a directory of coworking spaces, ranked Newark as one of the best car-free communities in New Jersey last year.
“Given its status as a major transportation hub with one of the busiest airports in the country and a transit system that is seamlessly integrated into the New York City metropolitan area, it’s no wonder that Newark’s public transit is a great alternative to commuting by car,” the study said.
Other communities, such as Hoboken and Jersey City, are among the leaders in eliminating cars.
This article contains information from USA Today
Daniel Munoz covers business, consumer affairs, labor and the economy for NorthJersey.com and The Record.
E-mail: [email protected]; Twitter:@danielmunoz100 and Facebook
