Although becoming a one car family isn’t possible for everyone, if you can manage it, you’ll save a ton of money. Owning one vehicle is expensive, let alone two or three. Between maintenance and insurance, your spare car could be costing you hundreds of dollars per month.
If you could save that money or use it to pay down your debt instead, you’d be able to accomplish your financial goals even faster.
Read on if you want to learn more about the numerous financial benefits of being a one car family.
5 Financial Perks of Becoming a One Car Family
1. Fewer Repairs
When you own two cars, your maintenance costs double, which can have a big impact on your budget. According to AAA, brand new cars cost about $100 per month to maintain because they require regular oil changes and tire rotations.
If you have a used car that’s older and more prone to problems, maintenance will cost even more as high-ticket items like the battery and alternator wear down. So you could easily save $1,000 to $2,000 every year by becoming a one car family.
2. Lower Insurance Costs
The average cost of car insurance is about $75 per month for a basic policy. Most companies offer a small discount for insuring multiple vehicles, so your costs won’t necessarily double if you keep a second car.
However, you’ll definitely shell out more for insurance if you decide against being a one car family.
3. Less Depreciation
Because cars depreciate, you’re essentially losing money every year you own your vehicle. In the first year alone, new cars lose 20% to 30% of their total value, which is money you can’t get back if you try to sell it.
Keeping just one vehicle instead of two means that you lose less of your hard-earned money to depreciation every year.
4. Fewer Taxes and Fees
The federal government requires you to pay a fee every year to register your car. Although it usually costs less than $100, it adds up over the years, especially if you own multiple vehicles.
Some states also require you to pay an excise tax that’s a small percentage of the car’s value on an annual basis. Luckily if you sell your second set of wheels, you won’t have to pay this tax anymore and can save the money instead.
5. More Room in Your Budget
If you usually take out a car loan to pay for your vehicles, owning two cars will take up a large chunk of your monthly budget.
A $25,000 loan with a 60 month term and a 5% interest rate costs about $475 a month. Multiply that by two and you’re paying nearly $1,000 per month for both cars—and that’s before insurance, maintenance, and registration costs are factored in.
Selling off that second car means you’ll have much more of your paycheck left over to save, invest, and meet your other financial goals.
If your second car is paid off, becoming a one car family can still benefit you financially. Selling your car will give you a big influx of cash that you can use to pay off debt or invest.
Instead of having thousands of dollars tied up in a depreciating asset, you’ll be able to put that money to work for you and build more wealth.
Logistically, it isn’t always possible to be a one car family. But if you live in a city with decent public transportation or carpool with your spouse, you may be able to make it work and save thousands of dollars per year.