The costs of owning and operating a car go far beyond the monthly payment. Including insurance, maintenance, gas and other ownership costs, AAA calculates the average annual cost at $11,577.
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Those costs vary by state however, and in some states, residents spend nearly half their household income on car costs.
5 States with the Highest Overspending on Cars
A 2025 analysis by Goodcar calculated the average car ownership to income ratio in all 50 states. The most “car poor” states with the highest spending as a percentage of income included:
- Kentucky: 42.8%
- West Virginia: 43.7%
- Louisiana: 45.8%
- Mississippi: 46.7%
- New Mexico: 46.9%
In New Mexico for example, residents earn a median household income of $50,822, yet spend an average of $23,853 per household on car ownership.
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Expert Tips To Reduce Car Ownership Costs
Automotive experts recommend the following ways to spend less on car ownership.
Buy Reliable Used Cars and Drive Them Forever
Cars lose value immediately when they roll off the lot. By buying a car that’s two to five years old, you can buy a car with a decade or two of life left in it, without breaking the bank.
“To keep a car going longer than average, you have to start with the right car,” advises Melanie Musson, automotive expert with Quote.com. “Some cars are statistically more likely to reach 300,000 miles than others.”
Keep Up with Scheduled Maintenance
You could buy the most reliable car in the world, but if you don’t keep up with oil changes, tune ups, tire rotations and other scheduled maintenance, it will die sooner rather than later.
“Clean oil keeps your engine working optimally,” adds Musson. “If you hear a strange noise, deal with it right away instead of waiting and risking something major going wrong.”
Reduce Insurance Costs
Just because your insurance quotes you a premium doesn’t mean you have to take it. Try reducing your coverage amount, dropping your deductible, bundling with your home insurance or even trying telematics.
Maya Afilalo of AutoInsurance.com explains further: “If you drive safely, you could shave 10% to 15% off your annual bill per vehicle — so long as you’re comfortable sharing location and driving data with your insurer.”
Drive Less
Walk. Bike. Carpool. Consider flying to your destination and renting a car on Turo rather than driving. The less you drive, the less wear and tear you put on your car, and the less gas you pump into it.
Share One Car
Like most American couples, my wife and I each had our own cars for many years. Then we moved overseas and experimented with sharing one car, and then going carless entirely.
After moving back to the U.S., we share one car, and it saves us five figures each year. It helps that I work remotely, but I’m far from alone in that nowadays.
The less you spend on car ownership, the more you can spend elsewhere such as a nicer house, better education for your children, more travel and entertainment. Or better yet, building wealth faster so you can become work-optional at a young age.
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This article originally appeared on GOBankingRates.com: 5 States Where Americans Are Spending Half Their Income on Cars — What Experts Say To Do About It
