Sep   2019

Thu

19

Does It Make Financial Sense to Start Driving in College?

by
Content Marketer, ValuePenguin

Teens used to long for the day they could finally get a driver’s license and buy a car—but it’s a trend that’s disappearing. Since 1983, the percentage of Americans who are getting licensed has fallen among those under 50 years old, and car sales have also decreased recently in some age groups. While some sources tie the decline to the internet, there are a handful of more pressing reasons teens hold off on getting a car.

For those still in college or graduating soon, it may make financial sense to continue the delay. Here’s why.

Related: 6 Things to Know Before Buying a Car

Buying a car is expensive

Most college students have a limited income and expensive student loan payments on the horizon. According to Experian, a credit reporting bureau, the average cost of a new car hit a record high in 2018: $31,455 total with monthly payments of $523. Even used car prices hit a record high in 2018, with monthly payments averaging $400.

Unless college students have enough money saved for a new car or have a steady income, getting approved for financing may be difficult or even impossible without a cosigner.

Related: Car Budget Tips for College Students: How to Pay for College AND But a Car (or Not)

Insurance rates are often based on experience

Traditionally, auto insurance rates for new drivers can cost nearly three times more than policies for those with driving experience. However, insurers in some states like California can only base premiums on driving experience and not the driver’s age. This can significantly add to the costs of owning a car, so you might wait until you’re older and can afford the high premiums. Plus, insurance rates rise annually (like by 13% in some states!), so don’t just think about year one—you need to consider years two, three, and beyond.

Related: How to Save Money on Your Car Insurance

You have public transportation options

Public transportation options are expanding. No longer is the bus your only option, especially with ride-share programs making an impact. These typically cost less than owning a car if you’re using them for short distances. According to AAA, car ownership costs top $8,469 per year. By using public transportation options, students can put their savings toward their loans or rent after graduation instead.

Related: Pros and Cons of Owning a Car in College: On Campus vs. Off Campus

Your post-college plans may be uncertain

If relocation is a possibility after college, it may make sense to wait on buying a car, especially if you plan to move to a city. In some places, a car may not be necessary for daily commutes and be a larger hassle to find suitable (and cheap) parking.

What should college students do instead?

College students sometimes need a way to get around, and public transportation options don’t always work. Consider getting your license, especially so you know how to drive if you’re ever in an emergency where you need to hop behind the wheel. But drivers can hold off making an investment in a car if it’s not a necessity for their everyday living. With a license in hand, individuals can rent a vehicle for longer drives through car-sharing services like Zipcar that let drivers use cars for as little as an hour.

Save money on college and save up for a car—find scholarships on CollegeXpress!

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About Callie McGill

Callie McGill is a Content Marketer for ValuePenguin.com.

 
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