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.
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 in July of 2023 is $44,700 for non-luxury and non-electric vehicles, with the cost significantly higher for these other types of cars. 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. If relocation is a possibility after college, it also 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.
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 the 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.
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. There are also numerous cities implementing rentable bike stations and other sustainable travel options. These typically cost less than owning a car if you’re using them for short distances. By using public transportation options, students can put their savings toward their loans or rent after graduation instead.
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 which let drivers use cars for as little as an hour.
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