How to Budget for Car Repairs

If you own a car, you know car repairs are unexpected and costly. According to the New York Times (September 22nd, 2023), "The average annual cost of car ownership is up more than 13% from last year to more than $12,000, or just more than $1,000 a month". Here are road-tested techniques to help you save money and avoid the expensive costs that come with owning a car

Most car owners have three main financial responsibilities. Those include paying an auto loan, covering the cost of maintenance and repairs, and paying auto insurance. If you face any of these financial burdens, you are aware that each can be quite costly. Here are a handful of proven techniques to help you effectively budget and save money.

1. Beating the Cost of Auto Loans and High Inflation: With the average interest rate on an auto loan for a used car soaring high at 13.53% (non-prime credit) and 9.33% (prime credit) (December 7th, 2023), you can save thousands of dollars if you can find ways to reduce the overall cost of your loan.

   1. Tip: If you are planning on taking an auto loan for a new or used car, experts recommend looking closely at what is being bundled into your loan. Items like vehicle service contracts, pre-paid maintenance packages, ding and dent coverage and many more, are often added to the cost of the car. This means you are paying interest on all of these items. While many of these items are great for cost savings in the long run, you may be able to save $200, $300, $400+ by finding more affordable coverage of the same caliber, without paying any interest. CarmaCare offers dealer-grade, interest free vehicle service contracts you can purchase 100% online. This means you will have coverage for mechanical failures, with no hidden fees. 

2. Battling the Cost of Car Repairs: Car repair costs are up almost 20% in the past year (July 5, 2023). This drastic increase is due to ongoing supply chain issues, more technology in cars, fewer auto repair technicians, and longer vehicle ownership. A few of these trends are here to stay, making sudden auto repairs more of a threat to your finances. If you are thinking about your available budget for car repairs, you are already taking the first step to being a more financially savvy consumer.

   1. Tip: When considering your risk of paying for expensive car repairs, consider how old your vehicle is. There is a clear relationship between the age of your vehicle and the increased risk of paying for an expensive car repair. Now consider some of the more expensive car components your vehicle has.  The reality is tough for some to face — "more than 36% of Americans are unable to pay for car repairs costing more than $500" (August, 2023). If you are a risk averse car owner, or a customer who is concerned about their vehicle's health, a low-cost monthly subscription can be an excellent way to save money at the repair shop. For example, if you know you can spend $20-$80 a month on your car, CarmaCare offers different coverage plans you can select from so that you reduce your risk of needing to pay out a $500-$15,000 claim on a car. Our plans also come with 24/7 Roadside Assistance, Towing Coverage and Rental Car Reimbursement.

In conclusion, a car warranty can provide valuable protection and peace of mind for you and your vehicle. Whether you're buying a new or used car, a car warranty can help you avoid costly repairs and keep your vehicle running smoothly. When considering a car warranty, make sure to research the different options available and choose a warranty that provides the coverage you need.