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Millennials Say Cars Are an Expensive Hassle, but Still Want Them

Sept. 12, 2016
Auto Insurance, Insurance
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Owning a vehicle is a luxury for some, a necessity for others and expensive for all. But it’s a perk that the millennial generation, renowned for rejecting consumption and burdened by college debt, isn’t willing to do without.

A new nationwide survey commissioned by NerdWallet finds that many millennials, defined in this survey as people ages 18 to 34, are surprised by the costs of owning a vehicle, and some of them believe it’s a hassle. But these views don’t translate to buyer’s remorse. Of the 80% of millennials who own a car, few regret their most recent vehicle purchase, and most see themselves buying another in coming years.

The survey was conducted online by Harris Poll on behalf of NerdWallet from Aug. 15 to 17, 2016, among 2,025 American adults ages 18 and older. Among all respondents, 383 are millennials who currently own a vehicle.

The findings: Millennial car owners share many attitudes about vehicle ownership with other age groups, and while their observation about owning a car may be true — it’s expensive — this doesn’t seem to affect their choice to own a vehicle or their plans to purchase one in the future.

Key takeaways

  • Most (92%) millennial car owners report considering the additional costs of ownership before purchasing a vehicle, but more than 6 in 10 remain surprised at the cost of maintenance (64%) and car insurance (68%). Indeed, their bills are higher than those of other age groups — for example, drivers age 26 pay an average of 15% more in insurance premiums than those age 40, according to NerdWallet data.
  • Despite the costs of vehicle ownership and with 35% reporting they’re still paying off an auto loan, just 12% of millennial car owners regret purchasing their current vehicle, and 75% see themselves buying another car in the next five years.
  • While student loan debt skyrockets, millennials are taking on less auto loan debt than in years past — as much as 11% less in 2015 than in 2003, according to the Federal Reserve Bank of New York.

Owning a vehicle is costly

The sticker price isn’t the only expense associated with owning a vehicle, and most millennials recognize this: Fewer than 1 in 10 (8%) car-owning millennials said they didn’t consider the additional costs that come with ownership prior to purchasing their vehicle.

But 64% of millennials with cars told us they were surprised at the costs of vehicle maintenance. And 68% agreed that auto insurance costs were surprising.

Millennials pay the same as everybody else for oil changes or new tires, but they definitely aren’t getting cheap car insurance, which could be behind some of their price shock. Using eight of the most populous states as a basis for a national average, NerdWallet found that 26-year-olds pay 15% more, on average, than 40-year-olds for their annual premiums.

Average annual auto insurance rates

State26-Year-Old Average40-Year-Old AveragePercent Difference

Source: NerdWallet


These costs could be causing some stress. According to the survey, 43% of car-owning millennials at least somewhat agreed that “owning a vehicle is a hassle” compared with 28% of car owners ages 45 and older.

But not expensive enough to forgo driving

Still, the nuisances and costs of owning a vehicle don’t seem to be steering millennials away. Four in 5 car owners in this age group (80%) disagreed with the statement “Owning a vehicle is not worth the money,” similar to those ages 35-44 (83%) and 45-54 (80%). And only 12% of millennial car owners regret purchasing their car.

Few are enticed enough by the thought of saving money to give up their vehicles. Just 9% of millennials said they have considered selling their vehicle for a cheaper transportation option, like public transport or ride-sharing, and only 17% said that increases in car-related costs would motivate them to give up their wheels.

So, why are they willing to put up with the costs? It could be necessity, but it could also be the joy of driving — 84% of millennial car owners agreed with the statement “I enjoy driving,” and 48% agreed strongly.

Millennials taking on less auto loan debt, but want to buy

These drivers aren’t showing up to the car dealership uninformed — 84% of Americans and 88% of all millennials said that they would compare their options online prior to going to the dealership if they were shopping for a vehicle.

The survey found 4 in 5 millennials already own a vehicle, and 75% of those see themselves purchasing another vehicle in the next five years — possibly indicating they may anticipate being ready for an upgrade in the near future.

According to the survey, 35% of car-owning millennials are still making payments on their auto loan. But overall, young auto buyers are taking on less auto loan debt than in years past.

Data from the Federal Reserve Bank of New York shows that as student loan debt skyrocketed overall for people ages 20 to 34 in the years 2003 to 2015, overall credit card debt decreased for this age range, and auto loan debt decreased for those ages 22 to 33. The biggest drop in auto loan debt during this period was 11%, seen among 26-year-olds.

2003-2015 debt changes among 20- to 34-year-olds

Age% Change Auto (2003-2015)% Change Credit Card (2003-2015)% Change Student Loan (2003-2015)

Source: New York Fed Consumer Credit Panel / Equifax


Though the data cannot show a cause-effect relationship, according to Meta Brown, senior economist in microeconomic research at the New York Federal Reserve, “It’s clear that younger Americans are shifting their debt portfolios quite heavily into student debt and away from more traditional consumer debts,” such as auto loans and credit cards.

Elizabeth Renter is a staff writer at NerdWallet, a personal finance website. Email: [email protected]. Twitter: @ElizabethRenter.


This survey was conducted online within the United States by Harris Poll on behalf of NerdWallet from Aug. 15 to 17, 2016, among 2,025 U.S. adults ages 18 and older, among whom 383 are millennials who currently own a vehicle. This online survey is not based on a probability sample, and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables, contact Diamond Richardson at [email protected].

Insurance rates from a sampling of ZIP codes in eight of the most populous U.S. states were pulled from data in NerdWallet’s car insurance comparison tool. The states included: California, Florida, Georgia, Illinois, Michigan, Ohio, Pennsylvania and Texas. These represent annual premiums for 26- and 40-year-old single male and female drivers insuring a 2012 Toyota Camry. All drivers were quoted liability limits of 100/300/100 and a comprehensive and collision deductible of $500. All drivers were quoted 25/50 uninsured motorist coverage, unless there were higher requirements for that state, in which case those coverage amounts were used. To find the average rates for each state, we averaged the rates for each policy market, selected the three cheapest policy markets and averaged those.

Changes in average debt balance by age are from U.S. aggregate debt balance data between 2003 and 2015 from the Federal Reserve Bank of New York.