How Much Does the Average American Spend on Transportation?

By Lindsay Frankel
Inside Subprime: September 1, 2020

Most Americans treasure their personal vehicles, and owning a car has long been considered a part of the American dream. But it is extremely costly to own, operate, and maintain a vehicle. In fact, it’s the second highest expense for the average American after housing. Yet a lack of public transportation options in many cities and rural areas leave Americans with few options for cutting costs. 

Around 88 percent of Americans over the age of 14 are drivers, according to the Bureau of Transportation Statistics. And most need their cars on a regular basis; 83 percent of U.S. adults get behind the wheel several times a week or more, a Gallup poll found. But there’s still evidence that Americans have more personal vehicles than they need; while U.S. households have an average of 1.8 drivers, they own an average of 1.9 cars. Only about 8 percent of households don’t own a vehicle at all. 

The annual average price tag for transportation across all Americans was $9,761 in 2018, according to the Bureau of Labor Statistics. Transportation accounted for 15.9 percent of households’ annual expenses and eating up 12.4 percent of their average pre-tax income. 

Transportation is often an unavoidable expense, since most Americans need to travel to get to work and earn income. 77 percent of Americans drive themselves to work, and another six percent carpool. While that’s a decrease from 2007, when 85 percent of Americans drove themselves to work, we’ll likely see this figure increase as Americans turn away from public transportation amid the pandemic. 

How Do Americans Spend Their Transportation Budget?

In 2018, Americans spent an average of $3,975 on vehicle purchases, and gasoline/motor oil cost an average of $2,109. Other costs, such as insurance premiums and repairs, made up the rest of the $9.761. The average annual cost of car insurance is about $1,416

Public transportation can save families thousands of dollars in transportation costs, but 45 percent of Americans don’t have access to it. Only 11 percent of adults reported taking public transportation daily or weekly, according to Pew Research Center. Spending on public transportation accounts for 1.3 percent of all household expenditures. 

Who Spends the Most on Transportation?

Moderate income households spent the greatest share of their income on overall transportation costs in 2018, while the lowest and highest income households spent the least. Transportation costs ranged from $3,718 for the lowest income households to $18,387 for the highest income households. 

While lower income households are more likely to rely on public transportation, many other low-income households lack access to the option, and are precluded from owning personal vehicles due to the financial burden. For other families, the cost of owning a car can be a barrier to accessing more promising employment opportunities. 

As Joe Chestnut of the Institute for Transportation and Development Policy wrote, “In the US, there is a narrative that if people work hard, then they can get out of poverty, but we’ve built cities that make this narrative impossible. For households making less than $20,000 per year, reliable cars are a pipe dream: a huge expense that they can’t afford. Without adequate transit, they will remain stuck in place.”

How Does Credit Score Influence Costs?

Poor credit can influence transportation costs in the following ways:

  • The better your credit is, the lower your interest rate will be on an auto loan. That means Americans with poor credit end up paying significantly more over the life of the loan.   
  • In most states, your credit score also affects your insurance premium. Poor credit can increase your annual rate by nearly $2,000 in some states. 

Interest rates on auto loans can range from under 2 percent to about 15 percent, and that makes a huge difference in the total cost you’ll pay over the life of the loan. On a five-year loan, someone with poor credit could end up paying $10,000 more for the same car than someone with excellent credit. 

But there’s a new trend in car buying: Americans are buying pricier vehicles, made possible by auto loans with terms longer than five years. A longer term means a lower monthly payment, but it also means you’ll pay more in interest. If you have poor credit and get stuck with a high APR, you could end up paying double the amount someone with excellent credit would pay for the same vehicle. 

How to Trim Transportation Expenses


  • Take public transportation. According to the American Public Transportation Association, drivers can save $9,797 annually by switching from driving a car to taking public transportation. However, not all Americans can get to work on a public transit system, and the current pandemic presents a safety issue to going this route. 
  • Move closer to work. If you can walk to your place of employment, you’ll save a significant chunk of change on transportation costs each year. However, it’s possible that rent/mortgage prices could be higher, and in some cases unaffordable, near your workplace. 
  • Carpool. Sharing a ride with a co-worker or carpooling with family members can allow you to use less fuel, endure less wear and tear on your car, and possibly even own one less vehicle. 
  • Buy a used car. Brand new cars are unnecessarily expensive, and you can usually get a much better deal just by purchasing something a few years old. 
  • Pay in cash. If you can put down a sizable downpayment or avoid financing altogether, you’ll save a ton of money on interest. 
  • Keep up with the necessary maintenance on your vehicle. Regular maintenance can be costly, but it’s something you can plan for. If you don’t take care of your vehicle, the resulting repairs can be much more expensive in the long run. 
  • Compare insurance premiums. Your credit score isn’t the only factor influencing your car insurance rate. You may be eligible for a variety of discounts that can vary from one insurance provider to the next, and your driving record may affect one policy differently than the next. To get the lowest possible premium, you should compare auto insurance quotes across providers. 

For more information on the middle income consumer, subprime loans and payday loans, see our city and state financial guides including states and cities like California, Texas, Illinois and more.