A recent survey by MarketWatch of 1,000 Americans found more than 36% would only be able to pay $500 without taking on credit to foot the bill.
According to a survey by AAA, that figure hasn’t changed since 2017 when one in three car owners said they couldn’t afford to pay out of pocket for an unexpected car repair bill of $500 to $600.
While both surveys centered on mechanical repairs, insurance policyholders face the possibility of paying out of pocket for collision repair as well if their insurer won’t pay what the shop needs to get the job done, or if their policy doesn’t cover certain vehicle parts, components, or OEM procedures. Also, collision deductibles often range from $500 to $1,000.
Those surveyed by MarketWatch were ages 18 to 85 who either own or are currently leasing a vehicle. They were asked how much they could afford for an unexpected car repair at that time, excluding potential credit options.
MarketWatch found that more than half of all divorced respondents aren’t able to afford more than a $500 unexpected vehicle repair, which is significantly higher than average.
Education level also is a factor that impacts how much Americans can afford, according to MarketWatch and the U.S. Bureau of Labor Statistics (BLS). Respondents with any type of college, university, or postgraduate degree are 50% more likely to be able to afford up to a $2,000 surprise repair bill than those with a lower level of education.
BLS data from 2021 show that the more educated a person is, the more they earn on average, the less likely they are to be unemployed, and higher earnings mean more money to spend on unexpected expenses.
Gender is another factor. Male respondents reported being 50% more likely than women to be able to cover an auto repair costing more than $1,000, MarketWatch found. Overall wages likely factor into this trend, with the Pew Research Center pointing out that the gender wage gap between men and women has seen little change in the last 20 years.
Female respondents were 63% more likely to say they felt less prepared than men to afford repairs of more than $1,000. Two-thirds of men surveyed said they’re confident they’re prepared to deal with potential car problems.
However, across all demographics, including age and gender, nearly 57% of respondents agreed to some extent that they felt prepared to pay for car repairs.
Respondents that felt most prepared were between the ages of 18 and 24 but that group was also the second most likely to have less than $1,000 in their emergency fund, with respondents ages 45-54 coming close behind in how much they had saved.
Young adults took the No. 1 spot as the group most likely to put off necessary car repairs or car maintenance services for longer than three months. Overall, nearly 63% of respondents said they weren’t putting off necessary preventive maintenance or car care services.
Out of the 37% of respondents who said they put off necessary maintenance, several mentioned waiting to take care of tires, vehicle filters, brake pads, car inspections, and oil changes, MarketWatch said.
At least two of those — tires and brake pads — can likely put drivers at a higher risk of being involved in a collision. Car inspections aren’t required in every state but MarketWatch notes that they can uncover an issue or defect that could become a larger problem and/or necessitate more expensive repairs in the future.
The average cost for auto repairs has risen steadily over time, with the BLS reporting a 14.9% increase in the price of motor vehicle parts and equipment year-over-year, as of June 2022.
Earlier this year, in April, The Morning Consult and Bloomberg News surveyed 11,000 people and found that 48% of Americans wouldn’t be able to afford any type of emergency expense over $400. Thirty-five percent of respondents said they would need to take on debt to cover an unforeseen $400 bill and another 17% said they wouldn’t be able to afford the expense at all.
Low and middle-income earners are disproportionately affected by surprise bills, with 48% of those unable to pay them earning less than $50,000 per year, the survey found.
A separate study released by FinanceBuzz in April found that 58% of drivers surveyed couldn’t afford an emergency car repair of more than $1,000.
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