Bettering Your Transportation Situation
Transportation challenges can contribute to many problems. In many cities and rural areas, public transportation often runs late, and bus stop locations are sometimes few and far between. Additionally, cars can break down and require repairs. In fact, one study revealed that 51% of American consumers had to pay for major car repairs in the span of five years.
Car insurance also adds up. Drivers who can’t afford insurance may risk driving uninsured. If they get in a car accident without insurance, obtaining a future insurance plan with an affordable premium may prove difficult. Lacking an insured car that runs properly makes it difficult to arrive on time to work every day, but individuals need jobs to save up for a car. This process can create a difficult cycle to break.
But exactly how does transportation affect poverty? And how can paying for transportation become more attainable? This guide covers these topics in detail.
Getting an Auto Loan
Many people need an auto loan to afford a vehicle. However, good loan interest rates require good credit scores, and good credit scores require a credit history. As a result, individuals in poverty may experience difficulty building credit.
However, starting to build credit while in college can help. While we encourage you to research responsible credit usage, you can start by applying for a credit card and paying off each month’s balance in full. However, watch out for scams, which often appear as offers that seem too good to be true. This article offers more information about credit scores.
Leasing a Car
Leasing a car allows individuals with a high credit score to obtain a vehicle without a large down payment. These individuals submit monthly payments during the leasing period. Most lease payments also cover repairs and maintenance during the period. However, leasing a car does not help drivers build equity.
In contrast, when people take out a loan for a vehicle, they pay some interest but build ownership in their car. After they pay off the loan, they can sell or trade their car for a different one. Therefore, saving for an auto loan down payment may benefit individuals long term.
Buying a Car with Cash
Paying for vehicles with cash comes with benefits. For instance, buyers do not need to pay interest on a loan. They also do not need to make monthly payments. However, buying a new or high-quality used car with cash may drain your savings account. Additionally, both new and used cars cost more than usual due to a supply shortage.
New cars typically include better fuel efficiency than old cars. The federal government publishes a helpful calculator to compare gas mileage savings. According to the site, a vehicle that gets 30 miles per gallon (MPG) costs $768 less to fuel each year than a car that gets 20 MPG. During a span of five years, the 30-MPG vehicle saves the consumer $3,838 compared to the 20-MPG vehicle.
Car Repairs and Maintenance
Both new and old cars typically require maintenance and repairs. Failing to budget for these expenses may contribute to financial instability. Younger adults often own cars that require high repair costs. For example, research from 2019 shows that individuals ages 18-34 paid an average of $2,334 on car repairs and maintenance over five years. In contrast, people 55 and older spent $1,654, on average, over the same period.
Many people don’t fully understand how to repair and maintain their vehicle. In fact, a 2018 study conducted by Cooper Tires found that almost half of U.S. car owners cannot perform an oil change, and nearly 30% could not choose the correct oil for their car.
Cars require regular oil changes, so learning how to change your car’s oil saves money over time. Car owners can also learn other maintenance routines, like how to rotate tires and replace air filters. Skipping routine maintenance often leads to repair bills. One in three U.S. drivers cannot afford unexpected car repair bills.
Unfortunately, car insurance may cost more for individuals with lower income. For example, insurance companies typically charge young drivers more money, and young people often lack financial stability. Some insurers also charge higher premiums for low credit scores. One at-fault accident can also drive up insurance costs.
Additionally, large cars and rare models typically cost more to insure. Drivers should get multiple insurance quotes to find the cheapest rate.
If you live in a large city with many bus stops and subway stations, then public transportation offers an affordable way to commute. Commuters can often purchase monthly or weekly passes that allow for unlimited rides.
However, sprawling cities tend to feature fewer bus stops, and many don’t have subways. Individuals in these cities may benefit from biking to bus stops. Still, commuting costs time. A 2020 study revealed that taking public transportation takes an average of 1.4-2.6 times longer than driving a car. Purchasing a car may allow people to spend more time working, which can lead to more money.
What Now? How to Improve Our Transportation Problems
So how does transportation affect poverty? In summary, working people often need reliable transportation, but obtaining reliable transportation requires income. However, you can break this cycle.
By doing proper research, you can make the best decision and form a plan. For example, individuals can work at a job they can walk to while saving up for a vehicle or building their credit score. College students can also take steps to build their credit during their studies. Budgeting apps like Mint and You Need a Budget also help people plan for paying for transportation.
Additionally, community programs may help connect individuals with starter cars. Some people donate used cars for tax benefits.
For long-term change, consider writing to elected officials and advocating for better and affordable public transportation.
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