Owning a car is becoming more expensive, with the December 2024 Consumer Price Index (CPI) revealing motor vehicle insurance costs soaring 11.3% year-over-year.¹ This isn’t just a blip — insurance premiums have been climbing steadily for years, up 93% since 2014, far outpacing general inflation, which grew 34% in the same period.^2,3

Several key indexes rose last month, reflecting shifts in the cost of vehicle ownership:

• Used cars and trucks: Prices increased 1.2% in December, reversing months of decline in the pre-owned vehicle market.
• New vehicles: Prices rose 0.5% over the month, continuing a decade-long trend of steady increases.
• Gasoline: The fuel index jumped 4.4% in December, though prices remain 1.1% lower before seasonal adjustment.

Overall, the CPI shows that inflation ticked up 0.4% for December and 2.9% for the year.⁴

Annual motor vehicle insurance cost 2014-2024 

Why these costs are rising

As cars become more complex, with sensors and multiple on-board computers, it makes repairs more expensive. The average repair bill for a traditional car is $4,437, and for EVs it’s even higher, at $6,618.⁵ The cost of collision insurance claims rose 64% from 2018 to 2022.⁶

The monthly increase in gasoline reflects seasonal demand and oil price fluctuations. Americans spent an average of $183 on fuel in December, according to the Empower Personal Dashboard^TM.

Read more: Americans' most-asked money questions

How drivers are adapting

Despite these rising costs, many drivers are finding ways to adapt. Empower research highlights a growing trend with 57% of Americans keeping their cars longer to save money.  This shift helps households delay the expense of buying a new vehicle while spreading out insurance and maintenance costs over time.

Car owners are paying more for their loans, too. As of the third quarter of 2024, average U.S. car loans for new vehicles were financed for 69 months at 7.1% APR and a monthly payment of $736. For used cars, rates pegged higher at an average of 11.3% APR financed for 70 months, resulting in a monthly payment of $548. In addition, 18% of buyers are opting for longer payment plans of 84 months, or 7 years, which results in a lower payment than a shorter-term loan, and 17% are signing up for monthly car payments of $1,000 or higher as car prices increase and the average new car is now priced over $47,000.^7,8

What it means

December’s CPI data shows the landscape continuing to evolve for vehicle ownership, with rising costs for gas, insurance, and cars/trucks. Developing strategies such as exploring the value of pre-owned vehicles, comparing insurance options, or considering hybrid or other fuel-efficient cars can help offset the expense and keep budgets on track.