The 5 most (and least) expensive cities for millennials to own a car

We generally make money when you get a product (like a credit card or loan) through our platform, but we don’t let that cloud our editorial opinions. Learn more about how we keep this compensation from affecting our editorial views.

The 5 most (and least) expensive cities for millennials to own a car


Just a few years ago, millennials didn't seem to have much interest in owning cars.

According to an April 2015 study from J.D. Power & Associates, millennials made only 18 percent of all new car sales in 2010. However, in 2014, this share rose to 27 percent. That makes them the second-biggest group of new car buyers, trailing only the baby boomer generation.

One potential reason for the change: more millennials have jobs now and the availability of long-term, low-interest auto loans have made cars more affordable.

While owning a car isn't cheap, the cost can vary depending on where you live. We compared gas prices with the average auto loan debt of millennial (ages 18 to 34 by our definition) Credit Karma members in 100 of the biggest U.S. cities to find the most - and least - affordable cities for millennials to own a car.

The most expensive cities for millennials to own a car

Two cities in Texas start us off, and two more (El Paso and Lubbock) appear in the top ten. Gas prices are generally pretty low in the Lone Star State - according to a December 2015 report from AAA Texas, the average statewide price per gallon is $1.82 - so why's it so expensive to own a car?

One clue could be the types of cars purchased. According to our data, Texan cities Laredo and Corpus Christi rank one and two in the nation in average millennial auto debt. That could be because pickup trucks are so popular down in Texas. Bloomberg notes that 30 percent of pickups sold in 2013 cost at least $40,000.

The rest of our top five (Anchorage, Henderson and Bakersfield) all rank pretty highly in average auto debt as well, though their totals don't compare with Laredo and Corpus Christi. All three of these cities are in the top 20 in average gas prices as well, which surely did its share of damage.

The least expensive cities for millennials to own a car

Compared to the rest of the country, the Midwest is super affordable. Detroit and Cleveland both appeared on our list of the most affordable places for millennials to buy homes, and when it comes to the cost of car ownership, they're outpaced only by cities in Minnesota and Wisconsin.

All five of the least expensive cities (Minneapolis, Saint Paul, Madison, Detroit and Cleveland) are actually pretty middle-of-the-pack when it comes to gas prices, so it's average auto debt that makes the big difference here. Minneapolis, Saint Paul, Madison and Detroit have the four lowest average auto debt levels among millennials, and Cleveland comes in seventh.

One possible explanation for their low debt totals: the prevalence of inexpensive used cars. Forbes identifies Cleveland, Detroit and Minneapolis, for instance, as three of the most affordable American cities to buy a used car.

How to save when buying a car

No matter where you're living, there are some simple ways to avoid overspending when buying or maintaining a car.

1. Work on improving your credit health. Yep, your credit score matters here. If you're about to shop around for an auto loan, it makes sense to get your credit into the best shape possible. A better credit score could mean a lower interest rate and savings on your loan.

You don't need to be in the market for a new car for this tip to pay off, either. Getting your credit into shape could also help if you're looking into refinancing an existing loan.

2. Shop around for an auto loan before you buy the car. If you put all that effort into making your score as great as possible, why would you settle for the first auto loan offer that you get?

Shopping around for an auto loan could be beneficial in a few different ways. You can see what rates multiple institutions can offer and choose the one that's best for you. And if you decide to go with the dealership, shopping around beforehand will help you figure out what your credit profile can earn you, and could potentially strengthen your ability to negotiate for better terms.

While you're shopping around, you should keep in mind that applying for a loan could add a new hard inquiry to your report and put a small dent in your score. A lot of scoring models allow for rate shopping, though, and getting pre-approved could also be a great way to find out more about your options without affecting your credit.

3. Buy used. New cars definitely have their benefits, which can include manufacturer's warranties and greater peace of mind when it comes to maintenance and repairs. However, this doesn't mean they're a necessity.

Buying used can save you a lot of money, and you'll still get the thrill of driving off in something that's new to you. Many manufacturers sell "pre-owned" cars with their own warranties as well, and maybe they'll even use air fresheners to recreate that new car smell everyone loves so much.

4. Look for auto insurance discounts. Just like with the loan itself, you'll probably want to shop around for the best auto insurance rate. A lot of insurers offer discounts for good credentials like an accident-free driving record.

Keep in mind that auto insurers in every state except California, Hawaii and Massachusetts can factor in your credit history when calculating your auto insurance rate, so if you're not in one of those states, it makes sense to check out your credit first before you shop for auto insurance.

5. Buy a car that's cheaper to insure. The more expensive your car, the more expensive it'll be to insure, generally speaking. So, for example, insuring a 2015 Tesla Model S is likely to be much pricier than insuring a 2000 Honda Civic. Buying a car that's a little cheaper or a little older can save you money not only on the car loan, but also on the insurance.

Getting a car with a good safety record and key safety features could also potentially save you some money on insurance premiums.

Bottom line

Buying and owning a car can be expensive. The costs of car ownership can vary pretty widely, though, depending on factors such as where you live, what kind of car you're buying and how extensively you shopped around. If you're thinking about making the plunge, make sure to do your research and get prepared first.


This list is an approximation of cost of vehicle ownership, based on publicly available data from the EPA and U.S. Department of Transportation, used against data pulled from the millions of Credit Karma members between the ages of 18-34 who live in America's 100 largest cities and have auto loans. It should be used as a guide only.

The data assesses the amount of money an 18-34 year old could pay to own and drive a car while living in each of the 100 largest cities in the United States. It looks at the average size of open auto loans for Credit Karma members between the age of 18 and 34, among members who have auto loans, assuming a 5.89% interest rate and 67-month repayment terms. It assumes each person buys gas in the city where they live, is driving 15,098 miles each year (the average annual miles driven by 20-34 year olds in 2014, according to U.S. Department of Transportation Federal Highway Administration data) and owns a vehicle getting 24.1 miles to the gallon (the average fuel economy for new vehicles in America in 2013, according to the EPA).

About the Author: Mike Goldstein is Copywriter at Credit Karma. Since joining the team in June 2013, he's been delivering the financial know-how on the daily. When away from work, you can find Mike watching hockey, Twittering for hours and frequenting trivia nights.

Editorial Note: The opinions you read here come from our editorial team. While compensation may affect which companies we write about and products we review, our marketing partners don't review, approve or endorse our editorial content. Our content is accurate (to the best of our knowledge) when we initially post it, but we don't guarantee the accuracy or completeness of the information provided. You can visit the company's website to get complete details about a product. See an error in an article? Use this form to report it to our editorial team. For questions about your Credit Karma account, please submit a help request to our support team.

Advertiser Disclosure: We think it's important for you to understand how we make money. It's pretty simple, actually. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials.

Compensation may factor into how and where products appear on our platform (and in what order). But since we generally make money when you find an offer you like and get, we try to show you offers we think are a good match for you. That's why we provide features like your Approval Odds and savings estimates.

Of course, the offers on our platform don't represent all financial products out there, but our goal is to show you as many great options as we can.

Comment on this Article

Write your comment:
Enter Your Comments