Being hit by an unexpected bill can be a huge bummer. Especially when it’s an expense that you can’t delay paying, like a car repair bill.
According to a 2019 Ally survey conducted by The Harris Poll, the average American spent nearly $2,000 on vehicle repairs in the last five years. But, for Millennials and Generation Z (ages 18-34 collectively) average car repair expenses were even higher … landing at a whopping $2,334.
This is especially troubling news because 2/3 of young people ages 18–24 do not have an emergency savings fund and nearly 40% of adults would not be able to cover unexpected expenses of $400 or would have to sell something or go into debt.
Keys to overcoming expensive car repairs
If you’re concerned about a surprise car repair bill leaving your finances on empty, there are things you can do to prepare.
1. Start an Emergency Savings Fund
If you’ve put off starting an emergency savings account, you are not alone. However, the earlier you start saving, the better prepared you will be for an unexpected car repair bill. Even if you’re only able to set aside $10 each month, that money will add up over time and could help protect you against financial woes, like having to borrow money or incur credit card debt.
To determine how much you can save each month, look at your income and your spending to see how much money you typically have leftover every month. If you’ve been keeping those “extra” funds in your regular checking account, it may help to transfer them into a separate savings account, like our Online Savings Account.
2. Consider a Vehicle Service Contract
To alleviate the financial stress associated with car repairs, consider a vehicle service contract. This is a protection plan that can help cover the cost of vehicle repairs that extend beyond your manufacturer’s warranty.
There are different types of vehicle service contracts that you can get depending on the age and mileage of your vehicle. When researching the various plans available, make sure that you familiarize yourself with the contract, terms, and conditions to ensure the coverage meets your own needs.
Also look into additional benefits that might come in handy. For example, Ally’s FlexCoverage, includes 24/7 roadside assistance, towing, trip interruption protection (aka reimbursement for a hotel room and food from a restaurant, if your car troubles require an overnight stay), or rental car reimbursement. These additional perks usually have limitations, such as being capped at a certain dollar amount in reimbursement — but they can help to alleviate the all-around hassle of a major vehicle issue.
3. Don’t delay car maintenance
Keeping up with basic vehicle maintenance can go a long way in terms of keeping your car in good driving condition and making sure you are safe while on the road. Be sure to schedule timely oil changes, replace your brake pads, and rotate your tires regularly. And mark your calendar to check fluid levels like coolant, oil, and windshield washer fluid.
If flashing lights appear on your dashboard, check your owner’s manual and contact your dealer immediately to see what the problem could be. Maintenance issues that go unattended can lead to heftier repair bills down the road.
Ready to explore a Vehicle Service Contract?