One in four American drivers could not pay for a car repair of $2,000 if faced with one today, according to the results of a survey released today by AAA. The survey also said one in eight would be unable to pay for a repair bill of $1,000 – easily reached with overly complex vehicles on the road.
Since the end of World War 2, 80% of Americans commute to work in an automobile. This was part of what became known as the American Dream. Auto industry growth of course was the cornerstone of American prosperity and strong economic growth that lasted for decades.
Now, increasingly stringent government safety and emission standards have increased the average price of a new car to more than $30,000. This record high price comes as more than 14 million Americans are unemployed, with at least another 10 million underemployed. The average length unemployment is now the longest on record. Overall, the total U.S. light vehicle market grew less than 1% from what was a weak July of 2010.
And, one quarter of drivers admitted to neglecting repairs and maintenance on their vehicles in the past 12 months due to the economic climate, which AAA Automotive experts rightly say can greatly increase the likelihood of their car needing a costly, major repair.
“Economic conditions have taken their toll on many Americans resulting in them neglecting their cars and leaving them at increased risk for very expensive repair bills,” said Marshall L. Doney, AAA Vice President, Automotive and Financial Services.
“Many Americans rely on their cars for their livelihood and losing access to them could be financially devastating during an already troubling economic time,” said Doney.
According to the survey, 38% of American drivers could pay for a $2,000 repair bill with funds in a savings account, while 20% would pay with their credit card. Eleven percent said they would have to borrow money from their friends, family, retirement or home equity in order to pay for a $2,000 repair.
Slightly more Americans reported being able to pay for a $1,000 repair bill with 46% saying they could use savings and 22% using a credit card. Fourteen percent would look to borrow from their friends, family, retirement or home equity.
AAA said that a $1,000, $2,000 or higher repair bill can quickly appear – especially on older vehicles that have not been properly maintained. While repair costs can vary greatly by make, model and type of repair, a transmission repair can be $2,000 to $4,000, while an engine repair can exceed $5,000. Major brake repairs may range from $350 to $1,000, and a new set of tires can run from $300 to more than $1,000.
