Young Americans are giving up their cars. It's a path to financial freedom, for some.

By Venessa Wong

With vehicle prices soaring and ownership increasingly out of reach, some young adults are discovering that life without a car leaves them with breathing room to spend on other things

The average car has gotten so expensive that giving up one can provide young Americans with greater control over how they spend their money.

When Nick Renteria moved from Boston to Los Angeles for school, he rented a car for about $350 a month. His parents covered the rental cost while he paid for gas, but he hated sitting in traffic, parking and feeling disconnected from the city.

When he finished his program, Renteria, 24, decided he didn't want a car at all.

He moved to West Hollywood, selecting a neighborhood where he could bike to work, use public transportation and altogether avoid the expense of owning a vehicle.

The decision has paid off over the past two years. While a roommate with a car and a similar income struggled financially, Renteria found he could afford to go out with friends and enjoy the city, even while working part-time jobs.

"L.A. is actually kind of affordable if you don't have a car," he said.

For generations of Americans, owning a car has been a symbol of independence. But for some younger adults, that notion is being turned on its head. The average car has gotten so expensive that giving up one can sometimes translate into gaining something equally important: greater control of how they spend their money.

"L.A. is actually kind of affordable if you don't have a car," said Nick Renteria, who gave up his car two years ago.

And there are signs that younger Americans are shifting away from car ownership as a symbol of success.

The share of households younger than 35 that owned a vehicle last year fell to 79.4% from 82.1% in 2019, according to data from the Federal Reserve. Meanwhile, over the same period, vehicle ownership among Americans 75 and older rose to 83% from 80.1%. Younger adults have now replaced the oldest Americans as the demographic with the lowest vehicle ownership rate.

Other data suggest that young people are changing how they get around. Among adults ages 29 and younger, 48% drove themselves in their own car at least once a month this year, down from 53% in 2023, according to YouGov surveys. Meanwhile the share who rode as passengers increased to 54% from 45%. This was the only method of transportation to become more common among Gen Z adults during this period.

Those surveys gauge transportation habits and not necessarily car ownership. But taken together with the ownership data, they point to a shift in the relationship between young Americans and vehicles.

The high cost of car ownership

The case for young Americans not owning a car is becoming increasingly compelling.

As the rising cost of vehicles, maintenance, insurance and loan payments deter young Americans from buying cars, many are ride-sharing, carpooling, car-sharing and using delivery services instead - and some say they prefer it over having a car of their own.

New vehicles now sell for more than $50,000 on average, and used cars for $27,000. Meanwhile, those who finance their vehicles face average interest rates of 6.35% for new cars and 11.19% for used cars, pushing up the average monthly payment to $765 for new cars and $542 for used cars, according to Experian.

And purchasing a car is only the beginning. Maintenance and insurance costs have also increased dramatically since the pandemic, while gas prices crossed $4 a gallon, on average, this year due to the war in Iran.

The average annual cost to own and operate a new vehicle is now $12,863, according to AAA.

More on this: Cars have become unaffordable for many Americans. Here's what the numbers show.

For younger Americans navigating a difficult job market, expensive housing and student-loan debt can consume a substantial chunk of income.

In a 2025 survey, common concerns hindering Gen Zers from buying a car included not being able to afford the type of car they wanted (30%), interest rates being too high (32%) and costly maintenance (28%), data shared with MarketWatch by Enterprise Mobility show.

On top of that, remote work and online shopping trends, as well as new delivery services, make it easier to forgo car ownership.

Last month, about one out of five workers ages 25 to 34 worked from home at least some of the time, according to data from the Bureau of Labor Statistics.

Meanwhile, Gen Z adults said online shopping (54%) and working from home (48%) have reduced their need to drive over the past few years, and more than 20% cited rideshare services, according to a Mercury Insurance survey in June.

In a separate poll, 29% of Gen Zers said they have used peer-to-peer car-sharing platforms, and among them, 43% did so at least biweekly or monthly. Convenience and cost savings were the top reasons among all survey respondents.

To these young Americans, such options have made owning a car a luxury, not a necessity.

For Xenna Smith, 27, selling her Subaru in Raleigh, N.C., last year was partly a money decision and partly about peace of mind. "I just felt a lot of anxiety," she told MarketWatch.

In addition to safety concerns as driver, "it was just costs and costs and costs," she said.

Now, Smith bikes or rides the bus almost anywhere she needs to go, and walks to buy groceries. Her apartment, which is $1,500 a month, has a gym, pool and bike parking.

In a typical month, she now spends less than $40 on transportation for the occasional Lyft and bike maintenance, compared to $600 when she had a car. Through a $25 annual membership at bike advocacy group Oaks and Spokes, she gets her bus pass for free.

While renting a car, ride-hailing apps (like Uber and Lyft), and public transit all come with their own costs, average transportation spending for households with no cars are lower at every income level - including the top 20% of earners - compared to households that own or lease at least one vehicle, according to the Bureau of Transportation Statistics.

There are tradeoffs. Not having a car makes it harder to see people who live out of town, requires more effort and is physically demanding, Smith said. She also wished drivers would "stop being so aggressive to cyclists."

On the other hand, "I can afford my student loans now, my rent's comfortable and I actually am saving money for once," she said about going car-free. "I'm not contributing anything bad to the environment, and I'm making myself better physically."

Smith's experience underscores an important point: Going without a car isn't necessarily about giving up something. For some, it's about deciding what they would rather be able to afford.

"I can afford my student loans now, my rent's comfortable, and I actually am saving money for once."Xenna Smith, age 27, recently car-free in Raleigh, N.C.

When Sabrina Rae Santoro, a 33-year-old entrepreneur, moved from North Scottsdale to Old Town Scottsdale, Ariz., earlier this year, she decided to give up her Mercedes. The loan payment, insurance, gas and maintenance cost about $1,000 each month, but she was only using it to drive 20 to 30 miles each week because she normally works from home.

"Anybody that knows me knows like I am a car girly," Santoro said, but "I simply ran the numbers and worked out a location where everything that I need is pretty much five to 10 minutes away walking, or a short drive," she told MarketWatch.

Now, Santoro uses the on-site gym at home, has her groceries delivered, and shops on Amazon. To get around, she uses Lyft, which runs $450 to $500 each month. Compared to when she owned her car, "I'm spending half [as much on transportation], and the funny thing is, I still go everywhere I want to go. I don't limit myself," she said. "It's actually an improvement in quality of life. I feel free."

Sabrina Rae Santoro, a 33-year-old entrepreneur, decided to give up her Mercedes and says not owning a car has improved her quality of life. "I feel free," she told MarketWatch.

Living in cities with robust public transportation can ease the transition as well. "It's been a huge relief" financially and mentally to go car-free and not have to worry about maintenance and repairs, said DJ Hargrave, a 30-year-old who sold his Honda when he moved to Chicago last year.

Hargrave's car expenses ran about $1,000 per month, and when he sold his Accord Sport back to the dealership, he had to pay about $3,000 in negative equity.

Now, Hargrave relies on Chicago's public buses and trains with a $75 monthly pass, and spends less than $200 a month on Ubers.

"Younger generations of consumers are doing a lot of math and they don't believe that owning things is the way to go, or that they can ever own things to the same extent older generations have, so they make different choices," Jeremy Robb, chief economist at Cox Automotive, told MarketWatch.

As young people also delay getting married and have fewer children "there are lifestyle choices that may mean they don't need to have a car, especially on the family side," Robb added.

Related: America's renter generation is trying to build wealth by investing in stocks instead of owning a house

Car-industry response

These transportation trends are showing up especially in sales of new cars. Drivers ages 18 to 34 made up 9.7% of new vehicle registrations in August, down from 12.7% five years earlier, according to automotive-data company Mobility Global.

"Younger and less affluent buyers have largely left the new-vehicle market," Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions, told MarketWatch. At the moment, the U.S. car industry lacks options below $30,000. The loss of entry-level models such as the Ford Focus, Chevrolet Cruze and Nissan Versa over the past decade "have eliminated several key products that brought first-time buyers into the market," he noted.

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