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The average natural gas bill in the United States is $80 to $100 per month. Your monthly gas bills could vary significantly, depending on the time of year, where you live, the size and age of your home, and other factors.

Read on for a breakdown of what can cause your gas bill to go up and down from one month to the next, how to budget for those price changes, and how you might be able to lower your costs in the future.

How Much Does a Gas Bill Cost Per Month on Average?

The average cost of gas per month in the U.S. has hovered around $80 in recent years. Your household’s cost could be much lower or higher, depending on your location and its cost of living by state, the size and age of your home, the appliances you use, inflation, and the ever-fluctuating cost of natural gas. Your bill might be much higher, for example, than that of a friend who has the same size house in a state with a warmer climate. And it could be less than what your next door neighbor pays, if your home is smaller or more energy efficient.

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Why Is My Gas Bill Higher Than Usual?

If your gas bill seems higher than usual, it could be that your provider is charging a higher rate. (You can check that by comparing two or more months’ worth of gas bills, or credit card statements if that’s how you pay your bills.) It could also be that you’re simply using more gas because it’s colder outside. Or maybe you’ve been taking more hot showers or running the dishwasher, clothes dryer, or gas fireplace more often. Working from home is a common reason that utility bills are sometimes higher.

If you can’t come up with a reasonable answer for the cost increase, you may want to talk to your gas provider or check your statement to see if your usage is up. But be prepared: The calculations that go into determining your monthly gas bill can be complicated.

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Understanding the Monthly Cost of Gas

In the U.S., natural gas can be priced in a few different ways, including dollars per therm, dollars per British thermal unit (BTU), and dollars per cubic foot.

Here’s what you really need to know: According to the U.S. Energy Information Administration, the price residential customers pay for natural gas is determined by two major factors:

•   Commodity Cost: The actual cost of the gas.

•   Transmission and Distribution Costs: The costs involved with moving the natural gas from where it’s produced or stored to a local natural gas distribution utility, plus whatever it costs to deliver the gas to customers.

If you live in a state with easy access to residential gas (Alaska, Utah, Washington, Colorado), the monthly rate you pay may be lower than if your utility has to transport the gas a long distance to reach you (in say, Hawaii).

The price you ultimately pay for natural gas in your state, city, or subdivision also may be affected by state regulations, taxes and other charges, availability, seasonal consumer demand, and the amount of competition in your location. (By the way, there’s no relation between the cost of natural gas and the price of gasoline.)

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Average Gas Bill Based on Household Size

Knowing the natural gas rates in your area can help you understand why your bills might be higher or lower than you expected. But the size of your home and the number of people who live there can also influence your average monthly gas bill. Keeping these things in mind can help you predict your gas usage when you make a budget.

Prices can vary significantly by season, with costs rising if you need to stay warm in cold winter months. According to HomeGuide.com, monthly gas costs in winter can be $120 to $200 versus $35 to $50 in summer.

Here’s a rough estimate of what the average monthly cost of gas could be for various apartment size, according to ApartmentList.com. Apartment costs may well be less than the cost for gas for a house, given that a house is likely to be larger and have more appliances, among other factors.

Remember that your costs may be much different depending on how many gas appliances you have in your home, how warm you keep your home in the winter, what you keep the temperature set to on your water heater, and other factors.

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What Uses the Most Gas in a Home?

The top uses for natural gas in U.S. households are heating and water heating. But many homes also use gas for cooking, indoor or outdoor fireplace, clothes dryer, or heating a pool. (Worth noting: Replacing home appliances can lead to greater energy efficiency.)

How Can I Lower My Gas Bill?

Even if you earn the average salary in the U.S., it may be challenging to afford your gas bill at times.

There are several steps you can take to lower your natural gas bill. (You may be interested in lowering your car’s gas bill, too.)

Get a Home Energy Assessment

A professional home energy auditor looks at your past bills for information about your energy use, and inspects your home to pinpoint problem areas and offer money-saving suggestions. Your gas company may offer assessments to its customers, or you may be able to get help finding an energy audit program through your state or local government.

Balance Costs Across the Year

If your local utility offers a yearly budget plan, you may be able to spread out your costs so that your bill is roughly the same amount each month. This can keep bills from becoming overwhelming in months when you use more gas. Or you can use a money tracker app to determine your average monthly cost of gas and set aside the appropriate amount.

Lower Your Water Heater Temperature

When was the last time you even looked at your water heater? Lowering the temperature to 120 degrees can help you save money, prevent family members from accidentally scalding themselves, and protect your pipes. You can also purchase a special blanket or “jacket” to insulate your water heater and make it more efficient.

Look for Leaks

If your doors and windows are getting older, check whether cold air is coming in and warm air escaping. Clear plastic film or weather stripping may be all you need to fix the problem.

Lower the Thermostat

The U.S. Department of Energy recommends setting your thermostat at 68 degrees when you’re home during the winter, and turning it down a few degrees more when you’re away. If you keep pretty standard hours, a programmable thermostat can ensure the house is comfortable when you get home from school or work. And if you work from home, you can lower the temp when you go to bed, or pull on a sweater during the day.

One note: If you get hit with a super-high bill one month (say, due to a polar vortex triggering frigid temperatures), that may be a time to dip into your emergency fund. It’s there to help you cover unexpected expenses

Assistance Programs to Help with Your Gas Bill

If you’re struggling to pay your gas bill, you may be able to get some help from a federal, state, or local government assistance program or from a nonprofit agency. Here are a few options to consider:

Low Income Home Energy Assistance Program

The Low Income Home Energy Assistance Program (LIHEAP), operated through the U.S. Department of Health and Human Services, was created to help low-income households pay high home energy bills. Each state has its own rules regarding who is eligible for help and when and how to apply. (Assistance isn’t made directly to households.) For more information, go to the LIHEAP website.

Low Income Home Energy Assistance Program

The Low Income Home Energy Assistance Program (LIHEAP), operated through the U.S. Department of Health and Human Services, was created to help low-income households pay high home energy bills. Each state has its own rules regarding who is eligible for help and when and how to apply. (Assistance isn’t made directly to households.) For more information, go to the LIHEAP website or call 202-401-9351.

Local Utility Company Programs

Some utility companies offer limited bill-paying assistance programs on their own or working alongside state agencies or nonprofit organizations. Check your local gas company’s website to see if they offer help, or try giving them a call. Your gas company may take special circumstances into consideration when it comes to paying your bill.

SoCalGas, for example, offers past-due bill forgiveness, discounted rates, and extended payment dates for certain qualifying customers. The utility also works to provide one-time grants through their Gas Assistance Fund.

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The Takeaway

The average cost of gas per month for a house is $80 to $100. The location, size, and age of your home — and, of course, the time of year — can affect your gas bill from one month to the next. So can the number of people in your household and the appliances you use. The rate you pay each month for gas may also fluctuate based on factors over which you have no control. All those things combined can mean that budgeting for your monthly gas bill requires some careful oversight.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

How much does the average person pay for gas each month?

The average household pays about $80 to $100 per month for natural gas. Your bill could vary significantly, however, based on location, home size, number of residents, your appliances, whether you work from home, and more.

How much should you budget for gas a month?

One way to determine how much to budget for gas each month is to track your spending, then calculate the average monthly amount based on past bills. You may want to budget an amount that’s a bit higher than in the past, just in case the winter is especially cold or gas rates go up. (If you don’t end up needing the extra funds, you can put the money toward your emergency fund or another bill.)

What’s the average price of natural gas in San Francisco?

According to UtilitiesLocal.com, residential natural gas prices in San Francisco rose slowly but significantly from September 2021 to September 2022. Rates increased by approximately 34% year over year.

Photo credit: iStock/DGLimages

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

SORL-Q125-026

If you attended The Art Institutes between 2004 and 2017, you may qualify for federal student loan forgiveness. During that time, according to an investigation by the U.S. Department of Education (DOE), The Art Institutes made “substantial misrepresentations” about students’ chances of employment after graduation.

In 2024, the Biden-Harris administration announced more than $6.1 billion in immediate and automatic student loan relief to nearly 317,000 borrowers who were enrolled in The Art Institutes school system during that 13-year period.

Students who attended after 2017 may have some recourse as well. In September 2023, The Art Institutes closed their doors for good. Borrowers impacted by the schools’ closure may be eligible for discharge of their student loans through closed school loan discharge.

Learn more about The Art Institutes loan forgiveness, closed school loan discharge, and other options for dealing with your student loan debt.

Background on The Art Institutes’ Closures

The Art Institutes was a private, for-profit art school system with 50 campuses. Between 2004 and 2017, the institution engaged in what the DOE called “substantial misrepresentations related to employment rates, salaries, and career services,” and distributed false information to prospective students, the DOE said.

Many of The Art Institutes’ schools closed in 2019 or earlier. On September 30, 2023, the remaining eight schools permanently shut down. Students affected by the closure can apply for discharge of their federal student loans.

On May 1, 2024, the Biden-Harris administration announced the automatic $6.1 billion in Art Institutes student loan forgiveness for students with federal loans who attended the schools between January 1, 2004 and October 16, 2017.

Private student loans are not eligible for this federal forgiveness or discharge.

Current Status of Loan Forgiveness Programs

If you attended The Art Institutes between 2004 and 2017, your federal student loans should be automatically forgiven, with no action needed by you. Separately, if you were affected by the 2023 closure and you’re wondering can student loans be discharged in this instance, the answer is generally yes.

Federal student loans can be forgiven due to certain actions by a school, including school closure if you were attending the school at the time it closed, or if it closed soon after you withdrew. If you meet that criteria, your federal loans may be discharged under a process called borrower defense to repayment. You can apply for closed school discharge through the Federal Student Aid office.

It’s important to note that in 2023, a federal court delayed the effective date of the latest regulations for borrower defense and closed school loan discharges. No applications can be processed until the effective date is reinstated. However, you can still apply for a closed school discharge in the meantime.

Eligibility Criteria for Loan Forgiveness

Students who are eligible to receive The Art Institutes loan forgiveness announced in May 2024 must meet the following criteria:

•   Enrollment in one of The Art Institutes schools between January 1, 2004 and October 16, 2017

•   Borrowed Federal Direct student loans (or loans that can be consolidated into a Federal Direct Consolidation loan) to attend The Art Institutes

Students impacted by The Art Institutes’ 2023 closure may be eligible for closed loan discharge to relieve their student loan debt through borrower defense to repayment if:

•   Their school closed while they were enrolled, on an approved leave of absence, or within 180 days after they withdrew

•   They borrowed Federal Direct student loans (or loans that can be consolidated into a Federal Direct Consolidation loan) to attend the school

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Types of Loans Eligible for Forgiveness

The types of federal student loans eligible for forgiveness through borrower defense are Direct Loans such as Federal Direct Subsidized and Unsubsidized Loans. Other federal loans that can be consolidated into a Federal Direct Consolidation Loan — including Federal Family Education (FFEL) Loans, Federal Perkins Loans, and Parent Loans for Undergraduate Students (Direct PLUS loans) — are also eligible.

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Application Process for Loan Forgiveness

Students who attended The Art Institutes between 2004 and 2017 should have been contacted about forgiveness without having to take any action. If you have not been contacted, reach out to your loan servicer.

Those affected by the 2023 closure of The Art Institutes can apply for borrower defense to repayment. To apply, log into your account at StudentAid.gov and be sure to have on hand:

•   School name(s) and program of study

•   Your enrollment dates

•   Documentation to support why you believe you qualify for borrower defense and to demonstrate the harm you suffered

Alternative Options for Art Institutes Borrowers

If you are not eligible for The Art Institutes student loan forgiveness, there are some other methods that can help you manage your student debt.

Income-Driven Repayment Plans

Borrowers with federal student loans may want to consider income-driven repayment (IDR). These plans base your federal student loan payments on your discretionary income and family size. This typically results in a lower monthly loan payment. There are several different IDR plans to choose from.

Under an IDR plan, you could qualify for forgiveness of your remaining debt after 20 or 25 years.

Public Student Loan Forgiveness

If you work full-time in public service for a qualifying employer like the government or a nonprofit organization, you may be eligible for Public Service Loan Forgiveness (PSLF). This program forgives the remaining balance on most Federal Direct loans.

Qualifying borrowers can get PSLF after making the equivalent of 120 qualifying monthly payments under an IDR plan or the Standard Repayment Plan.

Student Loan Refinancing

Refinancing is another option you might consider. With student loan refinancing, you replace your old loans with a new private loan, ideally one that has a lower interest rate and more favorable terms, which could lower your monthly payments.

Borrowers interested in refinancing student loans to save money should compare lenders and offers. Also, be aware that refinancing federal loans makes them ineligible for federal benefits like income-driven repayment.

A student loan refinancing calculator can help you decide whether refinancing makes sense for your situation.

The Takeaway

If you attended The Art Institutes between January 1, 2004 and October 16, 2017, you may be eligible for automatic federal student loan forgiveness. You should be contacted about forgiveness without having to take any action. If you haven’t been notified, reach out to your loan servicer.

Students attending The Art Institutes in 2023, when it permanently closed its doors, may be eligible for closed school discharge through borrower defense to repayment. You can apply for a loan discharge at StudentAid.gov.

If you are not eligible for Art Institutes loan forgiveness, you can explore other debt relief options such as income-driven repayment, Public Service Loan Forgiveness, and student loan refinancing.

FAQ

How can I check if my loans from The Art Institutes qualify for forgiveness?

If you have federal student loans and attended The Art Institutes between January 1, 2004 and October 16, 2017, forgiveness should be automatic without any action needed on your part. However, if you haven’t received any notification, you can contact your loan servicer to ask for information on the status of your loan forgiveness.

If you were impacted by the 2023 closure of The Art Institutes, you can apply for closed school discharge. Just be aware that this discharge is on hold per a court order until the effective date on regulations is reinstated. Check with StudentAid.gov for updates on the situation.

What government programs are involved in forgiving The Art Institutes loans?

In May 2024, the Biden-Harris administration announced that the U.S. Department of Education (DOE) would forgive Art Institutes loans for borrowers of federal student loans who attended the school between January 1, 2004 and October 16, 2017. At that time, the DOE took steps to automatically approve individuals for loan discharge.

If you were impacted by the 2023 closure of The Arts Institutes, you may qualify for the DOE’s closed school discharge.

Are private loans taken for attending The Art Institutes eligible for forgiveness?

Only federal student loans taken out to attend The Art Institutes qualify for forgiveness. Private student loans are not eligible.

How long does it take to receive loan forgiveness for Art Institutes loans?

If you were eligible for the forgiveness announced by the Biden administration in May 2024, that forgiveness was automatic and you should have received notification. If you didn’t, check with your loan servicer.

If you were affected by The Art Institutes’ 2023 closure and you filed for closed school discharge, a federal court has delayed the effective date of the latest regulations for borrower defense and closed school loan discharges. You can check with StudentAid.gov for updates on the situation.

Are former Art Institutes students eligible for borrower defense to repayment?

Yes. While borrowers who enrolled at The Art Institutes between January 1, 2004 and October 16, 2017 should automatically receive 100% discharge of their eligible student loans, you can apply for borrower defense to repayment through closed school discharge if you were affected by the schools’ 2023 closure.

Photo credit: iStock/chanakon laorob

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

SOSLR-Q424-025

If you’re struggling with a student loan problem like loan forgiveness or repayment challenges, and you’re getting nowhere on your own, it could be time to consider legal assistance.

A lawyer with expertise in student loan-related legal issues may be able to help you get the answers and action you need to resolve your situation.

Hiring an attorney may not make sense in some situations. And if you’re wondering, how much does a student loan lawyer cost?, there’s the expense to consider. But if you’re tired of spending time and energy on a problem that seems unsolvable, read on to find out how a student loan lawyer may be able to help.

When Should I Seek Legal Advice for Student Loans?

A student loan attorney can explain complex rules so you can understand your rights and responsibilities as a borrower, whether you have federal or private student loans. If your situation requires it, they can also advocate for you with your loan servicer or lender, the U.S. Department of Education (DOE), or even go to court with you.

Here are some issues a lawyer might be able to help with:

Public Service Loan Forgiveness (PSLF)

Public Service Loan Forgiveness is a program to help those working in public service for the government and nonprofit organizations achieve forgiveness for their federal student loans. But there are many stipulations to meet, which may trip up those trying to apply as well as borrowers already in the program.

An experienced student loan lawyer can help ensure your compliance with the requirements of the often-confusing PSLF and other student loan forgiveness programs, and assist you in avoiding potential missteps. This might include reviewing your records for errors, helping correct mistakes, and following up on missing documentation such as employment certifications. Not all PSLF issues are fixable, but if you feel as though your application was unjustly denied, for example, you might decide to hire a student loan lawyer to help rectify the problem.

Total and Permanent Disability (TPD) Discharge

If you received a TPD discharge, you don’t have to repay your federal student loans or complete a Teacher Education Assistance for College and Higher Education (TEACH) Grantservice obligation, if you have one. But you’ll need to provide proof that your physical or mental disability severely limits your ability to work, both now and in the future.

A student loan lawyer can help you prepare your TPD discharge application and assemble the appropriate documentation to meet all the criteria. If your application is denied, an attorney can help if you choose to appeal.

Loan Servicer Errors

A lawyer may be able to pinpoint a loan servicer’s mistake — such as a payment that wasn’t properly applied to your account — that’s keeping you from getting student loan relief. A student loan attorney could also serve as your representative to get the error fixed.

Forbearance and Deferment Decisions

An attorney can help you determine if you qualify for federal student loan forbearance or deferment, assist with your application and documentation, and dispute a denial if you feel it’s incorrect.

If you don’t qualify for forbearance or deferment, but you can’t manage your current loan payments, an experienced student loan lawyer can help evaluate various options for lowering your monthly amount. You may be eligible for an income-driven repayment (IDR) plan that bases your monthly federal loan payments on your discretionary income and family size, for example.

Another option is to refinance student loans. With refinancing, you replace your current private or federal loans with a new loan from a private lender. Ideally, the new loan will have a lower interest rate and more favorable terms, which could lower your payments. Keep in mind, though, that if you refinance federal loans with a private lender, you’ll forfeit federal benefits like forgiveness and IDR.

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Collections and Garnishment Mitigation

A lawyer can offer negotiation assistance if your student loan is in default, meaning you’ve missed a series of payments on it, and the loan is being sent to collections. An attorney could also be helpful if you’re facing wage garnishment or some other legal action as the result of unpaid student loans. Options an attorney might suggest for you to consider include loan consolidation or rehabilitation.

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How Can I Find a Student Loan Lawyer?

If and when you decide it’s time to consult with a student loan lawyer, it’s important to find someone with the appropriate expertise and credentials to deal with your particular issue.
Ways to search for a student loan attorney include:

•   Contacting state and local bar associations for referrals to lawyers in your area.

•   Asking friends, colleagues, and family members for referrals. Or, if you’ve worked with an attorney with a different specialty in the past, he or she may be able to suggest someone.

•   Using an online database. The National Association of Consumer Advocates (NACA) website allows users to do a free attorney search based on practice specialty and location. Websites like Nolo and Avvo also offer attorney databases to consumers who need legal help.

Many lawyers offer a free consultation, so you can use that as an opportunity to make sure you’ve found the right fit. This is a good time to ask specific questions about the attorney’s credentials, costs, how and how often you should plan to communicate about your case, and what outcome you might expect based on similar cases. You can also ask if the person you meet with will be representing you personally, or if someone else might be assigned to your case. Finally, be sure to ask the attorney for references.

When you’re scheduling your first appointment, it’s a good idea to inquire about what documents and other information you should bring with you. Having this information organized and ready to go could help speed up the process and possibly lower your costs.

How Much Does a Student Loan Lawyer Cost?

The amount you pay for a student loan attorney can vary depending on several factors. Some lawyers bill by the hour, while others may charge a preset fee based on the complexity of your case and the services required. Where you live and the lawyer’s level of expertise might also affect your costs. Generally speaking, your bill could range from $1,000 to $10,000 or more.

Once you have an idea of what the overall cost will be, you can determine if it makes more sense to get legal help or continue pursuing a solution on your own. Ask yourself: Could hiring an attorney save you money in the long run? Would handing the reins to someone with more experience, contacts, and knowledge allow you to move on to other goals? Or would taking on more debt upfront to pay a lawyer lead to even more financial and emotional stress?

When you’re researching and interviewing student loan lawyers, keep your budget in mind and be clear about your concerns. Some attorneys may offer a payment plan, or they might be able to refer you to other, less expensive options that can provide help.

Other Ways to Get Student Loan Help

If you need help with student loan debt, but you don’t have the money to pay a student loan lawyer, here are some more affordable options to consider:

•   Legal clinics: You may be able to find free or low-cost legal help through a local organization or nearby law school program. You can find a list of legal aid resources at USA.gov.

•   Guidance online: Borrowers can get free virtual student loan help from the American Bar Association Free Legal Answers or from the Institute of Student Loan Advisors.

•   Credit counseling: If you’re feeling overwhelmed by your student debt, a debt counseling organization, such as the National Foundation for Credit Counseling (NFCC), might be able to help you work with your lender or loan servicer to create a repayment plan. The NFCC’s services aren’t free, but they may be more affordable than hiring a lawyer.

•   Ombudsman assistance: If you submitted a complaint about a federal student loan and believe the response was wrong or incomplete, you can contact the Federal Student Aid Ombudsman Group. If you have an unsolved dispute with a private loan lender, the Consumer Financial Protection Bureau (CFPB) may be able to help.

The Takeaway

Researching and pursuing student loan forgiveness, relief, and repayment options can be confusing and frustrating. If you feel as though you’ve hit a brick wall with your efforts to clear up a student loan issue, you may find it makes sense to hire a student loan attorney to evaluate your problem and help seek a solution.

It’s important to weigh the benefits vs. the costs of getting professional help. An experienced lawyer who specializes in student loan debt may be able to provide options you didn’t know about. And that assistance might help you get back on track with your federal or private student loans. But if you can’t afford a student loan lawyer, or decide that legal help doesn’t make sense for you, there are other ways to help manage your payments, including income-driven plans, credit counseling, and student loan refinancing.

The important thing to keep in mind is that you have options.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

Photo credit: iStock/
SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

SOSLR-Q424-030

If you’re wondering whether to get a new or used car in the year ahead, there isn’t one single answer. Each car shopper’s situation is likely to vary, and you need to make the decision that best suits your needs and your budget. Factors like the features you’re seeking in a car, price, insurance costs, and depreciation may come into play.

To help you decide where to spend your cash if you plan to buy some wheels, read on. You’ll learn the pros and cons of new and used cars, plus tips for making your choice.

Pros and Cons of Buying a New Car

For some people, there’s nothing that can compete with the allure of a bright and shiny new car. However, it’s important to consider the pluses and minuses before making your purchase.

Pros

•   Pristine condition: With a new car, you don’t have to kick as many tires. New vehicles arrive on dealer showroom floors (and at online auto sales platforms) in pristine condition with very few miles on the odometer, so you don’t have to spend time checking for vehicle inefficiencies and maintenance or repair issues.

•   Latest features: Some people may feel “the newer the car, the better.” Here’s why: The auto industry is doing wonders with new vehicle construction, with features like better gas mileage, longer ranges in the case of EV vehicles, and technological advancements that improve vehicle performance. Those upgrades come most notably in car safety, cleaner emissions, and digital dashboards that improve driving enjoyment.

•   Warranty and service benefits: New car owners are typically offered a manufacturer’s warranty when they buy a new car, which typically grades out better than third-party warranty coverage on a used car. Additionally, extended car warranties may be available, and auto dealers are more likely to offer services like free roadside assistance or free satellite radio to lock down a new car sale. Those services and features are harder to get with used vehicles.

•   Multiple financing choices: It’s often easier to get a good financing deal with a new car vs. a used car. That’s because the vehicle hasn’t been driven and should have no structural problems, maintenance, or repair issues. That’s important to auto loan financers, who place a premium on avoiding risk.

Next, learn about the potential downsides of buying a new car.

Cons

Some disadvantages of a new car purchase might sway a buyer’s decision.

•   Immediate depreciation: The moment you drive a new car off the dealer lot, it loses several thousand dollars in value, plus an estimated 20% in the first year of ownership and then 15% annually for the next few years afterward, which is not a fun fact when you are making car payments at the same level month after month.

•   Higher price: Saving up for a car is a big undertaking, and you may owe a lot of money on a new vehicle. The average price for a new car is $47,452 as of late 2024, which is a significant figure.

•   Higher insurance costs: Auto insurers typically deem new cars as being more valuable than used cars and assign auto insurance premiums accordingly. Also, since new cars cost more, auto insurers prefer to see new auto drivers get full coverage and not minimum coverage.

•   Less room to negotiate: New car models may be less negotiable in price than used ones. Because they are the latest shiny new thing, demand may be higher and inventory lower. A dealership may be less likely to knock down the price for this reason, while they might do so on a used car sitting on the same lot.

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Pros and Cons of Buying a Used Car

Used cars offer buyers value and savings, which are attractive benefits to drivers who may not have a big budget, but still want to drive a quality vehicle. However, there are other benefits and downsides to consider as well.

Pros

•   Lower price: No doubt about it, most used cars sell for significantly less than a new car with the same make and model. You learned above that the average new car is retailing for just under $50,000. How about used cars? The average is currently about $25,571, a considerable savings.

•   Slower depreciation rate: New cars tend to lose value quickly, as noted above, especially if they’re not properly cared for. But used cars tend to depreciate more slowly, especially if they’ve had regular maintenance, and their sustained value makes them a good resale candidate if the owner wants another vehicle, but still wants to make a good deal when selling the vehicle.

•   Your down payment may go farther: Buyers who can manage a robust down payment on a used vehicle can bypass a good chunk of the debt incurred in purchasing the vehicle. It comes down to simple math — if a buyer purchases a $25,000 used vehicle with a down payment of $15,000, there’s only $10,000 left to pay on the vehicle. If a buyer purchases a new vehicle for $48,000, and puts $15,000 down, that buyer still owes $33,000 on the auto loan. Buying a used car could leave more money in your budget to put in a high-yield savings account for emergencies or another purpose.

Cons

When deciding whether to buy a used car or not, these potential disadvantages may also be worth considering.

•   Reliability issues: With a used car, an owner may be getting a quality vehicle — or maybe not. A used car may have spent years on the roads and highways, incurring a fair share of dings, dents, and general wear and tear that may have aged it prematurely, particularly if it hasn’t been maintained well.

•   Fewer options: You may not get the exact make and model you want. The options can dwindle when it comes to buying a used car. Whereas auto dealers can offer a wide range of makes, models, and colors for a new vehicle, those choices can be significantly limited with a used car, truck, or SUV. That could mean that a used vehicle buyer may have to compromise on different factors, in contrast to someone who is buying new and can often get their dream car, down to the last detail.

•   Maintenance costs: You may pay more for vehicle maintenance. Auto repairs often cost more over time and become more frequent, too, as a car ages. So you may well pay more for maintenance and repairs with a used car. With a very old car, finding parts to complete repairs may also be a challenge. In other words, it may take more time and have you spending more from your checking account to keep the car running.

Is It a Better Value to Buy a New or Used Car?

As noted above, there’s no one-size-fits-all answer to whether a new or used car is the better value, but often, a used car is considered a better value. This is because, with a used car, depreciation has already occurred, meaning the price is lower. In this way, you may be able to get more car for the money you’ve earmarked for this purchase, and the car could have a better resale value. Insurance costs may be lower as well.

Is It Easier to Get Approved for a New or Used Car?

In general, it’s considered easier to get approved for a new car loan vs. one for a used car. That’s because new cars are thought to be less risky since they are new, without wear and tear issues. Their value is thought to be simpler to determine.

It’s worthwhile to consider how your credit score could impact which loan offers you might qualify for:

•   If you have very good or excellent credit (say, 781 or above), your interest rate as of late 2024 would typically be close to 5.08% APR (annual percentage rate) for a new car or 7.41% APR for a used car.

•   If you have good to very good credit (between 661 and 780), your APR for a new car would be close to 6.70% APR and 9.63% APR for a used car.

•   If you have a credit score that’s in the fair range to lower good range (between 601 and 660), you’d likely be assessed an APR of close 9.73% APR for a new car and a 14.07% APR for a used car.

•   If your credit score was between 501 and 600 (in the lower section of the fair range), you may have a more difficult time accessing financing and could expect to be charged close to 13.00% APR for a new car and 18.95% APR for a used car.

•   Have a lower score, in the 300 to 500 range (poor)? You might expect to face challenges getting financing. Those who do offer you a loan could charge close to 15.43% APR for a new car and 21.55% APR for a used car.

Consider Buying a New Car If…

As you make your decision between buying a new or used car, you likely will have your own set of needs and preferences. Here’s when buying new may be your best option:

•   If you can afford what is likely to be the higher price tag of buying a new car and loftier insurance costs (as noted above), then you may want to go ahead and buy the latest model.

•   You want the latest bells and whistles: If you feel you need an auto with certain new features (whether it’s the design or a safety system), then you may opt for this year’s model.

•   If you are financing your purchase, you may be able to get a more favorable APR when buying a new vs. used vehicle. Doing research on how to get a car loan can help you prepare for this path.

Consider Buying a Used Car If…

For some people, though, buying used can be the wiser choice. For instance:

•   If you have a fixed budget, a used car will generally offer a lower price and possibly lower insurance costs, too.

•   Is there a feature you need but can’t afford in a brand new car? A used car may suit your needs. For instance, if you really need a vehicle with a third row of seats but can’t afford one brand new, that may lead you to a used car.

•   If you want to avoid the steep depreciation that comes with buying a new car, a used car may work better for you. It may help to know your car will retain much of its purchase price in the coming years. This could be helpful if, say, you know you’ll be selling the car in a year or two and want to forecast how much you’ll net to put in an online bank account.

By weighing your choices on these fronts, you will likely be able to make the right move, both in terms of the car you buy and how well it fits into the type of budget you use.

As you would with any major purchase decision, you’ll want to shop around, check the book value of preferred vehicles, and look at the car’s maintenance and repair history to ensure it’s in good condition. You may also want to make sure it’s inspected by a trusted mechanic.

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The Takeaway

The choice between a new and used car likely will depend upon your personal preferences and financial situation. New cars may have the latest features and lower maintenance and financing costs, but they tend to be pricier and trigger higher insurance costs. And they will depreciate rapidly. A used car will usually have a lower sticker price but maintenance costs and higher rates on financing should be noted.

As you think about car financing that best suits your needs, you may want to make sure that your banking partner is the right one, too, and is helping your money work harder for you.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

Do used cars require more maintenance vs. new cars?

You may pay more for maintenance on a used car vs. a new one. Typically, older cars need more work than their younger counterparts.

Are used cars a better deal than new cars?

Used cars can be more affordable than new ones, from the sticker price to the insurance costs, and because they don’t depreciate as rapidly as new cars, they can be a better deal.

What are options to buying a new or used car?

Buying a certified pre-owned car, which has been vetted to be in very good condition, or leasing a car are other options you might consider when thinking about buying a new or used car.

Photo credit: iStock/Ivanko_Brnjakovic

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