- Vehicle costs plummeted during the pandemic due to an increase in work-at-home options.
- Relief for transportations costs was limited to individual companies providing temporary relief from vehicle payments or reducing insurance costs.
- Closed or limited public transportation routes increased transportation costs for consumers without personal vehicles.
Transportation options changed dramatically during the pandemic. Many cities shut down trains and buses or limited capacity. Work at home mandates eliminated the commute for office workers. Gas prices fell due to a decrease in demand. However, not everyone saved money or saw any meaningful relief.
Transportation Costs During the Pandemic
Federal and state mandates failed to provide direct aid for auto loans or mandatory auto insurance. Congress and governors directed help toward housing and utilities,treating transportation as a non-essential expense. However, in most towns and cities, public transportation is not adequate, making cars the primary means of getting around.
Auto lenders generally offered help in the form of one to six months of deferred payments. In most cases, at the end of the deferment, you resume making your scheduled monthly payment, and the number of deferred payments extends the loan term. Companies waived late fees on a case-by-case basis.
Vehicle Insurance Companies companies also offered rate discounts because stay-at-home orders meant fewer drivers on the road and less insurance risk. Rebates applied to either the current policy or renewals during the second quarter of 2020. The discounts averaged half of one month’s premium. Some states waived license renewals for a period due to DMV office closures. After the initial wave of discounts, insurance costs returned to normal.
Fuel costs fell across the country throughout 2020 due to lower gas prices and less driving. As things get back to normal, you will drive more, increasing the amount you spend on gas. In addition to driving more miles, gas prices are also rising sharply in 2021.According to the Bureau of Labor Statistics, gas prices are up 22% over 2020, with the rates expected to increase by 34% and reach a 3 year high by summer.
Public Transportation: Due to the pandemic, half of the consumers surveyed reported avoiding public transportation or using it less than they did before the pandemic. Working from home, fear of public spread, and the shutdown of operations contributed to lower use. The challenge is that transportation alternatives cost more. When public transportation becomes unreliable, you might have to buy a vehicle. Owning a car could also mean a car payment, insurance, gas, and parking fees to an already tight budget. You may depend on rideshare options without a car, which insignificantly more than the cost of a bus or train ticket.
Ride Shares/Taxis also saw an initial decline in demand when fewer people traveled, and there was increased access to delivery services.As the economy recovers and the lack of confidence in public transportation remains, demand for rideshare services is outpacing the availability of drivers. The result is that companies like Uber and Lyft raised prices. In some cases, they are triple what they were a few months ago.
Parking costs fell for many households as commuting declined. As employers reopen offices, those costs will return to the pre-pandemic levels. In some cases, parking fees may rise sharply as companies and municipalities try to make up for last year’s lost revenue.
Aid Offered During the Pandemic
Relief packages did not address transportation costs. There was no guaranteed help for car payments, insurance, or other transportation needs, leaving individual companies to address consumer challenges.
In the early days of the pandemic, car finance companies offered short-term help for those unable to make payments. Some programs remain in place for the newly unemployed. Payment deferments were generally added to the end of the loan, preventing a major financial burden when payments resumed.
When Will the Aid End?
Without any coordinated relief for transportation, most assistance ended in 2020.
Budgeting Strategies for Post Pandemic Transportation Costs
Your post-pandemic budget must include all transportation costs you will incur as things return to normal. You must also include inflation. Rising gas prices, higher rideshare costs, and increases in parking fees could mean transportations costs now account for a more significant portion of your monthly budget.
