A $1,000 repair would wreck most drivers' savings

How financially vulnerable are drivers?

According to our survey, only 41% of Americans have enough money saved to pay for a $1,000 car repair out of pocket. That means the majority of people would need to take on debt to deal with a major car repair. (Cox Automotive data indicates the average car repair now costs $548.32, but we’ve found that larger fixes, like transmission and catalytic converter replacements, can cost thousands.)

Nearly 70% of females said they couldn't pay cash for a $1,000 repair, while a majority of men (55%) said they could afford it out of pocket.

So, how are people keeping their cars on the road?

Of survey respondents who didn’t have enough savings to pay for a $1,000 repair, 39% would put it on a credit card, and 31% would have to borrow the money from a friend or family member. About 9% would take out a loan. Finally, 21% couldn’t pay for it at all — they’d just be stranded.

That means 13% of all respondents would have no way to afford a major car repair. (And, unfortunately, if you can’t afford a $1,000 repair, you probably can’t afford a new car, either.)

While putting repairs on plastic is rarely advisable — high-interest debt can make solving money problems even harder — it may be the lesser evil if that’s your only option.

» MORE: Car shopping shortage and struggles

Even high-income households struggle

While respondents’ ability to pay out of pocket for a major car repair rose correspondingly with income, high earners weren’t as financially secure as you might think.

Nearly 23% of households earning over $150,000 annually still claimed they couldn't afford to pay cash for an urgent $1,000 car repair. And 2% of those respondents said they would have absolutely no way to cover the cost.

» LEARN: Are you still in the middle class?

Are you making things worse for yourself?

Putting off maintenance and ignoring your check engine light can lead to more severe problems, which means even bigger bills down the road.

We asked our survey respondents how long they had left their check engine lights on, and most of the results were longer than experts generally recommend.

How soon should you take your car in after the check engine light goes on? Ideally, as soon as possible, but you may have a little bit of leeway.

• If your check engine light stays on (not flashing), it means there's an issue but not an emergency, according to Robert Walden, CEO of VehicleFreak, a website providing auto maintenance advice. He said you should get it checked out within a week or so — at the most.
• A flashing check engine light is much more urgent. Walden said you could cause major damage if you keep driving the car, and you should pull over right away.

“No matter what kind of light you see, it's not smart to put off dealing with it for long,” Walden said. “Think of the check engine light as your car's cry for help. The sooner you respond, the better it is for your vehicle's health and your wallet.”

How you can protect yourself from car repair bills

The good news is that there are things you can do to shield yourself from expensive car repairs.

Keep up with maintenance

Regular maintenance (like oil changes, fluid flushes, inspections and filter replacements) can help you avoid serious problems and lower your overall upkeep costs. Sure, it’ll cost you a little now, but it should save you money long-term.

What does that look like for most people? Over 95% of our survey respondents reported that they perform maintenance on their cars at least once a year, and most of them spent less than $500 on it in the last 12 months.

Take advantage of warranty coverage

Warranty coverage can be a lifesaver when something goes wrong with your vehicle, especially if you don’t have the cash to pay out of pocket or the credit to finance the costs.

New cars come with warranties from the factory, but they don’t last forever. (The industry standard is three years/36,000 miles of bumper-to-bumper coverage and five years/60,000 miles of powertrain coverage. A few manufacturers offer more.) You can also get warranty coverage with a certified pre-owned vehicle or an extended warranty.

Unfortunately, there’s also a lot of consumer confusion around car warranties.

Almost 27% of our survey respondents weren’t sure whether their vehicle was under warranty, and just under half of those people didn’t know how to check, either. (If you aren’t sure about your vehicle, you can look up your factory warranty status with your vehicle identification number.)

To make things worse, about 55% of people surveyed were confident that they knew what a car warranty covers, but almost 47% of these respondents incorrectly believed a warranty pays for routine maintenance.

The confusion and misinformation around warranty coverage mean that many people probably aren’t taking advantage of it like they should. Or worse — they’re relying on warranty coverage to help them in ways it’s not capable of.

Make sure you have adequate insurance

While car insurance is mandatory in almost every state, the required coverage is generally meant to limit your danger to others. In other words, liability insurance won’t cover damage to your own vehicle.

Spending more for collision or comprehensive insurance with good protection and an affordable deductible may be worth it if you want coverage for your own car after an accident, theft or extreme weather event.

» COMPARE: Car warranty vs. car insurance

Bottom line

Many more Americans may soon find themselves stuck between a rock and a hard place — unable to afford a new vehicle but without the money to keep their current cars on the road.

If you find yourself in a financial pinch, remember that putting off routine maintenance to save money in the short term often leads to bigger bills over time. Likewise, ignoring issues may turn small problems into major repairs.

To avoid getting stuck with a large repair bill in the future, do what you can to keep your vehicle in good shape, carry enough insurance to protect yourself from the unexpected and remember to take advantage of whatever warranty coverage you have.