When Is Ridesharing Better Than Owning a Car?
When I suddenly found myself without wheels this fall after what I thought was just kinking fenders, I spent several weeks worrying about whether I wanted to buy another car.
In less than three years, I have driven only about 12,000 miles. I worked from home. I could walk or bike to a grocery store or pharmacy. Did I really want to spend thousands of dollars on a large piece of metal and plastic that would spend most of my time in my driveway?
While I was thinking about it, I signed up for a monthly Lyft subscription , dropped my bike to set up, and downloaded a mobile app to track my local bus route. But it was all like a guessing game. I felt like there must be a magic number when it would be wiser to own a car rather than collecting a collection of rides, rentals and other vehicles for myself.
Spoiler alert: I bought a car after the price of the used car I was looking for dropped so low that I couldn’t give it up. But after I signed the papers and got comfortable with my new ride, I still continued to use my bike and request trips to the city center; I even took the bus from time to time. So my questions remained.
Leaving a car is a convenience, not just a cost
The reason it is so difficult to determine the true cost of owning a car compared to anything else is because it doesn’t really boil down to cost. “It’s about your location and accessibility,” said Richard Reyna, director of product training at auto parts store CARiD.com .
If you live in an urban area with a myriad of options, from sharing to hourly car rentals and monthly ownership of public transportation, cycling, scooters and that weird one-wheel hoverboard – I could go on – you can go for some mixed solution. which works for you.
But on the other hand, you may not have a place to park your car if you own it full-time or part-time. Your decision depends in part on your finances, but it also depends at least as much on your willingness to manage any number of transportation options in your never-ending search for convenience.
In the meantime, if you live in an area with no public transportation, an irregular sharing service (or no service at all), or far from your workplace, it may come down to sheer necessity. If you want to be on time for work every day, you must have your own wheels, whether they are old or unfashionable.
And while it would be nice to be able to easily calculate the tipping point for ditching the car in exchange for some form of sharing economy, there is simply no single answer for many people. “What price do you pay for freedom and flexibility?” asked Greg McBride, chief financial analyst at Bankrate . “This is the real advantage of having a car. Nobody ever thinks about how convenient it is to throw things in the trunk when you’re at work, until you have a car to do it. “
Don’t miss the budget forest for the trees of car owners
A lot of personal finance resources will tell you that if you want to get out of debt, one way to get it done quickly is to get rid of your second car or ditch it altogether. But while it can provide a quick cash infusion into your budget, chances are you won’t be able to get where you want with a monthly bus pass and your own feet. Your budget will still have a shipping line item even if it isn’t filled with car and insurance payments.
A recent poll by debt management app Tally found that 49% of Americans with debt would not give up their car within a year in exchange for paying off all of their debts. For Gen X and millennials, this is the second largest non-negotiable expense (above only cellular). Meanwhile, only 12% of respondents were reluctant to give up their passenger-sharing services like Uber or Lyft to get out of debt.
I was one of those people who didn’t want to give up the freedom to jump in the car and just drive . Twenty thousand student loans? “No problem,” I said, signing up for the first car I bought when I moved from Washington to Florida. It was okay to have a car. I would do fine too. Not because I didn’t want to save money to pay off my debt, but because being able to get by on my own terms seemed the most economical way to do it.
Well you can run numbers
To see if it makes sense for me to give up my car, I compared the cost of using LyftPink for a month to what I spent every month on my last car. (I paid in full for my last car, so the math won’t be as fair for her.)
When I had my monthly car payment, the minimum amount I could expect to pay each month was $ 491. This included my minimum car loan payment, my insurance, gasoline, mileage through the car wash, maintenance, and my AAA membership.
For a month of using LyftPink, I paid $ 19.99 to get 15% off every ride. I made 16 trips and, while tipping the drivers, paid a total of $ 206.46 – an average of $ 12.90 per trip.
Cheaper than having my car, of course. But I also spent money (which I didn’t track) to get to the bus; if a friend took me on errands during the absence of a car, I would have thrown her a few bucks for gas.
Other options I might consider is a shared ride plus rentals at places like Enterprise or Hertz, which in the past in the area cost me about $ 150 for a three-day weekend. If Zipcar or Car2Go (RIP) were available in my area, I would look at the cost at least $ 82 per day.
You should also consider a new concept for subscription-based car ownership services. “They are an intermediary for people who do not want to own a car and the associated obligations, but who need more convenience than a sharing service can provide,” explained Reina.
You must sign up for at least 30 days before upgrading to a monthly subscription. Your payment includes your insurance, maintenance and repairs. All you pay extra for is refueling the gas tank. “It becomes a potentially viable option depending on where you live and how often you need a car,” Reina said.
But even this is not a perfect solution. “If you live in Manhattan, it’s not as attractive” as if you live in an area with ample parking, he admitted.
ZipCar even has its own version that offers unlimited vehicle access from Monday to Friday for commuting. If you drive 20 miles a day, your expenses (including gas, insurance, parking, and maintenance) would be around $ 700, according to a pricing tool on the ZipCar website .
Reina said the upfront cost for services like ZipCar or FlexDrive’s monthly ownership subscription service is at least $ 400-500 as it looks too expensive. It might sound ridiculous if you see ads for renting or buying a new car for $ 200 a month.
But this is not an apples-to-apples comparison, Reyna said. In addition to providing comprehensive services at a single price, the cost of insurance depending on your age and location is an important factor. For example, if you’re a 20-year-old driver, you are likely to pay significantly more for insurance coverage than someone in their 40s.
If you want to compare your long-term costs of car ownership versus ride-sharing, use the online Ride or Drive calculator. You enter information about your vehicle, driving habits, as well as information about parking and other expenses. (Decrease in the value of your car is also taken into account). Apart from the obvious costs associated with any of them, this site affects the value of your time. If you could work on your laptop or phone while traveling on Uber or Lyft, returning this time could be another factor that will force you to shift some, if not all, transportation in this direction.
I plugged in my own circumstances, including my new car, and found that owning a car for 10 years would cost me a total of $ 53,170, and ride sharing would cost me $ 90,460 over that time. (And I’m sick of the car, so working from the backseat of someone’s sedan isn’t realistic for me.) This is, of course, an estimate – it doesn’t take into account the ongoing development of self-driving cars, for example – but it’s an opportunity to gain a broad view of your future. if you switch completely in either direction.
But beyond the numbers, it all comes down to how difficult or downright miserable your life would be without your own set of wheels. If you gave up the car, how did you decide? What factors did you consider before making the transition? Let us know in the comments.