When you’re trying to save money, a good place to start is by evaluating all your necessary and discretionary expenses and figure out what you are willing to give up. Among the line items in the “necessary” column are often related to your car.
A car has long been seen as a necessity in the U.S. Urban sprawl and the desire for space has made us more car-dependent than ever. Even urbanites like the freedom owning a car can bring. But with the rise of ridesharing services like Uber and Lyft the landscape has changed. Now you have options to get around town that don’t involve owning a car, learning a bus schedule, or paying the high cost of a taxi. Is kissing your car goodbye really a viable option? Let’s weight the pros and cons to see what makes sense.
Many people look at their monthly payments and figure that’s all there is to owning a car. But there is so much more to think about than just a car payment.
Fuel & Maintenance
Unless your ride is electric, you need to have fuel in the car to go anywhere. How much you spend on fuel each month depends on your type of car, the amount of driving you do, and where you live. And don’t forget, regular oil changes, repairs, and other routine maintenance are all things to consider. Depending on what you drive, costs for maintenance can be substantial.
Most states require you to have at least some insurance, to be on the road legally. Your cost will depend on the amount of coverage, age and value of the car, how much you drive and where you live. Your driving history is also a factor in the cost, so if you have points on your driving record, the premiums could be higher than average.
In some cities, parking has become a major expense and is the hidden cost that you don’t think about. New York City has the most expensive hourly parking at $27.
You may not live in or near New York, but it goes to show what parking can cost if you plan to run downtown for a little shopping or dinner.
If you own a home, you likely have a driveway or street parking. However, in some areas you need to pay for a permit to park your car.
In a rental situation, apartments that include parking often charge you for the privilege. It can be as little as $25, or more than $100 a month, depending on where you live.
Using Ridesharing Instead
Ridesharing services like Uber and Lyft offers a few obvious advantages. According to Lyft, 250,000 users have ditched cars because of ridesharing availability. No car means no worries
about insurance, fuel, maintenance, or parking costs. But the Lyfts of the world can still put a dent in your wallet. These services price each ride according to location and demand. For example, a ride during rush hour will cost more than other times of the day. There’s also a booking fee, which is around $2.00, and then you’re typically charged per mile.
If you live close to where you work and don’t spend all your free time traversing the town, life without a car might be pretty easy. But if you travel into the city from the suburbs, the daily costs of commuting can really add up!
Before you give up your ride for good, rideshare for a week and see how you manage without your car and how much it costs to Uber everywhere. If you find that it costs more or is about the same as owning a car, then the answer seems obvious. But it may not be so cut and dry.
Start by looking at your driving habits. Analyze how often you drive your car and to where. Do you take your car to work, the grocery store, the gym, and for meeting friends and family on the regular?
Can you imagine what your life would look like if you went to these places without a car? Maybe there’s a closer gym that you can walk to. How much would Uber cost to take you to the grocery store? It may be cheap, but do you really want to stand on the curb with a cart full of groceries while you wait for your ride?
You may want to look new at options for your social life, too. Finding restaurants and meeting places that are closer to you, will be key. If you live in an urban environment where you can walk or take public transportation, it’s more likely that life without wheels is a viable option.
It’s not all about you
Let’s face it – in many cases you have more than just yourself to consider when contemplating life sans car. You may have kids to get to school, soccer and birthday parties. Perhaps your Great Dane prefers the dog park that is a bit out of the way. Maybe your frequent trips to the home improvement store necessitate an SUV. If any of this sounds familiar, it’s unlikely that arranging your transportation from an app on your phone is practical.
What’s More Important?
No matter your situation, even if you think that you could rely on Uber, you may not want to give up the “freedom” that owning your own car brings.
You have to be completely honest with yourself. Are you willing to be dependent on others and take a little more time running errands to save money? This is where you have to make important decisions and prioritize. As liberating as life without a car may seem, it may just not be in the cards.
If you realize that it’s not feasible to let go of your car, don’t worry. Owning a car and saving money aren’t mutually exclusive. If you plan right, you can have your cake and eat it too.
While you may try and rationalize your need for that new car smell, buying a used car will be easier on your wallet. The reason why is simple. Depreciation is the single highest cost of having a new car.
In other words, new cars lose money as soon as you drive them off the lot. In contrast, a used car costs less to insure, has lower registration fees and can result in lower monthly payments.
Get the Right Auto Loan
Financing might be necessary to buy a used car, so know your credit situation before you start your search. If you’re buying from a private party, they’ll likely want cash. If traditional funding isn’t an option for you, a personal loan might be a good solution. Whichever way you go, keep your monthly payments affordable and make them consistently and on time to help build a positive credit history.
When it comes to deciding between the ease of Uber vs. the independence of owning a car, there is a lot to think about. While eliminating the cost and responsibility that comes with owning a car may be tempting, there is more to consider than cost alone. You have to evaluate your lifestyle, your family, and your location. While on the surface it may seem easier, ditching your car for ridesharing might not be practical, or help you save money. Take time to weigh all the pros and cons before giving up your parking space at the office.