Owning a car is a lot more expensive than just your monthly payment. There's interest on your car loan, insurance, depreciation, taxes, petrol, maintenance, parking and more.
The average total cost to own a car was $430 per week, according to a calculation from Budget Direct. That's including the average car payment, insurance, maintenance, petrol and registration/fees costs. And then there are the less concrete expenditures; the amount of time you spend driving, cleaning and maintaining your vehicle, plus the the stress of driving everywhere in the first place.
Business Insider puts it succinctly: "On its face, spending so much money for an appliance that starts losing value immediately, takes up vast amount of our free time and is rarely used seems ridiculous."
With costs so high, it might be tempting to give up your vehicle and take one of the numerous available ride-sharing services, like Uber or Lyft, everywhere. Put does the maths work out?
When It Makes Sense to Swap Your Car for a Lyft or Uber
For people in densely populated areas with public transportation systems, making the switch is easier in that there are more drivers available and other options to supplement the services. But the rates are also more expensive, even with affordable options like Uber Pool.
A 2014 report from NerdWallet found that it's still cheaper for most people to own a car than take an UberX or Lyft everywhere. But there are some instances when it could make sense:
- If you don't use your car very often
- If you have a very short commute
- If you have a poor driving record and high insurance
If your travel route is relatively constant, you can use Uber's Price Estimate to work out a rough weekly estimate. For example, a trip from Redfern to Sydney works out to approximately $15-$20.
If you value your time more than your ability to drive everywhere, it may make sense to give up your vehicle. You can use this calculator, which takes into account a time value you assign, to see if it's worth it for you.
When You Should Keep Your Car
The 2014 NerdWallet report notes you should keep your car if:
- You're a parent
- You have a long commute (upwards of 30 minutes)
- You don't have any ridesharing services or car-hailing apps in your area
As Business Insider notes, "If you purchase a highly efficient vehicle for less than $30,000 and drive it more than 24,000km per year until it falls apart, then you should definitely own a car if your goal is to save money."
You can also decrease the number of vehicles your household owns, particularly if multiple people have similar schedules, as CNBC suggests.
A big part of keeping your car is not only the cost, but the convenience. Outside of the major cities, our communities are designed around driving everywhere to live our day-to-day lives. A car is also hugely helpful when it comes to holiday travel.
But for young people without children or elderly or less active people looking to cut costs, turning in your keys may make financial sense - and spare you the significant headaches of car ownership.