Are your car loan costs too high? Sell it, share it, and save. New car sharing companies are popping up in all capital cities to help consumers cut down on the running costs of owning your own car.
By Jack Han, RateCity.com.au3 April 2009
Everyone wants a car to call their own. You can store your favourite CDs, leave things in the back seat, and if you’re really attached even give it a nickname. But with the rising costs of car ownership, are these pleasures worth the fortune?
Australians are voting ‘No’, with the Australian Bureau of Statistics (ABS) reporting new car sales in February 2009 plummeted 18.6% from Feb 2008.
Sydney drivers and people all over the world are turning to car sharing, a popular and low cost alternative to car ownership and taxis.
Members of car sharing schemes have 24/7 access to a city-wide network of vehicles, and enjoy the convenience of booking a car on the net, or the phone, even as you’re walking towards the car.
After finding the car closest to them, a member will simply collect it from a designated on-street or off-street parking place, rent it for anywhere between an hour to a week, and return it to the same spot.
For a low flat fee, a car share customer does not need to worry about fuel costs, maintaining the vehicle, or car insurance . Instead, they pay for membership costs, hourly rates, and the distance they travel.
The three major car share schemes in Sydney are GoGet, Charter Drive, and Flexicar (see related links below). Each charges different hourly rates, membership costs, plans, and car models. GoGet disperses its car locations across many inner suburbs of Sydney, while Charter Drive and Flexicar concentrate its parking spots in the CBD.
All 3 car sharing services are trying to get people to understand the big costs of owning a car. Let’s look at what these are.
Take Nick as an example. He’s paid $15,000 for a new car. In 5 years time, it will depreciate to about 65%, or $9750. This is costing him $1950 a year.
A report from CANSTAR CANNEX calculates the national average insurance premium to be $852.90 (Sep 2007). A number of factors will influence your own personal insurance quote, including your age, car model, street you live in, and the car’s security features. Comparing car insurance online usually saves drivers hundreds of dollars.
CommSec's chief economist Craig James stated in March that the average household is paying $164.60 a month on petrol. Australian Institute of Petroleum (AIP) data released last week show that average unleaded fuel prices are $1.16 per litre, a big drop from April last year, where prices peaked at $1.47, costing households $207 a month.
If Nick secured a loan to pay for this new car, paying it off for 5 years at today’s rates of 10% will cost him about $800 a year in interest. Shopping around for some of today’s lowest car loan rates can minimise this.
Maintenance and Service
One of the biggest hassles for car owners is having to pay maintenance costs for their car, such as changing tyres, fixing dings and scratches, fixing their air conditioner and general maintenance such as washing and vacuuming the vehicle. Car sharing dispels these extra worries.
Monthly costs of car ownership – not including maintenance and servicing
TOTAL with interest
Now let’s compare these costs with car renting. GoGet estimates that people driving 3-4 times a week will be paying $350 a month. Charter Drive offers monthly packages from $5 to $250, the latter one being the equivalent of 19 nights of rent.
As we can see, clear savings can be made by switching to car sharing, especially for those thinking about taking out a loan to finance a new car. You won’t have to worry about any of the running costs mentioned above. However, take note that there’s less flexibility in car sharing as you’ll have to plan driving days and times in advance to guarantee a vehicle is available.
Thousands of Australians have already picked up the new trend, and will be reaping the cost savings and benefits. Of course, you’ll be sacrificing the added convenience and luxury of having your own car, so it’s up to you to decide if you would rather have more money for the groceries or the freedom to drive when it suits you best.