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Car ownership has historically provided people with the freedom and flexibility they need to work, have fun and run the important errands that crop up. But after a year of working from home and using delivery services more often, some may now view their car as more of a financial burden. The solution might be a new option that lowers the cost of car ownership while still giving you a way to drive when you need to: the car share.
Car sharing services allow their members to access a fleet of vehicles that can be used when needed without the costs associated with owning a car. And those costs can be steep, with the average yearly cost to own a car totalling $9,282, according to a 2019 AAA study.
Using a car share program may be attractive to folks looking to own fewer cars than they currently do or to eliminate car ownership altogether. In either case, car share programs allow users to rethink their transportation options, reduce their environmental footprint and keep more cash in their wallet. Read on to learn if this option might be right for you.
How Do Car Share Programs Work?
There are several types of car share programs that people can opt to join:
- Local nonprofit car share: A monthly membership model where customers pay a monthly fee. Customers will also pay for the usage of the car and gas mileage. This type of program is currently available in the Denver/Boulder metro area in Colorado.
- Peer-to-peer programs: These have begun to crop up as a sharing economy option where a member books their trip for the time that they're using the car and pays an agreed-upon hourly or daily fee. For example, Turo allows car owners to become "hosts" and offer up their vehicles to be used by those who need it. These services are called peer-to-peer because you're not renting from a fleet, but rather another person.
- Large companies: Members can access these services all across the United States. One example is Zipcar, which is available in several major metropolitan cities across the U.S.
- Corporate car share programs: Businesses may use car share to provide access to cars for their employees to commute to and from work.
One of the perks of participating in a car share program is that you don't have to worry about the annoying and costly parts of car ownership, such as maintenance and registration, since this will all be managed by the car share program.
Cost of Ownership vs. Car Sharing
Car sharing can be an affordable alternative to owning a car, but there are still some costs to consider for both options.
Car Sharing Expenses
- Monthly membership fees: This is dependent on the type of program that you join. For instance, the AAA program doesn't charge a fee for membership, and you'll only pay for the time and gas that you use. The Colorado Car Share program, by contrast, has different membership tiers that are either free or $12 a month. Usage rates range from $5.50 to $7.95 an hour with varying costs for mileage.
- Gas: You typically do have to pay for your gas when using a car share program.
- Insurance: This is a place where car share members can realize a significant amount of savings. Members are typically part of a group insurance policy that may charge a monthly fee. In some cases, members can also opt for more coverage in addition to the group policy, such as a non-ownership insurance policy option. This type of insurance coverage is not as comprehensive as coverage for owners of a vehicle, but could help manage expenses incurred if you end up in an accident.
Car Ownership Expenses
- Car loan: Unless you bought your cash outright in cash, it's likely that you have a monthly car loan.
- Insurance: In order to own a car, drivers in most states must have some degree of insurance coverage that helps cover costs in the event of an incident that damages property or causes injury.
- Maintenance costs: Buying new tires, washing your car or getting a basic tuneup are all an unavoidable part of the car ownership experience.
- Vehicle registration fees: Drivers also incur the cost of maintaining their car's valid registration, and any costs associated with it such as smog services or vehicle inspection costs.
Additional Benefits of Car Sharing
Car sharing requires users to rethink the role of transportation in their lives. It may require sacrifices in some areas, but the benefits are enough to make it worth it for some people.
Not owning a car simplifies a users' finances, and frees up a major component of their monthly budget. How much you could save depends on how much you were spending in the first place, of course, and you may even find yourself with a windfall if transitioning to car sharing allows you to sell your vehicle. You can then take what you save on car expenses and reallocate it toward debt repayment, your emergency fund, travel or other obligations that may have been previously out of reach due to transportation expenses.
Driving less may also help you reduce your impact on the environment. Without a car, though, you'll need to come up with alternative ways to get around such as bicycling or taking public transportation. If the impact driving has on the environment is a priority for you, it's worth taking the time to think through the cleanest alternatives.
Alternatives to Car Sharing
If car sharing is not available to you, or it's simply not a great option, there are a couple of other strategies to consider.
- Use public transportation. If there's an extensive transportation system where you live, transitioning to public transportation could be the answer. Some companies may also provide subsidized transit passes to their employees, and you might also be eligible for discounts based on your age or occupation.
- Ride your bike. This isn't for everyone and may not be ideal depending on where you live. But, if you're a fan of two wheels and your town has great bike lanes, then riding your bike may be a great way to get around town.
- AAA's Gig car share program. This program is exciting because it allows users to pick up their car and drop it off in a different space than they found it if needed. This program currently only operates in select cities on the West Coast of the United States.
Think It Over
Deciding to use a car share program ultimately depends on how flexible you are when it comes to using a car. If you're the type to go on last-minute adventures, then this service isn't for you. Be honest with yourself about your car needs and work through the numbers. The cost of car sharing can add up if you're not careful.