Is Using a Ride Sharing Service Cheaper Than Buying a Car?
The age of ride sharing is upon us, and it’s been speculated that in a few decades, ride sharing will be more common than actually owning a car. Though this is still up for debate, it brings up a very interesting question: is using a ride sharing service cheaper than buying a car? This method of transportation is becoming more common, and for those who either don’t have a car because they simply cannot afford one or live in a place where it’s easier not having to drive or own due to insane parking fees, and the overall lack of space, it’s a more economically efficient way of travel. Taxis can be absurdly expensive, especially in the city, and public transportation isn’t always reliable. The next best option is Uber, Lyft, or any other ride sharing service. Is exclusively relying on a ride sharing service, however, cheaper than actually buying a car?
Let’s compare the costs of ride sharing to, say, owning a minivan, a compact SUV, a regular SUV, and a commuter car.
● Depreciation rates: A disadvantage that comes with new minivans is the rapid depreciation rates. In fact, within the first year of driving a brand-new minivan, the depreciation rate can be decreased by one-third or more. Therefore, it is most beneficial for you to buy a used minivan that’s only a few years old, as it has already experienced its highest depreciation drop.
● Fuel costs: As of 2018, newer minivan models can range anywhere from 20 to 32 miles per gallon. The average car’s mpg can be calculated to about 22.3 mpg; therefore, a minivan can fall anywhere from an environmental menace to and eco-friendly vehicle. It ultimately depends on how often you drive, the distance you go on a weekly basis, and your gas budget, among other factors.
● Insurance quotes: On average, minivan drivers pay significantly less than other drivers on the road. Sure, your age, marital status, etc. counts towards your insurance rate; however, your choice in vehicle also counts. In this case, a practical and safe car – that is typically used to transport children, is an inexpensive option.
● Maintenance: Minivans offer the most bang for your buck, with owners having to pay an average of around $400-450 a year for maintenance.
● Registration: Because minivans are on the heavier side, you are going to have to pay a little more money. Your average minivan weighs well over 3,000 pounds and, depending on where you live, can be a little pricey.
● Taxes: If you live in a state that has car tax, then you’re going to have to calculate the costs of that. On average, the tax can be calculated by taking the net cost of your car and taking out any reductions placed on the price (i.e., discounts) and multiplying it by the car tax rate in your state. This percentage falls between 2% and 8%. Therefore, if you have a newer minivan, which costs around $27,000, and your state’s tax is at 4%, then you would be paying around $1,080. Used minivans can be found anywhere between $10,000 to $20,000; therefore, your car tax would be lower. In the state of Nevada, car taxes are 8.1%.
● Depreciation rates: A compact SUV’s depreciation rate is listed at about 50%. This rate was taken at the end of five years. A luxury compact SUV’s depreciation rate even less at about 40% at the end of five years.
● Fuel costs: Compact SUVs on average use approximately 25-27 miles per gallon, and this is when you combine both highway and city driving. It’s also important to note that these higher numbers are from newer models as well.
● Insurance quotes: SUVs, unfortunately, are notorious for having higher insurance premiums. This is largely due the fact that SUVs can cause more damage on the road, are more susceptible for thieves to break into, and are more likely to flip over, among other risks. On average, the rate you could be paying for a compact SUV, is about $1,100 per year.
● Maintenance: Let’s say that you have a new SUV. This means maintenance fees in your car’s fifth year will be significantly more than its first. For a new compact SUV, your first year of maintenance shouldn’t cost more than $100. However, at the end of its fifth year, that SUV will have racked up about $6,000 worth of maintenance fees.
● Registration: Compact SUVs don’t weigh as much as their full-size counterparts; therefore, registration shouldn’t be as costly.
● Taxes: Compact SUVs, if new, are in a similar price range to regular SUVs: anywhere from mid-$20,000 to $30,000. Used compact SUVs that are a few years old make for much more budget-friendly vehicles and can be found anywhere from $15,000 to $20,000. Cars that are closer to 10 years can be priced at just under $10,000. Take 8.1% of the cost and you have your number.
● Depreciation rates: A regular-sized SUV can experience a depreciation rate of about 41% over the course of five years.
● Fuel costs: Regular SUV’s are calculated to be around 22-27 mpg, though there are newer models that can get as high as 32 mpg.
● Insurance quotes: Similarly to the compact-size SUV, a regular size SUV can cost on average $1,100 per year. This ultimately depends on the make and model of your car, on top of your history.
● Maintenance: Since regular SUVs are larger and use more horsepower, it’s understood that the wear and tear on your car will be bigger as well. Therefore, for a new regular SUV, you’re looking at a maintenance cost of around $300 by the end of the first year. At its fifth year, you will have invested about $6,000 in maintenance.
● Registration: Seeing as registration fees depends on the weight of the car, you will have to pay more than someone who drives a Sedan. It also helps to check your local DMV to see their rates, as it differs depending on your state.
● Taxes: As before stated, your regular SUV’s car tax will fall anywhere from 2-8% of what you paid; in Nevada, it’s 8.1%. Buying a new SUV can cost between $25,000 to $30,000 while used cars can cost as low as $15,000.
Note: Since this is a fairly new kind of car on the market, not a lot of information has been gathered regarding depreciation rates and insurance.
● Fuel costs: This vehicle is reported to be all-electric; therefore, fuel costs are unnecessary. A fully-charged car can drive up to 150 mph and lasts anywhere from 40-60 miles.
● Registration: Registration is expected to be inexpensive, as the car is quite lightweight, weighing in at around 2,000-2,500 pounds.
● Taxes: These cars retail for approximately $108,000; therefore, in the state of Nevada, your tax could be around $8,000. However, the newer model is reported to cost around $240,000.
So, how does this all compare to ride-sharing? Ultimately, it boils down to what kind of lifestyle you’re living. Take these factors into consideration:
● Where do you live?
● Where do you work?
● How expensive is it to have a car in your town? (Think parking fees, maintaining your car, car taxes, fuel, etc.)
● How often do you drive? How long are your commutes?
● How much does ride sharing cost in your town?
People who live busy lifestyles often prefer ride-sharing options as that saves hundreds of hours of time that could be dedicated to doing work. Owning a car is very much embedded in American culture; however, with large masses of populations flocking towards the city, causing congestion, there are more benefits to using ride sharing services.
● Ride sharing fares depend on: your location and your destination, the type of car you request, and other conditions such as weather that could change the price.
● Ride sharing can be cheaper than owning a car, provided that you are in a situation in which you don’t need to travel (i.e., you work from home or you live within walking distance of where you need to go.)
● Owning a car is a cultural norm in America, and a lot of people feel obligated to have one because that’s what we are accustomed to hearing.
● Owning a car is the better optionrnif you regularly drive longer distances.