Recently Epu, looking worried, asked me if we are spending so much money on car rentals that we’re eclipsing the savings of not owning a car. I laughed.
Then I sat down to do some math. How much are we saving by not owning a car? It depends on a lot of factors, but the short answer is, about $500 per month.
According to AAA, driving a large sedan would cost us $8,000 to $10,000 a year, depending on how much we drove. That includes gas, maintenance, insurance, registration, taxes, depreciation and financing. So this means it includes the car payment we might have if we bought a car right now on credit.
If we were to lease a Chevy Impala,* the cost would be approximately $550 a month, according to Motor Trend. Plus we’d still have to pay for gas.
Personally, I have always thought AAA’s estimates were high, probably because I don’t tend to spend money on financing. So I checked other sources. Yahoo Autos estimates the cost to own a 2012 Chevy Impala at $52,112 over the first five years, or just over $10,000 a year, with more costs happening the first year.
Compared to what costs we would really experience, this $10,000 per year is still too high, because we would buy a used car. On the other hand, when we rent a car, we get a new car to drive, so it is fair in that way.
On Edmunds.com, I found a total cost to own estimate for a 2008 Impala. $38,000, or an average of $7,600 a year for the first five years.
Why a Chevy Impala? That’s not really a car we would buy, but it’s a car that we have gotten at a rental company, so it’s comparable to what we drive now when we drive. In reality, when we do buy we’ll be buying something more expensive, like a Ford Flex or an SUV or even (groan) a minivan.
Let’s take the used car estimate and guess that it would cost us $7,600 a year, or $633 a month to own a car right now. How does that compare to what we are spending on transportation now, with our average of one weekend rental per month?
In July, we spent $78 on one weekend car rental (including gas and parking), and about $20 on public transit, mostly on one trip into SF for shopping and lunch. $98 compared with $633? It’s not too difficult to calculate that renting a car was cheaper than buying one. (OK, we got driven around a lot by our visiting in-laws, but to be honest, even if we had owned a car we probably would have ridden in one big car with them when they visit, since our car probably would not have been able to carry us all.)
In August so far we have spent $80.40 on a car rental and gas for our North Bay weekend, plus $16 in public transit costs for a trip to Fisherman’s Wharf (we took the cable car which is frickin’ expensive at $6 per trip). We will spend more on transit this month, but let’s assume that our total cost for the month won’t surpass $150. Still looks good compared to $633. Let’s also keep in mind that when I take these trips to the city on public transit, I probably would have paid as much for parking and tolls as I paid for fares.
If we average $200 in transportation costs this year, we’ll spend $2400 — compared to that used car estimate of $7600. Pretty good!
These estimates do not take into account the biggest advantage of not owning a car at this point in our lives: Financial flexibility. If we bit the bullet, scraped together a down payment and took out a car loan, that would be a bill that we had to pay every month, even if we have a bad month with something major breaking in the house or what have you. By not owning, we can choose whether to spend money on transportation. We can take a fun weekend trip and spend $100 on driving, or we can say, “We just can’t afford it this month.”
Note that I am not including Epu’s costs to commute to work in our transportation costs, for a very good reason: He would take public transit to work whether we owned a car or not, so those costs are irrelevant.