It’s a choice facing an increasing number of motorists: buy a car or rent one by the hour? We crunch the numbers to find out which is the best option. Picture by Justin Sanson.
It’s a choice facing an increasing number of motorists: buy a car or rent one by the hour? We crunch the numbers to find out which is the best option. Picture by Justin Sanson.

Car finance versus car sharing - better to buy or rent?

CAR-SHARING schemes are becoming more popular but in most cases it still pays to buy your own car, a study by News Corp Australia has revealed.

Motorists who cover the average annual distance travelled - and who don't have easy access to public transport - are still better off with their own set of wheels rather than renting a car by the hour.

However, people who have the option of catching a bus or a train to work - and only need a car on weekends - are likely better off subscribing to a sharing service.

According to figures verified by finance comparison website Finder.com.au, a $10,000 used car costs an average of $132 per week to run, including loan repayments, petrol, servicing, registration and insurance.

To rent the cheapest vehicle from GoGet, a Toyota Yaris, the weekly costs are between $110 and $121 for 10 hours and 100km of driving (including subscription fees, hourly rates, fuel and distance charges and insurance), or between $150 and $161 for 10 hours and 200km of driving, matching the average distance travelled.

Kim and Jason Graham-Nye say car-sharing works for them but agree it might not add up for everyone. Picture: Richard Dobson
Kim and Jason Graham-Nye say car-sharing works for them but agree it might not add up for everyone. Picture: Richard Dobson

If you prefer a larger hatchback such as a Toyota Corolla, on the surface it seems as though you'd be better off with car sharing.

A new Corolla valued at $25,000 costs an average of $239.27 per week to run, according to Finder.com.au, including loan repayments, petrol, servicing, registration and insurance.

To rent a Toyota Corolla via the GoGet car-sharing scheme, the weekly costs are between $115 and $126 for 10 hours and 100km, or between $155 and $166 for 10 hours and 200km.

However, one key element overlooked in these calculations is what your car would be worth after three years, once the loan is paid out.

A $10,000 used Toyota Yaris in good condition with low kilometres would be worth about $6000 after three years, and a new Toyota Corolla would be valued about $15,000 at the end of the loan.

You could sell the car, pocket the cash, and start again - or keep the car and slash your annual running costs with only registration, insurance, fuel and servicing to worry about.

In the case of the Yaris, once the loan is paid out its annual running costs would be halved, and in the case of the Toyota Corolla its annual running costs would be slashed by more than two-thirds.

Once the loan is paid out, in both cases buying a car is a better option financially than subscribing to a sharing service if you cover close to the average annual distance travelled of 10,400km.

With our congested streets, Australia’s uptake of car sharing is leading the world, the industry claims. Picture: Joshua Dowling.
With our congested streets, Australia’s uptake of car sharing is leading the world, the industry claims. Picture: Joshua Dowling.

For those who don't need to travel as far, car sharing works.

Sydney couple Jason and Kim Graham-Nye haven't owned a car since December 2014, when they began using GoGet.

"I never want to go back to owning a car," says Kim. "Our needs may change but if it's up to me I never want to go back to owning a car."

The couple agree car-sharing isn't for everyone but it makes sense in their congested suburb.

"You can spend an hour looking for a parking spot on weekends," says Kim. "We have access to a lot of cars … there are six spots within a four-minute walk. We also use Uber when that's more convenient. Financially we reckon we're in front, rather than owning and maintaining a car."

Laughing all the way to the bank … Kim and Jason Graham-Nye say the cost of car sharing drops to almost zero when they’re away, whereas owning a car would still cost money. Picture: Richard Dobson.
Laughing all the way to the bank … Kim and Jason Graham-Nye say the cost of car sharing drops to almost zero when they’re away, whereas owning a car would still cost money. Picture: Richard Dobson.

Husband Jason says not having the ongoing expense of a car is part of the appeal of sharing services.

"When you sit down every month and look at personal finances you can see the savings," says Jason. "When you go away there's no ongoing car expense. When you go on holidays the GoGet bill for the month is almost zero."

The couple concedes car sharing appeals more to people with good access to public transport and who don't need to travel big distances for work.

They also like the flexibility of vehicle choice.

"If we need a people mover or van - or a convertible for a weekend away - we can get one," says Jason. "Every now and then it can be hard to get a car when you need it, but if you book in advance it's locked in."

 

Crunching the numbers: car financing versus car sharing

Photo of the 2016 Toyota Yaris
Photo of the 2016 Toyota Yaris

 

$10,000 Toyota Yaris (used car)

Average fuel consumption: 6.3L/100km

Average fuel cost: $1.46 per litre

Annual distance travelled: 10,400km (200km per week)

Annual fuel used based on 6.3L/100km: 655.2 litres

Annual fuel cost based on $1.46 per litre: $956.60

Annual registration and insurance cost: $1600

Annual car maintenance (servicing and tyres) cost: $600

Annual repayments over three years on a $10,000 loan with 6.1 per cent interest (source, Finder.com.au): $3756

Total annual running costs of a $10,000 car financed over 3 years (including repayments, fuel, registration, insurance, servicing and tyres): $6912.60

Total weekly cost of running your own car: $132.93

 

GoGet: GoFrequent Plan

Toyota Yaris

10 hours rental per week $63.50 plus $10.75 to reduce insurance excess from $2000 to $300

Fuel fee to travel 100km per week: $40

Flat monthly membership fee calculated weekly: $6.92

Total weekly GoGet cost for 10 hours/100km per week: $110.42 without excess reduction, $121.17 with excess reduction

 

10 hours rental per week $63.50 plus $10.75 to reduce insurance excess from $2000 to $300

Fuel fee to travel 200km per week $80

Flat monthly membership fee calculated weekly $6.92

Total weekly GoGet cost for 10 hours/200km per week $150.42 without excess reduction, $161.17 with excess reduction

 

2017 Toyota Corolla Ascent with safety pack.
2017 Toyota Corolla Ascent with safety pack.

 

$25,000 Toyota Corolla (new car)

Average fuel consumption: 6.6L/100km

Average fuel cost: $1.46 per litre

Annual distance travelled: 10,400km (200km per week)

Annual fuel used based on 6.6L/100km: 686.40 litres

Annual fuel cost based on $1.46 per litre: $1002.14

Annual registration and insurance cost: $1600

Annual car maintenance (servicing and tyres) cost: $600

Annual repayments over three years on a $25,000 loan with 6.1 per cent interest (source, Finder.com.au): $9240

Total annual running costs of a $25,000 car financed over 3 years (including repayments, fuel, registration, insurance, servicing and tyres): $12,442.14

Total weekly total cost of running your own car: $239.27

 

 

GoGet: GoFrequent Plan

Toyota Corolla

10 hours rental per week $68.50 plus $10.75 to reduce insurance excess from $2000 to $300

Fuel fee to travel 100km per week $40

Flat monthly membership fee calculated weekly $6.92

Total weekly GoGet cost for 10 hours/100km per week $115.42 without excess reduction, $126.17 with excess reduction

 

 

10 hours rental per week $68.50 plus $10.75 to reduce insurance excess from $2000 to $300

Fuel fee to travel 200km per week $80

Flat monthly membership fee calculated weekly $6.92

Total weekly GoGet cost for 10 hours/200km per week $155.42 without excess reduction, $166.17 with excess reduction

 

Loan repayments calculated at 6.1 per cent interest, average rate in late June 2018 on comparison website Finder.com.au

 

Average fuel cost $1.46 in late June 2018

 

This reporter is on Twitter: @JoshuaDowling


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