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When Is Zipcar More Expensive than Car Ownership?

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author photo by Russ Heaps October 2015

Car sharing has become all the rage in congested Urban areas, as well as on larger college campuses, and is replacing car ownership for a growing number of cost-conscious consumers. Cost of car ownership isn't just about purchase price and monthly payments. Fuel, upkeep, repairs, insurance and so forth are ongoing expenses over and above making that monthly loan payment. Consequently, car ownership may not make financial sense for people only occasionally requiring the utility of a personal car, which is why people look for services such as Zipcar, Car2Go and Hertz.

However, there's a break-even point at which the average costs of car sharing exceed the average expenses of owning a car, but knowing where that point is requires more information than most people have at their fingertips. Taking some of the guesswork out of the process, San Francisco-based consumer-advice firm NerdWallet ran the numbers for the car-sharing company Zipcar in several metro areas to arrive at average break-even points that show when owning makes more sense than car sharing.

Car Sharing In a Nutshell

A number of local and national companies offer car sharing. Although each service has varying policies and procedures, basically all have fleets of cars available for short-term rentals at locations around service areas. At Zipcar, for example, members can use a smartphone app to reserve a nearby car for as little as an hour or as long as seven days. Rates vary, but can be as low as $8 per hour, including insurance and gas. Members access the car they reserved, drive it and return it to the same reserved parking spot when done.

The Study's Methodology

NerdWallet analysts looked at the cost of weekend rentals -- the most expensive periods for using Zipcar -- that would involve a day trip from 10 a.m. to 5 p.m., as well as the annual membership fee for Zipcar in 15 metropolitan areas. Then, they compared the average cost of ownership for a 2012 Toyota Camry purchased for $14,000 and financed for $11,200 for five years after a 20 percent down payment to the initial cost figures. The monthly payment was calculated using the 5.2-percent average car-loan prime interest rate for the 15 cities. NerdWallet also factored into the ownership cost average insurance premiums and fuel costs of the target cities. Because they varied wildly, parking, maintenance and registration costs weren't included in ownership costs.

The Bottom Line

Among the 15 cities in the study, the average number of day trips needed before car ownership becomes a better financial deal was 49. Ann Arbor, Michigan, (77) and Portland, Oregon, (72) had the highest number of day trips annually before hitting the break-even point. At 67 day trips, Austin, Texas, was also much higher than the average. Surprisingly at the low end, New York at 38 and Boston at 42, had the lowest number of day trips required before car ownership is better financially.

What It Means to You

There are plenty of reasons for owning a car other than running errands or a weekend jaunt to the country. Carpooling the kids to school or other functions, business requirements and so on make owning a car a necessity. But even for people who don't require a personal car every day, car ownership eventually makes better financial sense than car sharing.

This image is a stock photo and is not an exact representation of any vehicle offered for sale. Advertised vehicles of this model may have styling, trim levels, colors and optional equipment that differ from the stock photo.
When Is Zipcar More Expensive than Car Ownership? - Autotrader