Buying a Car vs. Ridesharing

Cars Wanted sign

With more ridesharing and car sharing options available, many people are opting out of car ownership completely. Companies like Zipcar, Lyft, Uber and Liftshare are making transportation as easy as the click of a button and it has people thinking: What do I need a car for anyway?

One of the hardest parts of car shopping and buying is the necessary long-term commitment that comes with it. The vehicle has to be able to withstand the test of time and you have to be prepared to pay for it- along with the cost of insurance, gas and parking.

But is ride or car sharing really cheaper or more efficient? We took a look into your options. Though initially avoiding car ownership costs sounds ideal, ridesharing transportation can also add up depending on your lifestyle. Each company operates differently, some charging by the minute or mile, while others use memberships and reserve time slots.

Buying a Car

Even with ridesharing being as simple as using an app, can anything truly be easier than jumping into your own car and getting where you need to go? For those who don’t live within walking distance of their regular destinations (grocery store, workplace, park, etc.) planning a ride for every unique trip might be a bit of an inconvenience.

If you live in a non-metropolitan area, using your own vehicle is likely more convenient and cost efficient. With ridesharing costing more for longer distances and car sharing being restricted to certain areas, these services don’t benefit everyone all the time.  If you require a vehicle for a round trip at least once a day, you may want to consider buying a car.

Remember all the good things that come with car ownership, too. Like never having to wait for a vehicle or being able to easily change your plans when needed. The benefits may be more valuable in the long run than you think.

Not Buying a Car

If you rarely drive long distances, often use public transportation and like to walk to destinations when you can, ridesharing may be for you. Just as it has always been, car-free living is much more realistic in a big city. Owning cars can be an unnecessary expense for those who do not get enough usage out of them and don’t want to worry about upkeep. But, deciding against ownership doesn’t mean you can’t use vehicles when you need them.

Zipcar is an up-and-coming car sharing business with company vehicles located around the country. Customers are able to reserve them for $9/hour or $75/day and pick them up at various locations in their city. With this being said, if you need to get to and from work every day, your weekly cost could already reach up to $360, not to mention other trips and membership fees. You may also have difficulty finding parking spots that are permitted by the car sharing provider. But, if you take public transportation to work and only need the car to grocery shop and for quick trips a couple days a week, these rates can save you money in comparison to ownership.

Ridesharing apps like Uber and Lyft offer competitive prices for once-in-a-while trips where you might’ve used a taxi (ranging anywhere from $6-$20 for an average one-way trip), but regular or daily rides aren’t affordable for the average commuter. Charging both per minute and per mile makes it expensive to rely on this type of transportation alone.

There are also sites like Liftshare that make it possible to connect people both offering and seeking rides. The problem with this type of ridesharing is there are no guarantees that a ride will be offered when you need one. But, they tend to work well for road trips that involve more planning when an Uber or Lyft would be out of budget.

To opt for car and ride sharing over ownership has the potential to save you big bucks, but it requires a lot of planning to do so efficiently—and it depends on where you live. (For example, it probably isn’t cost effective in a rural area.) And without your own vehicle, there’s no quick trip to grab a gallon of milk or underestimating just how long you’ll be at the mall. These kinds of things can increase your expenses in ride or car sharing when it wouldn’t make a difference in ownership. If a car is the only way you expect to travel, this is not the best way to save money. But, if you mix in other ways to get from place to place like walking, biking or bussing, it’s a much more viable option.

The difficulty with making this decision is estimating just how much you really need a car.. Some sites, like Zipcar, offer personalized calculators to compare costs of owning vs. car sharing. Using these tools will help as you begin researching which option works best for you.

A Hybrid of Both Scenarios

What if you own a car and use it to provide rideshare services? ERIE has you covered. Ridesharing coverage is available for drivers who put a “business use” designation on their personal car insurance policy. The coverage offers protection during every part of the trip—before, during and after the hired ride. Drivers and passengers can now ride easy, knowing they’re backed by ERIE.

If you’ve just purchased a car for the first time or are thinking about a career driving for a rideshare company, talk to your ERIE Agent about your options.

Coverage is subject to limitations and exclusions. See the policy or talk to an ERIE Agent for details.

Ridesharing is more popular than ever, but is it more cost effective? The answer is: it depends. /blog/car-buying-vs-ridesharing Erie Insurance