Car Sharing: Better Than Buying, Leasing, or Renting?April 14, 2014
The past few years has seen the rise of an alternate means of transportation: Car Sharing. According to Navigant Consulting, car sharing services around the world made nearly US$1 billion in 2013. They project by 2020, that number will grow to $6.2 billion thanks to a projected 12 million members. But what exactly is car sharing? What are its benefits? Do you need auto insurance? When does it make sense to use car sharing as opposed to other ways of getting around town? Fear not readers, ComparaSave has all of these answers and more!
What is Car Sharing?
In a nut shell, car sharing is a rising new business of short term car rentals. But how short is short term? With car sharing, you can now rent a car for as little as an hour to buy that big grocery order or to pick up your mother-in-law at the airport. Members can choose to book a vehicle by phone or online any time, day or night. Once booked, the member makes their way to the closest fleet. Fleets are usually spread throughout the city and are purposely located in areas that are easily accessible by public transportation. Every member gets a keycard to access the vehicle, eliminating the hassle of having to pick up and drop off keys. Most car sharing companies charge by the hour and/or by distance with a small annual fee. Gas, insurance, and vehicle maintenance is included in the price. Car sharing is an affordable, convenient, and environmentally conscious method of short-term transportation.
Car Sharing vs Car Buying/Leasing
Many people cannot afford to buy or lease a vehicle of their own. While others, especially those in big cities, don’t need to own a car on a full time basis. Many can get anywhere that they want via public transportation, cycling, or walking. Car sharing is perfect for these people who normally wouldn’t need a car. Car sharers also don’t have to worry about monthly insurance rates or upkeep to the vehicle. Most members spend less on car shares than they would on car insurance alone. However, people who need a car to get to work every day are likely better off buying or leasing. If you drive less than 12,000 km per year, as a rule-of-thumb, using a car sharing service may be the economical way to go.
Car Sharing vs Car Rentals
Car sharing and car rental companies use the exact same model but for different lengths of time. Unlike car rentals, car sharing companies offer the convenience of booking by the hour. They are perfect for short errands, day-trips, or anything else that takes less than 24 hours. Most car sharing companies offer day rates but those day rates can end up costing you more than the standard 24 hour rate of a traditional car rental. If you generally need a vehicle for large blocks of time, like a weekend, renting a car likely offers you better value.
Car Sharing vs Taxi Cabs
Taking a taxi is the most convenient transportation option (outside of owning your own car). Cabs will pick you up right at your door and drop you off at your destination’s door. This door-to-door service is available 24/7 and cabs will arrive within minutes of calling. You do not need to worry about finding a parking spot, paying for gas, or upkeep of a vehicle. However, that convenience comes at a cost. In Toronto, simply sitting in a cab will cost you around $4.25. After that, the average cab will charge you $1.74 for every kilometre travelled plus additional fees for time spent waiting in traffic. Taxis are best used in situations where convenience and timeliness are more important than cost. A 10 minute cab ride will usually cost more than a one hour rental from a car sharing company. We found this cool taxi calculator, the World Taximeter, that estimates the cost of your taxi ride before you decide to hop in that cab (note: it currently only includes Vancouver, Toronto and Montreal).
Car Sharing vs Public Transportation
While cabs favour convenience over cost, public modes of transportation such as buses, trains, and streetcars favour cost over convenience. Aside from walking or cycling, public transportation is the most affordable and environmentally conscious option on the list. Rates differ from city to city but for as little as $2.00 – $5.00, you can travel from one side of the city to the other. However, public transportation does have its disadvantages. Unlike the rest of the options, public transportation won’t simply take you from Point A to Point B. You will stop several times between your departing point and destination. You will most likely even have to transfer to another vehicle to get close to your destination. This can take significantly more time than the other options and will not get you from door to door.
Most car share members use public transportation as their main means of travel. They tend to rent from car shares when they need to go somewhere that public transportation cannot take them (or won’t within a reasonable period of time). Unlike car shares, public transportation vehicles don’t have any storage space. This is another major reason people are turning to car sharing companies as an affordable and convenient supplement to public transportation.
The Auto Insurance Implications Of Car Sharing
Most car sharing members are fully insured when driving the car sharing vehicle (of course there may be variations, so read up on what’s covered and what’s not if you sign up.). Typically, the cost of insurance will already be included in the price, and if there’s an accident, there’s no cost to the member as long as they are not at fault. If the member is deemed to be at fault, at minimum, there will likely be a deductible that needs to be paid. Many companies also offer options to reduce your deductible to $0. Even better, some car sharing members can build an insurance history. The car share company can provide you with a Letter of Insurance Coverage certifying your coverage history. Now, not all auto insurers will accept this as “insurance” experience, but some do and this can save you bundles in the future should you decide to get a vehicle of your own.