Do You Even Need a Car? Uber vs. Owning a Car

Uber vs. Owning a Car

Last Updated: May 21, 2020

There used to be two hallmarks that showed a comfortable quality of life: buying a home and purchasing a car. Today, many people are questioning whether they need a car. Maybe the money that would have been spent on a vehicle could be put somewhere with better returns. Perhaps you prefer a more environmentally friendly option or a way to shift the driving risk to someone else. Uber vs. owning a car is also a popular question.

If you decide you need a car, go beyond the marketing and figure out if owning a car is the right option for you or if alternatives such as Uber, public transportation, ride-sharing, and short-term rentals make more financial sense.

Benefits of Owning a Car

  • Cars are time-savers, especially compared to the alternatives.
  • They are also convenient, giving you freedom, independence, and flexibility. You can go or return when you want. You either follow the schedule or get left behind by public buses or trains.
  • Another advantage of cars over alternatives is safety. You don’t have to share your space with strangers or be driven around by one.
  • Car ownership can also provide intrinsic benefits, like pride and happiness. Some owners may use a car as a form of self-expression, customizing it to reflect who they are.

Disadvantages of Car Ownership

  • Purchasing and maintaining a car is expensive. Several costs are added to the monthly car payment (already worth hundreds of dollars). Especially first-time owners can be caught by surprise by all of the expenses that go into owning their own vehicle.
  • Car buying and owning is stressful because you must make many decisions to get the desired vehicle. Then you must deal with salespeople at the lot and shop for car insurance. You may also have to figure out parking and where to go for service and repair.
  • Parking, service and repair, and traffic jams can also waste time. Think about the traffic on your commute, or how long you spend looking for a parking spot. How long do you wait for rides while your car is in the shop?

What Car Ownership Alternatives Exist?

You have many options if you don’t want a car. These alternatives have become popular because they may be more convenient, less stressful, and cheaper than owning a car.

  • Walking is an excellent alternative for short distances when the weather is favourable. It is something that almost everyone can do, and it has additional health benefits.
  • Public transportation is where you use public transit provided by the government. The fare costs are usually low, as transportation can be subsidized by the government. The price per ride does not depend on how many riders are present.
  • Taxis and ridesharing services are similar. Both involve passenger-sized cars that you can hire for travel. Taxis are usually licensed by the government, with a set rate per mile. Ridesharing services, like Uber and Lyft, are privately-owned companies that contract private individuals to provide transportation. The costs, while usually low, can also be subjected to surge pricing when there is high demand.
  • Car-sharing companies like Zipcar own cars that people rent for short-term use. These cars are in convenient public locations where locals may not have cars.
  • Car-sharing programs allow owners to rent out their cars to others when it’s not in use.
  • Free shuttles may exist between your college campus and the closest major airport.
  • Rides from a friend are as simple as requesting a favour.
  • Rental cars are good selections for one-off travel or short-term rentals. Costs may vary due to many factors. The driver’s age, driving history, rental source, and car availability can cause the price to fluctuate.

Are the Alternatives Cheaper than Owning a Car?

It can be expensive to get to where you’re going, no matter your transportation model. Car ownership alternatives may still be less than the total cost of vehicle ownership.

Uber vs. Owning a Car

Consider Uber vs. owning a car. You can add up the ride costs over a month and see the immediate impact on your wallet. With a car, you may have to factor in several expenses. This quickly makes the cost of owning a car much higher than we anticipated.

For a quick estimate, you can use the Ride or Drive Calculator. It will show you if it’s more economical to own a car or use Uber/Lyft. The calculator was designed to question the assumption that owning a vehicle is better, educating people through comparing tradeoffs.

Uber vs. Owning a Car

Uber vs owning a car calculator

How to Decide if You Need a Car

The cost of ownership is one thing, but you should also contemplate:

  • Your home’s location
  • If parking is available, and at what cost
  • The distance between your home and your work
  • How far away is public transportation from your home and work
  • Is public transit frequent enough and convenient for your schedule
  • The size of your family
  • How each option uses your time, and if they are flexible enough to meet your needs.

Example 1

A passenger truck could be your best option if you live on a farm or other rural area. It may be required for towing farm equipment. Buses in rural locations are infrequent (if available), and buildings may be far apart. You may be walking or waiting for a long time if you don’t have a car.

Example 2

Let’s say you live in a large city with expensive parking spaces and insurance. Large cities tend to have more robust public transportation systems, with frequent buses or trains. They also tend to be serviced by many alternatives like rideshare companies, taxis, and car-sharing companies and programs. You may be able to use public transportation instead of owning a car, especially if you don’t have young children.

Example 3

Perhaps you live in the suburbs and have younger kids who need to be driven around to their extracurricular activities. In this case, you are better off owning a car as using the alternatives will be more expensive.

Conclusion

Uber vs. owning a car is a crucial decision. The answer can have significant financial and emotional effects, so it’s best to consider all your options carefully. Look at the pros and cons and their applicability to your situation. Only then you can know if you truly need a car or not.

Roman Zelvenschi

I started a digital marketing agency Romanz Media Group Inc. 12 years ago. Running my own business quickly taught me the importance of cash flow. Making sales was not enough, I had to have money in the bank to pay the vendors, staff and personal bills.

During those early stages of the company I learned how to get creative with debt and to save on interest cost. I paid for everything I could with a credit card to both get more points and to extend the payment date by 25 days (credit card grace period). I then utilized a 0% balance transfer offers to rotate this debt.

I learned a lot during this process and made a lot of mistakes. My key lesson is that the most important part of being financially independent is how much I managed to save, rather than how much I earned. Staying disciplined with savings and tracking spending is not easy and I tried many different methods to stay on track.

FinancialFreedom.Guru is a side project where I and my staff are trying to share the practical knowledge on how to understand finances and to build wealth.

5 1 vote
Article Rating
Subscribe
Notify of
guest
20 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Dion Alexis
Dion Alexis
2 years ago

Uber or owning a car really depends on your lifestyle and where you live. There’s no wrong answer here. Thank you for the examples and ideas to consider

Tatiana Le-Ann
Tatiana Le-Ann
2 years ago

I personally spent more money annually when I didn’t have a car.

Peter
Peter
2 years ago

I haven’t owned a car in over 2 years. I commute by train and a shuttle service is provided by my company to get to the building or it can be a 20min walk. When and if I need a car I rent one … for the day …

Natalie
Natalie
2 years ago

There’s no right or wrong answer..I’ve aways had a car..I’ve also been without car..when I didn’t have a car, I took the bus to work..my sister would take me shopping, that’s it..now I have a car and it’s the cheapest one I’ve ever owned

Tom
Tom
2 years ago

Having my own car gives me a great feeling of freedom. Freedom to go wherever I want whenever I need it. Maybe it is not wise enough from the point of view of financial intelligence but I can’t help denying that

Frankie
Frankie
2 years ago

At this point we should step back and take more consideration in our day to day expenses and personal preferences. A corvette will get you where you need to go quicker then a minivan and in style but at the end of the day they are both means of transportation. It is important to make the decision reasonably.  

Darcy
Darcy
2 years ago

By keeping track of the expenses, we realized that we spent more owning a car than using rideshare when we lived in Chicago. We missed those simple days of being able to walk to most places and used rideshare for longer trips. Unfortunately, our current residence is not in an urban area so it’s impossible to replicate our rideshare costs here.

Lee
Lee
2 years ago

4K/year for insurance and registration and probably 1K-1.5K/year gas and maintenance that’s my cost of owning a car. Probably using Uber could have been cheaper

Jasmine
Jasmine
2 years ago

This is a really interesting topic. My grandfather actually saved the majority of his money by never owning a vehicle. He lived in Chicago and always took public transportation. That helped me to realize how much owning a vehicle really cost

Brett
Brett
2 years ago

Not having a car in most of the United States isnt practical. However, my wife and I have been a one car family nearly our entire marriage, and it’s worked nearly to perfection.
However, it’s dependent on circumstances. But there is an argument to be made about getting rid of a car, and moving completely to ride share.
I was in a situation where it totally made sense when we lived in Salt Lake City, and I’m still in that circumstance in South Florida.