Does owning a car make financial sense?

After a decade of owning a car, Peter Marbry is calling it quits. The Vancouver resident has crunched the numbers and come to this conclusion: it doesn’t make any sense, financially.

“I can save about $400 a month by getting rid of it, and that’s not including things like repairs and tune-ups,” Marbry says of his 2005 Toyota Echo. “I’ve started biking to work, which means I’m saving on parking. When I don’t bike, I can walk or take public transit or even catch a cab — even then I’ll still be ahead.”

He’s planning on using Craigslist to sell his car, which he paid off two years ago. Plus, he can easily rent out his parking spot in his West Side condo for $100 month.

Marbry says that a lot of his friends are asking themselves the same thing: Is it worth it to own a car?

Besides the money side of things, there’s also the environment to consider. And, with the increasing prevalence of car-sharing programs across Canada, those in need of wheels don't have to look far.

So how much does it actually cost to own a car?

According to the American Automobile Association, the average cost to own and operate a sedan in the United States is about $8,946 yearly, or 59.6 cents per mile, while an SUV costs $11,360 every year, or 75.7 cents per mile.

Its most recent annual “Your Driving Costs” study found that the average cost of owning and operating a sedan rose 1.1 cents per mile from 2011 to 2012, based on 15,000 miles of annual driving.

“The average driving cost for 2012 is up due to relatively large increases in fuel and tire costs, and more moderate increases in other areas,” said John Nielsen, AAA director of automotive engineering and repair. “Those increases were offset by a decrease in depreciation resulting in an overall increase [in costs] of 1.9 per cent.”

Highlights of the 2012 Your Driving Costs’ study:

Based on Driving 15,000 miles annually Small Sedan Medium Sedan Large Sedan Sedan Average SUV 4WD Minivan
Cost Per Mile 44.9 cents 58.5 cents 75.5 cents 59.6 cents 75.7 cents 63.4 cents
Cost Per Year $6,735 $8,780 $11,324 $8,946 $11,360 $9,504

The study also found that from 2011 to 2012:

  • The cost of fuel rose nearly 15 per cent
  • The cost of tires increased by 4.2 per cent
  • Maintenance costs rose slightly, by nearly 1 per cent
  • Insurance costs (although they vary widely) went up by 3.4 per cent

For those times when he really needs a car, Marbry plans on joining either Zipcar or Car2Go, which are based on European car-sharing programs and are fast gaining in popularity on this side of the pond.

According to Zipcar (which currently operates in Vancouver and Toronto), members report an average monthly saving of more than $500 compared to car ownership. It offers a cost-savings calculator to help you do the math by punching in numbers like your monthly car payment, finance charges, insurance, gas and parking.

Rates at Zipcar start at $8 an hour or $78 per day. Car2Go, meanwhile, which is up and running in Calgary, Toronto and Vancouver, has a maximum daily rate of $73 and charges a sign-up fee of $35.

Marbry says he likes the idea of living more sustainably. Plus, he says going carless is guaranteed to have another positive effect: “This is one way for me to get off my butt and get more exercise.”

Cars that'll cost youWhile there’s a lot of pride in scoring a deal on the car dealer’s lot, what matters most is the vehicle’s true cost of ownership. Farnoosh Torabi explains upfront incentives that will likely cost you more. Read the article here.

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