Today’s auto loan rates are quite low with an average at about 5% APR for a 4-year loan, but for many, the thought of adding on another monthly bill and few thousand dollars in debt quickly cancels out any benefit of great rates. Then, for anyone struggling with bad credit, a tight budget or an unfortunate combination of both, financing a car can seem out of the question. So if you find yourself in any of these situations, is it possible to afford getting around in a car-dependent society? It might be with a zipcar.
What is Zipcar?
Zipcar is a fairly new car sharing company based out of Massachusetts that seeks to put less vehicles on the road and make transportation more affordable and convenient. The concept behind zipcars is that rather than owning your own car, you borrow one whenever you need to drive and then return it when you’re done so someone else can use it. Yes, it’s very much like renting a car, but there are a few key differences.
How Zipcar Works
The first step in getting your hands on a zipcar is to apply for membership. If you meet the eligibility requirements, you have 24/7 access to thousands of cars in the U.S., Canada and UK.
When you reserve a car, the cost of gas and insurance coverage, as well as up to 180 miles per day, are included. You also have 30 models to choose from and can reserve a car and pay by hour or by day.
The Drawbacks to ZipCar and Why You Might Want to Buy Your Own Vehicle
There’s no doubt ZipCar is working toward making a huge impact in reducing the amount of road congestion and pollution we create as drivers. However, it’s definitely not the ideal transportation option for everyone. The following are a few disadvantages to solely relying on a zipcar as your primary mode of transportation:
- Limitations: If you’re someone who likes to travel a lot, zipcars will not get you to your destinations. Granted, 180 miles in one day should be more than enough to cover even the most brutal commute, but don’t plan on borrowing a car for a cross-country trip. You’ll be charged extra for every mile over 180, plus you can’t keep a car for more than four days.
- Availability: Unless you live in one of the major cities where zipcars are offered, you don’t have access to the program.
- Fees: There are pretty hefty fees involved when you return a car late ($50 per hour), get in an accident (up to $500) or are in violation of any other rule (up to $150).
- Lots of People: Since nobody actually owns these cars, there is little incentive to take care of them. Drivers might leave a mess behind, drive aggressively and fail to maintain the vehicle in general.
- Only You Can Drive: It’s against the rules for a non-member to drive a zipcar, so you can’t share unless the other person is also a zipcar driver.
Is Zipcar or Car Financing Less Expensive?
If you’re still undecided about whether you’d rather become a zipcar member or just buy your own car, here’s the financial breakdown:
Average Daily Cost of Financing
If you secure a $10,000 auto loan at 5% APR with a term of 48 months, your monthly payments would equal $230.39 (or calculate your own auto loan payments). That comes down to roughly $7.68 per day.
Then you have to pay for gas–the average person spends about $2,000 a year on motor oil and gas, or $5.48 per day.
Finally, you have to insure your vehicle. The average yearly cost is $1,550, or $4.25 per day.
That brings the daily grand total for financing a driving a new car in this scenario to be about $17.41. Of course, a more expensive vehicle, higher interest rate, higher insurance rates or any number of other factors could make this number much greater.
Average Daily Cost of Driving a Zipcar
There are different rate plans for zipcar drivers, depending on the frequency and number of people driving. However, for a single driver, in addition to a $25 application fee and annual fee of $50, the hourly rate on a weekday is $8 or $66 for the whole day. Weekend rates are a bit higher at $9 per hour or $72 for the day.
As you can see, on a daily basis, financing your own car is actually much cheaper than borrowing a zipcar in most cases. However, if you don’t drive often or can’t get a decent car loan rate, a zip car might a better choice.
If you need a car everyday, buying a car makes the most financial sense. On the other hand, if you don’t drive much or occasionally need a second car, zipcars could very well be the less expensive and more environmentally sound transportation option.
