Car clubs are becoming more prominent in UK cities, especially London.
Firms such as Zipcar, Enterprise Car Club and Drive Now have fleets of vehicles dotted around the capital that are available to members and customers on short-term rentals.
They’re ideal for people who don’t have their own car and need a vehicle for those odd jobs that can’t be done without the aid of four wheels – think trips to furniture stores or taking grass cuttings to the recycling centre.
But what if you have your own vehicle but don’t necessarily use it that much? How infrequently do you have to drive to make ditching your motor and joining a car club more cost effective?
Could a car club be more cost effective? Depending on how many miles you drive, it might be better for your finances to ditch your own vehicle
According to new research, the annual mileage sweet spot for making the switch is 2,000 miles, or less.
That works out at roughly four hours of driving per week if you live in London, the study says.
While that might not sound much, that’s a feasible annual mileage for someone who might regularly commutes by public transport to avoid the capital’s clogged-up roads.
The numbers were crunched by iCarhireinsurance.com, a leading provider of specialist Car Club and car hire excess insurance.
It compared the cost of owning a vehicle and using a Car Club membership for four hours a week and found there was a saving up for grabs even when you don’t factor in the cost of the vehicle.
When taking into account car owners’ cost to insure, tax, fuel, MOT, park and generally keep a vehicle running in the capital, a person would be spending around £1,731 a year to run a motor of an equivalent size to a Ford Fiesta.
Car clubs like Zipcar charge around £6 to £7 an hour for the use of a medium-size vehicle in London
A car club user – hiring a similar vehicle for around £6 an hour (though £7 was used for the calculation below) – would pay just £1,572 a year to drive for around the same amount of time.
Here’s a breakdown of how the costs compare:
Cost of car: £4k-£5k
Insurance: £1,028 per year*
Excess insurance (reduce to £0): £43.74
Fuel: £235 (approx)
Service: £100-£150 (Kwik Fit/Halfords)
Breakdown cover: £108 (AA)
Parking permit: £111 (London zone 1-4)
Hourly/daily rate: N/A
1 year total running costs without cost of car: £1,730.59
*based on a 50,000-mile Ford Fiesta
Cost of membership: £66 for one year
Excess insurance (reduce to £0): £49.99
Fuel: Included (up to 60 miles a day)
Breakdown cover: included
Parking permit: Included
Hourly/daily rate: £6-£7/£52-£65
1 year total running costs based on a £7 hourly rate: £1,571.99
These calculations also don’t take into account the depreciation of the vehicle, costs for any repairs and outlays for consumables such as new tyres, headlight bulbs, wiper blades, brake pads, oil and so on.
Factor over the costs spread across five years, iCarhireinsurance estimates that a London motorist doing no more than 2,000 miles a year could save £1,000 annually by offloading their own vehicle.
‘If you don’t use your car much, 2019 might be the year to ditch it for good, and save around £1000 using a Car Club instead,’ said Ernesto Suarez, founder and chief executive of the zero-excess insurer.
‘Hiring cars by the hour from approximately £6 for a mid-size car, which includes basic insurance and petrol, is a good option for those in urban areas, giving you the convenience of a car without the headache and costs that come with running and parking it.’
Car clubs fleets are growing, with many motorists deciding vehicle sharing works better for them
Running costs are almost non existent – fuel (up to 60 miles), MOT, tax, servicing etc are also charges you could avoid
However, there are some drawbacks of using such clubs.
For instance, there might not be a vehicle readily available in your location.
Even if there is a car club parking space near your home, you are heavily reliant on the volume of other users trying to access these short-term rental vehicles.
Also, the calculation doesn’t take into account the costs incurred by drivers who go over the arranged loan period.
For instance, Zipcar charges a late return fee starting at £35 per hour (up to a maximum of three hours), plus the additional usage cost.
For daily rentals, there tends to be a 29-minute grace period, though fines are levied if the vehicle isn’t made available to other users beyond this.
However, there are some issues with car clubs, such as steep late fees, vehicle availability and the fact they’ll no longer be Congestion Charge exempt in London from April
The range of vehicles from car clubs are diversifying too, with more electric and hybrid models being offered
Drivers who don’t take out additional excess insurance also run the risk of high charges incurred for any damage to the vehicle during your period of use.
And while car club motors are currently exempt from the London Congestion Charge, mayor Sadiq Khan announced at the end of last year that this will no longer be the case for private hire vehicles from 8 April 2019.
This means that car club drivers and operators will need to pay the £11.50 Congestion Charge if they travel within the Zone during charging hours.
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