Personal Finance

How to know if it's time to ditch your car for ridesharing

Key Points
  • Can using a car service make you more productive?
  • Consider financing costs for your own vehicle
  • Is sharing your car among family members feasible?

When start-up founder Alexander Cohen moved to the San Francisco Bay area, he debated whether to keep his car or pay to rent vehicles and rideshare exclusively.

Though Cohen has a dog, his proximity to a grocery store and other amenities meant he could save about $550 per month by choosing the latter. He ditched his wheels.

More than 8 in 10 consumers familiar with the sharing economy, including automobiles, agreed it "makes life more affordable," according to a 2015 report by PwC.

But the decision to completely forgo a personal car can be difficult, depending on where drivers live, work and play, because of convenience and other important criteria, experts say.

Uber driver looking for new passengers in Washington, D.C.
Jonathan Newton | The Washington Post | Getty Images

"Cars have roughly a 10-year shelf life, so we are potentially still decades away from major behavioral change. People are attracted to personal ownership for lots of reasons, and they'll want to maximize their investment," said Mark Lawrence, CEO and co-founder of, an app that helps drivers find, reserve and pay for parking.

Because I no longer had to think about direction or navigation or anything related to travel, I became more productive.
Adam Torres
CEO, Century City Wealth Management

Despite the rise in popularity of ride and car sharing in recent years through companies like Uber, Lyft, Zipcar and Car2Go, personal vehicles were used for 86 percent to 88 percent of work commutes from 2000 to 2014, according to the Department of Transportation's Bureau of Transportation Statistics. Nearly 11 million more people drove alone to work in 2014 than in 2000, while the number of carpoolers fell.

If eliminating a car or reducing the number of cars in your household appeals to you, consider the following before giving up title:

Compare costs 

Mark Ralston | AFP | Getty Images

Though the AAA reported the average cost of car ownership has gone down thanks to lower fuel prices, it estimates the typical driver spends about $8,558 annually, including depreciation, maintenance, taxes, fees, finance charges, tires, insurance and gas (but not parking or tolls).

Depending on how much you need to use them, car rental and sharing services can be cheaper. Zipcar charges for car usage by the hour or day, including gas and insurance, plus a monthly membership fee that starts at $7. Car2Go charges $5 to join, plus rental fees by the minute, hour and day. An internal Zipcar survey of 30,000 members found they saved an average of about $600 monthly compared to owning a car.

Cohen came to his decision by comparing apples to apples, figuring he would take about 30 rides a month with UberPool at $4 a pop, and rent a car for about 15 hours per month at a total cost of $127.50. He weighed those expenses against his monthly car-related liabilities of about $800 per month, which did not include depreciation.

Consider noneconomic factors 

Determining the actual difference in cost between car ownership and ridesharing and rentals seems simple, said Roslyn Lash, a financial counselor and founder of Winston-Salem, North Carolina-based Youth Smart Financial Education Services, but you should also place a price on convenience.

"if you must wait 30 minutes for the ridesharing service to pick you up, or if there are times or days that it's less convenient, you must place a monetary value on your time," Lash said.

Ridesharing may also not make sense if you travel often with pets, need to go grocery or furniture shopping, tote kids around, or have a long commute.

If having guaranteed transportation in case of emergency is of utmost importance to you, having your own car may be worth the expense and peace of mind, said Jonas Sickler of

Can ridesharing make you more productive?

A Lyft customer gets into a car on January 21, 2014 in San Francisco.
Getty Images

Los Angeles financial planner Adam Torres ditched car ownership when he realized his overall cost of a car lease and associated expenses came to about $1,100 a month. Since he spends most of his time in a three-mile radius, ride sharing exclusively costs him no more than $600 a month.

There was also a large fringe benefit:

"Because I no longer had to think about direction or navigation or anything related to travel, I became more productive," said Torres, CEO of Century City Wealth Management. "My business began to grow faster because I was able to work during commutes and return phone calls instead worrying about where I was going to find parking in L.A."

Would you need to finance it?

Financing costs and payments can add a large chunk to monthly car ownership costs, so a paid-off car could tip the scales in the favor of maintaining ownership.

Cohen, founder of start-up Birch, which tracks credit card rewards, said it would have been cheaper to own than rideshare had that been the case for him, and if he could arrange for street rather than garage parking.

Think about variable vs. fixed costs

Kelvin Ma | Bloomberg | Getty Images

Commuting to and from work with Uber was cheaper than using a personal vehicle in eight of 20 metropolitan cities, according to a survey by

But if you live in a rural area, it may be a different story, since the distances you need to go may be greater and more expensive, said Lash.

And because demand on sharing services like Uber or Lyft fluctuates throughout the day, it can be harder for consumers to budget for transportation costs, making the gap in expense between car ownership and sharing closer.

Can you share within your own household?

About 44 percent of households have more vehicles than workers, and 44 percent of households have as many vehicles as workers.

If you and your spouse's schedules are similar enough, it is worth dropping from a two to one car household, said Kyle Winkfield, managing partner of the wealth management firm O'Dell, Winkfield, Roseman and Shipp in the Washington, D.C., area.

"That's the couple whose lifestyle is so parallel … they work at the same place or keep the same hours. They enjoy doing just about everything together," he said.

To keep household car costs to a minimum, parents, even those who can afford it, should encourage their children who want a car to pay for it and the insurance themselves to see if they truly need it, Winkfield said.

On the other hand, if the teenage drivers are involved in so many activities that not having a car is a burden on the family, it may be worth keeping the extra car for convenience, he said.

Choice about car ownership ultimately comes down to accommodating your desired lifestyle and goals, and what you're willing to pay to achieve them.

"It boils down to use," Winkfield said.