Should we buy a car?

[Leo]

My wife just got a new job few miles away. Walking is not an option, and public transportation is not good either.

Now we looked at ride sharing network like Lyft and Uber and she tried it. Round trip costs around $8.00 per day ($4.00 one way average).

We wanted to know if this is cheaper alternative than buying and owning a car. Let say we buy a used car maybe a 2009 economy car with less than 100k on it for around $5,000. Then we add depreciation, car maintenance, insurance, and gas, looks like it is more convenient to not own a car and cheaper?

UPDATE: Also please note that we have 1 car which I'm using so this going to be a second car. Also additional parking space in our apartment building will be $50/month.

[bjl584]

I'd probably rather have a car than depend on Uber. What if no driver is available and your wife is late to work?

If you buy it right and keep it for a long period of time, then owning a car is probably the better option. Plus, you can use it for more than just the commute to work.

[TexasHusker]

Buy a car.

[disneysteve]

I would buy a car because of the dependability issue and the ability to use the car for other things. What if she wants to stop and pick up dinner on the way home? What if she has other errands to run? What if a driver isn't available at just the right time? What if your car is in the shop and you need to get to work?

That said, what a modern problem to have? $8/day is $2,000/year compared to buying a car for $5,000 and paying for gas, registration, insurance, parking, and maintenance. From a strictly financial standpoint, it isn't a slam dunk in favor of buying.

[kork13]

After writing a response highly recommending a car purchase, I ran the numbers and surprised myself.

$8/day, 5 days/week, 50 weeks/year (assuming 2 weeks off every year). That comes out to $2000/year in Uber fares. In comparison, owning a car would be $5000 upfront, perhaps $200/yr insurance (older cars get cheap insurance), and about $600/year in gas (guessing 8k miles/yr, 30mpg, avg $2.50/gal). Maintenance could be a wildcard, but I'd guess around $500/yr. Then add in registration costs (varies by state, but let's say $50/yr).

So let's call your 5 year estimated costs:
- Uber: $10k
- Car: $12k
These are rough back-of-the-napkin figures... But in order to break even, you'd have to keep that car for 5 years and resell it for at least $2000 (at which time it would be 12 y/o with nearly 140k miles).

I'm shocked to say that Uber may actually be cheaper. Of course that depends on alot of assumptions... A more efficient car, doing fewer miles, or lower gas prices could each save you some of the ownership costs, and of course the assumption that getting to/from work will be her only transportation requirements that you can't work out while sharing a single car between you both.

I was going to flat out say that you should get the car. But my wife & I have shared a single car for most of a year, and her brother/SIL have done the same for 4 years. so it's totally doable, and if getting her to work is the only thing you can't manage with a single car, Uber might actually be a better answer.

An even better solution could be finding one of her co-workers to carpool with, or a neighbor that commutes to somewhere nearby your wife's job. She could pay for gas & you'd come out way ahead.

[Leo]

Regarding driver's availability. We live in Los Angeles and I think there are plenty of Uber or Lyft drivers any given time of the day.

After writing a response highly recommending a car purchase, I ran the numbers and surprised myself.

$8/day, 5 days/week, 50 weeks/year (assuming 2 weeks off every year). That comes out to $2000/year in Uber fares. In comparison, owning a car would be $5000 upfront, perhaps $200/yr insurance (older cars get cheap insurance), and about $600/year in gas (guessing 8k miles/yr, 30mpg, avg $2.50/gal). Maintenance could be a wildcard, but I'd guess around $500/yr. Then add in registration costs (varies by state, but let's say $50/yr).

So let's call your 5 year estimated costs:
- Uber: $10k
- Car: $12k
These are rough back-of-the-napkin figures... But in order to break even, you'd have to keep that car for 5 years and resell it for at least $2000 (at which time it would be 12 y/o with nearly 140k miles).

I'm shocked to say that Uber may actually be cheaper. Of course that depends on alot of assumptions... A more efficient car, doing fewer miles, or lower gas prices could each save you some of the ownership costs, and of course the assumption that getting to/from work will be her only transportation requirements that you can't work out while sharing a single car between you both.

I was going to flat out say that you should get the car. But my wife & I have shared a single car for most of a year, and her brother/SIL have done the same for 4 years. so it's totally doable, and if getting her to work is the only thing you can't manage with a single car, Uber might actually be a better answer.

An even better solution could be finding one of her co-workers to carpool with, or a neighbor that commutes to somewhere nearby your wife's job. She could pay for gas & you'd come out way ahead.

I agree on your point but we have a different number. Here's mine. With a car that old, I would say maintenance is at least $1,000/ year. Parking in our apartment is $600 per year. She is a new driver so I’m guessing that her insurance will be more than $200/year. I’m guessing $500-$1,000/year. Gas is probably cheaper than $600 per year since she will only drive maybe 3-5k miles per year. DMV costs maybe $100/year.

[disneysteve]

Regarding driver's availability. We live in Los Angeles and I think there are plenty of Uber or Lyft drivers any given time of the day.

I agree on your point but we have a different number. Here's mine. With a car that old, I would say maintenance is at least $1,000/ year. Parking in our apartment is $600 per year. She is a new driver so I’m guessing that her insurance will be more than $200/year. I’m guessing $500-$1,000/year. Gas is probably cheaper than $600 per year since she will only drive maybe 3-5k miles per year. DMV costs maybe $100/year.

I think you make a pretty good argument for going the Uber route.

The beauty of picking that option is that at any point, if it isn't working out, you can still turn around and buy a car. There is always the chance that Uber/Lyft will go away or significantly change. Just last week, the service became illegal in Philadelphia, for example, though last I heard they were still operating despite that, but if you're dependent on them and something happens, used cars will always be out there.

[snafu]

I'd pick car and driver [Uberer ] from the stress/hassle perspective. We get a car and driver when we work in Bangkok and it feels very VIP. [you have to see traffic in BKK to believe it]. Since this is a regular, repetitive, fare, can you get a monthly rate?

[smartspiritualincome]

This is a very good question to raise.

To me, the first thing you should consider is your financial situation. Can you afford to pay cash for a vehicle? If so, then having a second car around could help just in case something happens to your vehicle.

Do you have additional debt other than your house that you are currently paying off? If yes, then I would strongly consider the Uber/Lyft alternative. Avoid going into debt when possible!

The other thing, which is unrelated to financial advice, is your wife's perspective. Because she is the one that will actually have to live with the consequences of the decision, what are her feelings? Make sure you discuss topics like safety, comfort, and needs vs wants, in addition to just the cost. Doing so can only strengthen your relationship, and we all know how important it is to be on the same page in your marriage!

Hope this helps!

[greenskeeper]

buy the second car. The short commute will limit the wear and tear etc so your vehicle costs will be extremely low.

[GoodSteward]

I live in an area where taxies are not that common, so owning a car is simply the only one that makes sense. The only people who don't own cars are poor people or folks with no license(sometimes they still get a car lol). Living where you do I guess it can depend. However, you have so much more freedom once you have your own car I think.

In 5 years I'm sure uber will go up in price as well, so I would factor in that if you are plugging numbers.

[Leo]

After trying for a week, looks like it is convenient and cheap. We spent around $40 for 10 rides which is average of $4.00 per ride, but I think it could go lower. In the middle of the week, my wife tried to compare Uber and Lyft and goes with whichever is cheaper, there were couple times that she check the Lyft app and it was more than few bucks, then she check Uber app and it was only $1.10 for a ride. From now on, she will check whoever is cheaper before she request a ride. We are still going to buy a second car but not right now, we will save money and buy when the time is right. Maybe in several months. Who knows.

[DaveInPgh]

After trying for a week, looks like it is convenient and cheap. We spent around $40 for 10 rides which is average of $4.00 per ride, but I think it could go lower. In the middle of the week, my wife tried to compare Uber and Lyft and goes with whichever is cheaper, there were couple times that she check the Lyft app and it was more than few bucks, then she check Uber app and it was only $1.10 for a ride. From now on, she will check whoever is cheaper before she request a ride. We are still going to buy a second car but not right now, we will save money and buy when the time is right. Maybe in several months. Who knows.

I am curious about the tipping etiquette for these rides?

[Butterscotch]

I know a few people that have driven for Uber. They are disappointed when people don't tip, especially for a short trip. Sure, tipping isn't required, but it isn't required for taxis either, and people generally tip a taxi driver. Why not an Iber driver? Especially when the service you get from Uber is so much better?

[disneysteve]

I am curious about the tipping etiquette for these rides?

Etiquette is to tip the drivers. You can add it to your charge on the app, I believe, or just hand the driver cash (which I'm sure they prefer).