Buying a Car vs Uber vs Car Rental
We live in a technological age where getting access to a car no longer means buying a new or used car. We have the option to use taxi hailing services,uber and taxify as well as the option to hire a car long term. In this post we will compare the 3 options for a young adult who is still in university or just starting their career.
Scenario:
You are a young professional who lives in Durban 13km from your place of work. Below we will break down how much you would pay depending on whether you buy a car, rent a car or using taxi hailing services like uber and taxify.
Scenario:
You are a young professional who lives in Durban 13km from your place of work. Below we will break down how much you would pay depending on whether you buy a car, rent a car or using taxi hailing services like uber and taxify.
How much would you pay for buying a 2019 VW Polo Vivo
If you go to cars.co.za you can find a low mileage 2019 polo vivo for about R150 000 which would be a monthly installment of R3070 over 60 months with 10% deposit at Finance rate of 13% (Prime +3%), plus lets say car insurance of approximately R1000/month and one full tank a month would cost around R650. This gives you a total monthly price of R4720, this is excluding parking costs in the city and any maintenance fees.
How much would you pay using Uber per month
I have measured the distance from my home to my work place at 13.1km and uber charges R122-R162 for this distance, things such as traffic and surge pricing may also affect pricing. If I were to use uber for both trips to and from home I would pay between R5124-R6804 per month using 21 working days just to go to and from work.
How much you would pay monthly renting a VW Polo Vivo
I had a friend who consistently rented small cars as he said it was more convenient for him and cost about the same price as paying for a car monthly without paying for insurance and maintenance. Let's look at what renting a car in Durban would cost, specifically a polo vivo hatch. The cost of a Group B car such as a polo vivo would be R6424 per month on standard damage and theft cover using Avis (I have chosen march 2020 as the time period). And you can drive a distance of 3100 km for that price.
What's the best option:
So monthly price for buying a polo vivo would be R4720, ubering would be between R5124-R6804 and renting would cost you R6424. On the surface it looks like buying is cheaper but we did not include parking costs in the city which can be as much as R1600 a month in cities such as Cape Town. Adding R1600 to the price would be R6320 which makes the price of buying a car the same as ubering or renting a car. In addition to this because VW is the most hijacked car in the country you may need to have a car tracker which would add additional costs.
Uber is expensive if you live more than 5km from your workplace but it becomes a winner for people who live too far to walk but cheap enough to Uber. I have heard stories of people selling their cars because of Uber. The disadvantage of uber is when you want to travel longer distances just outside of town. In that case you would have to use public transport or hire a car.
Renting a car essentially costs the same as buying one as far as monthly installments, instead of getting a class B car you could rent a cheaper car to decrease costs. But one could argue if we include the Cape town parking scenario than renting becomes more expensive then buying again. The benefit of renting is that you always have a newish latest model car with low mileage that is unlikely to give you problems and if it gives you problems you are not responsible for sorting that out, you just go and exchange it.
Think of renting a house vs buying one, it’s the same with cars. Uber and Taxify would be the Airbnb of cars.
