Car Ownership vs. Car Rental vs. Car Sharing vs. Private lease

When we would reach FIRE, we don’t need a car anymore to get to work (yay!). However, we will still want to move around as we don’t live close to many of our relatives and friends. We will primarily try to do this with our bicycles and public transport, but this is not always an option. The type of transportation will all depend on the distance, locations and costs. However, the freedom of a car can be quite nice. Plus, if you need to move (kid) stuff around, a car is rather useful. But what’s the cheapest way to get around with a car? Todays post will review the Car Ownership vs. Car Rental vs. Car Sharing vs. Private lease debate. At least for the Dutch…..

Car Ownership vs. Car Rental vs. Car Sharing vs. Private lease

Car Ownership vs. Car Rental vs. Car Sharing vs. Private lease

The Assumptions

As you would likely agree, there are too many options to review and the needs and distances for each of us will be (very) different. I’m going to try to provide ranges and rough indications of what would work best for each scenario. Granted, there might still be other options and situation that will affect the data presented. The idea is to use this info as a guideline to start your own assessments.

As most of you know. the Netherlands is a very expensive country from a car perspective. We will therefore only focus on two car classes:

The mini class is fine to get up to 4 people around in short trips under about 1-2 hours. It’s the simplest away to get from A to B. The compact class is great to get up to 4 people around in reasonable comfort and to move stuff around (love hatchbacks!).

Why not review anything bigger? Because you only need one of these on occasion and not every day when you are FIRE. If you need one, just rent one for the day/week. Rates are only €10-25 more per day for rentals/car-sharing, so won’t kill the budget.

The Mini

The following assumptions where used for the mini class:

  • 2.500, 5.000, 10.0000 and 20.000km driven per year;
  • Two scenarios where the average trip is either 50 or 100km;
  • For the scenario of 20.000km/year and 50km average, we used 300 days of use;
  • Fuel costs are €1.50/l;
  • Fuel consumption is 21km/l (~50 mpg);
  • Car purchase price is €8.000 (assumed about 3 years old);
  • Driver is 35 years old an had a clean 10 year driving record (for insurance purposes);
  • Opportunity costs based on 7% yield per year; and,
  • Private lease includes 12.000km pear year, extra km cost you €0.06/km.

The Compact

The following assumptions where used for the compact class:

  • 2.500, 5.000, 10.0000 and 20.000km driven per year;
  • Two scenarios where the average trip is either 50 or 100km;
  • For the scenario of 20.000km/year and 50km average, we used 300 days of use;
  • Fuel costs are €1.50/l;
  • Fuel consumption is 17km/l (~40 mpg);
  • Car purchase price is €15.000 (assumed about 3 years old);
  • Driver is 35 years old an had a clean 10 year driving record (for insurance purposes);
  • Opportunity costs based on 7% yield per year; and,
  • Private lease includes 12.000km pear year, extra km cost you €0.07/km

The Data Sources

For the assessments I used the following data sources and sites to get pricing information (for affiliate links!).

For car ownership

Wat kost een auto?

https://www.autotrader.nl/

For Private Lease

https://www.privelease.nl/

Private Lease van Justlease.nl

For Car Rental

https://www.cheapcars.nl/

https://www.sixt.nl/

hhttps://www.greenwheels.com/nl/

For Care Sharing

https://www.snappcar.nl/

https://mywheels.nl/

The Results

Ok, time for some pretty graphs. Based on the above scenarios, data and car types, the following graphs provide some guidance. Keep the following in mind:

  • For car ownership the opportunity costs are also included. In case of the mini class these costs are €560/year;
  • Car ownership includes all costs, including depreciation, maintenance, fuel, insurance and taxes;
  • Costs for car rental, car sharing and private lease are also all-inclusive rates;
  • If the average trip is 50km and distance is 5.000km/year, the assumption is that you do 100 trips per year. Similarly, if the average trip 100km and the distance is 2500km/year, the assumption is that you do 25 trips per year. The number of trips obviously significantly affect the costs in the rental and car sharing options, as you are charged by the day; and,
  • In all scenarios we assume you get the car for the whole day (24 hours).

Average trip of 50km

Cars Costs 50km average trip - Mini Class

Cars Costs 50km average trip – Mini Class

 

Cars Costs 50km average trip - Compact Class

Cars Costs 50km average trip – Compact Class

Average trip of 100km

Cars Costs 100km average trip - Mini Class

Cars Costs 100km average trip – Mini Class

 

Cars Costs 100km average trip - Compact Class

Cars Costs 100km average trip – Compact Class

The Conclusions

This assessment provided us some interesting insights, and some surprises too! We always believed that private lease was very expensive, but this is not as bad when you compare cars of about the same age (we used a 3 year old car for ownership vs. a new car for private lease). This is partially caused by the opportunity costs.

Another interesting (but not surprising) observation is that the number of days you actually use the car are of greater impact on the costs when renting or car sharing. If you can limit the number of times you need a car, you significantly reduce the overall costs for rental/car-sharing.

Some other general conclusions:

  • If you need a car only once-twice per week, you are better of with car-sharing or renting. Which option is better for you depends on availability of both rental cars and car-sharing programs in your area;
  • If you need a car about twice-three times per week, buy a small (older) one. This way the opportunity costs are lower and you still beat a private lease; and,
  • For us personally, we are cheaper off going for car-sharing or rental (we have both option in our area) when FIRE. We probably only need the car 25-35 times per year for one or two days each. Considering our current car costs us about €4.500-5.500/year (all-inclusive), we would save quite a bit of money on transportation costs.

Fun Fact for our American/Canadian readers. The road tax on a F350 Diesel (weight 2726kg; €3340/year) is more than operating a mini car for a whole year at 20.000km (all-inclusive!). That is why we drive small cars in this county 🙂

 

What about you, any new insights into car costs? Does this match with what you see with your own car? Have you used car-sharing yet? We are curious about your thoughts!

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14 comments

  1. We did a similar study a month ago to see what the best solution is for the second car. IT mainly depends on how many days or hours you take the car. That surprised us as well…

    For now, we note that days we use both cars to have a baseline. Otherwise, you just assume too much!

    1. Fair point, you probably will be surprised too that you don’t need the car at the same time very often. Would be a good reason do drop one!

    1. So were we, but it is primarily caused by the “opportunity cost”, as in the loss of income on the €8000 you are out of pocket to purchase the car.

  2. Nice to get some insight in the different options. We have a “mini”, that I need for my job. We only have one car, if I wouldn’t need it for my job we still wouldn’t own a car I think. The benefit of this is that I can declare all the km’s for a nice compensation, which also covers the costs for the car regarding private use (we don’t drive it a lot besides work, use our bikes most of the time). 🙂

    1. My first car also fell into the “mini” category. Due to expense paid by the company for using it for business purposes, I ended up only paying depreciation for the car over a 3 year period. All other expenses were covered. It can be quite lucrative, that’s for sure!

  3. Wow it also surprises me private lease is not that much more expensive than ownership.
    But Im missing one variable. In how many years do you depreciate the car when you own it?

    1. Hey RG, I’ve used the depreciation over one year for a car of 8 years old, subject to the amount of km driven (i.e. more km, more depreciation). Based on the site of NIBUD and autotrader, the depreciation for that year varies (for the mini class) between €540 and €864 (so between 6.5-10% of the value of that car in that year). But you have a valid point, an older car will depreciate less and therefore car ownership would start to benefit cost wise.

  4. I have my hopes set on the google self driving car playing a big disruptive role in the future in this field.

    Since I have 5 more years to work (at least) I hope to have a better view on the changes coming.

    In the meantime, and since I love it, I am using the Vespa more and trying to limit the car use. Present car is 10 years old and 220.000 km driven. Hoping it will last us a few more years!

    1. The self driving car would have many benefits for sure! But what would it cost? Guess it would best compare to a rental or car sharing option.
      But for you the best thing would be to keep the current beast running for as long as you can! Depreciation is probably peanuts by now.

  5. Hi CF, it seems to me that your model overstates the costs of car rental. The key is, as you also conclude, in the number of days you use a car. If you can limit that, you are fine. We use the car for family visits (approx. 500 km round-trip, usually 2 days) and for vacations. For that we rent, last year the total was approximately € 1.000. A compact car in ownership would have cost me around € 2.500 for the same pattern. We looked at various car share options but found them to be more expensive, since most of them base the costs (partly) on hours used.
    No kids here, which makes things a lot simpler for us.

    1. For the rental cars I used €30-40 per day + fuel (mini class) and €47.5-55 per day + fuel (compact class), depending on the amount of times you use it per year. Keep in mind that I’m not assuming long distances here, so you stay within the 100km free driving (and thus no extra km charges). I have seen rates as low as €25 per day + fuel (for rental periods between 1-6 days), but those were promotional cars with company stickers on it (mini class).
      The car sharing options I found (with 200km free driving) where just a couple of euro’s cheaper. Resulting in the shown graphs. But granted, the top end could be a bit off depending on the deals you find with rental cars!
      Vacation rentals will be a different thing depending on the distances driven. Like it said in the intro, I won’t satisfy every situation here. It’s more of a guide to see what options are likely interesting, after which you have to do the calcs. yourself to confirm. You’ve obviously done that for your situation 🙂 I’m not surprised that car sharing is not a good fit for holiday trips.

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