Renting vs. Owning a Car

I’ve been trying to find some information or even personal experiences on renting a car when you need versus owning a car, but unfortunately all I have come up with is a large lack of information. When I do find information on the subject, it always seems to point more towards the cost of buying versus leasing a car. Obviously if you must have a certain model of car, leasing can be cheaper for that specific model. But it’s almost always more effective to purchase a used car and keep up with basic maintenance and that’s a completely separate argument. I am talking about owning a car and using it minimally versus not owning a car and renting for vacations or trips where it is necessary to have a car. And that’s how we arrive at my current conundrum.  Since there are currently a lot of “what ifs” for me I’m going to use some real and some estimated numbers and try to reach a decision with my own math. How many times (and how long) would I have to rent a car during the year where owning a car would become cheaper?

Let’s first look at the continued costs of owning my current car. We have several major expenses:

• Car Payments
• Car Insurance
• Maintenance
• Gasoline

I’m going to estimate that I would drive for about 4 vacations and 4 weekend trips per year. The vacations are probably over estimated at this point, but I can tweak those as I do the math. The total miles would be estimated around (600*4)+(200*4 ) = 3200 miles in an entire year. The car would not be used for daily commuting or anything else. So here are the current costs associated with me owning a car vs new estimated costs of owning a car:

So with the mileage being cut down that much, I’m able to make huge savings when it comes to insurance, maintenance, and gas costs. I think I may have overestimated the maintenance costs at 17 cents a mile, but you never know what can happen. My car is still under an extended warranty that the previous owner bought so there shouldn’t be any major expenses.

In my 10 months of owning the car I’ve spent around $160 in maintenance which comes out to $16 a month and closer to 1 cent a mile. My estimation is probably too conservative, but I also haven’t required any maintenance for brakes, spark plugs, air filters, coolant, etc. I get free oil changes for life and haven’t hit any of more “expensive” maintenance – which still shouldn’t be that pricey!

The insurance and gasoline costs are based on quotes I received for my new driving mileage, and not using the car for commuting any longer. This was only a single insurance quote that I got from one company though, and it probably would have been closer to $45 a month if I didn’t require collision. Even though I’ll be driving a lot less, it doesn’t seem worth it to drop collision when my car is still worth $11,000. Since my car is financed, I also believe it is required for me to have some sort of collision coverage as well.

Now here’s the estimated costs of renting cars:

I’m still estimating the same amount of trips and that is how I came up with the cost of car rentals. I’d also have to take out a non-owners liability policy because the cost of that insurance is usually by the day from car rental companies and is extremely expensive. I would also need to get a credit card that will cover for collision and hopefully any administrative or loss-of-use fees from the rental company. Unfortunately this is somewhat of a gray area, so it would require a little more research.

I estimated gas slightly higher at 30 MPG, while with my car I was estimating the cost at 30 MPG. It’s not a guarantee that I would be able to rent a car with the same exact mileage, though I would obviously be trying to rent a smaller car that should have somewhat comparable mileage.

So I think it really comes down to the fact is that the more rental car trips I end up taking, the closer it comes out better to continuing to own the car. If I end up taking less than my estimated amount of trips, renting a car becomes the clear winner. But then you also have to consider – would I be more willing to take trips if I had a car? This leads to ease of use in not having to worry about rental pick up and drop off times. There are obviously trade offs to both sides of the question!

If my car was already paid off, it seems like it would be a no-brainer to just keep the car as I would easily break even from the cost of car rentals. The $1920 fixed cost every year is what really seems to tip it in favor of renting cars, but maybe I’ll follow it up with a more long-term analysis. Like renting five years versus owning a car for five years then possibly having to buy a car again.

Please let me know in the comments if you have experience with renting cars and any other costs or missed savings I may be missing on either side!

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