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What’s Cheaper: Owning A Car vs Uber Everywhere

Last updated on July 6, 2020 by
uber vs car ownership

There’s no doubting that America lives, works and plays through the help of their automobiles. This year, 287.3 million vehicles will be registered with state authorities. If that translated to people living in the United States, that would mean 87.5 percent of Americans owned or would have access to a car.

But owning a car comes with some responsibility. Driving in the U.S. comes with the cost of a driver’s license, car payments, regular maintenance, and annual registration costs. Instead of making monthly and annual payments, would it be cheaper to call Uber to get you from point to point every day?

While the idea of a “pay where you go” plan seems easier to manage, is it truly more economical? Here are the numbers to consider when deciding what’s cheaper: owning a car, or taking Uber everywhere.

Buying a Car by The Numbers

The life of every car starts at the factory. Once assembled and quality checked, it then ends up at your local dealer, where it makes its way to the public roads in the capable hands of a licensed driver.

An automobile is a major investment, that requires careful planning and research. According to Edmunds, the 2019 average price for a new car was $36,718. For most of us, making a purchase this large requires an auto loan. How much the loan costs per month is based on a number of factors, including your down payment, your trade-in value, and your credit score.

Let’s say you decided to purchase a car valued at the national average. Your trade-in car is valued at $5,000, you have $2,500 to make a down payment and had good credit. Assuming your locality has a seven percent tax rate, and your good credit qualified you for 3.5 percent interest on a 72-month loan, your monthly payment would be around $490 per month.

The actual terms of your loan can change between your interest rate, local tax rate, your trade in value, how much you can put down towards a new car and if you are buying a new or used vehicle. According to credit bureau Experian, the average new vehicle loan payment is $554 per month, and the average loan payment on a used car is around $391 monthly.

Regular Auto Maintenance, Insurance, and Yearly Registration

The loan payment is only one consideration when measuring if it’s cheaper to buy a car or Uber everywhere. In addition to paying off the loan, it’s also important to figure out how much you may spend on your vehicle registration and maintaining your car’s optimal performance.

Auto maintenance doesn’t just consist of keeping the gas tank full and the car washed. Rather, cars need a lot of work to stay on the road, including oil changes, tire changes, and regular work to prevent roadside breakdowns. According to AAA, the average cost of driving a car is around $8,469, and varies based on what you actually drive. Sedans are cheapest to maintain at $6,354 per year, while pickup trucks can cost over $10,000 per year to keep running right.

On top of this is the cost of auto insurance, which is mandatory to legally operate a vehicle on public roads. A survey by Business Insider showed average yearly rates per state can range from $1,100 to over $3,300. The average cost of annual auto insurance across all 50 states is $1,377.

Finally, one has to factor in the cost of registering their car with their state authorities. Again, the annual registration fee will change depending on where you live. A survey by the National Council of State Legislatures notes that these fees fall into one of five different categories: flat rates, weight-based, value-based, age-based, or other considerations. Visit the NCSL website to determine how your state’s fees are calculated.

The Cost of Ubering Everywhere

Although private vehicles are the primary way Americans get from point to point throughout their days, it’s not the only method available to them. Major metropolitan cities offer public transportation options including buses and light rail, while rural areas may offer regional options to the public.

Through technology, Americans also have the option of ridesharing. Uber was the pioneer in launching technology-driven ridesharing, using only an app to call a car to get you to your destination. Today, Uber offers a range of services, from riding with a stranger to getting served by a professionally-driven black car.

By utilizing Uber, riders can skip the expenses of car ownership, and only pay when they need to travel from point to point. For those who don’t have access to a car, or often rely on public transportation, Uber can be an effective and easy way to directly get to your destination.

But how much does it actually cost? Rideshare tracking website Ridester.com claims the average Uber fare per mile is around $2. Subsequently, expense reporting platform Certify claims the average Uber fare is around $25.37 per ride. Although it may not sound like much compared to owning a car, the small expenses can add up quickly.

Car Ownership vs Uber: Which is Cheaper?

Everyone’s transportation needs are different, based on where they work, live, and activities. So how can you tell if it’s cheaper to own a car, or take an Uber everywhere you need to go?

Let’s consider the cost by mile driven. The Federal Highway Administration estimates the average adult will drive around 15,000 miles per year. Calculating that cost for an Uber annually is easy: 15,000 miles at $2 per mile is $30,000 every year, before adding gratuities.

To determine how much it costs per mile to own a car, we need to add all of the annual expenses, and then divide them by 15,000 miles. For the average used car, it costs $12,243 to operate per year, including 12 monthly payments ($4,692), maintenance costs ($6,354), and insurance ($1,344). Divided by the 15,000 drivers take to the road, that’s a per-mile cost of 0.828 cents.

What if you opt for a new car instead? If you add up 12 months of car payments ($6,648) with average maintenance costs and insurance, the average cost per mile would be 0.956 cents. This is still significantly lower than what it would cost to Uber everywhere.

Before making a final decision, be sure to look at all the local changes that would affect your situation, including state average insurance rates, registration costs and taxes. But for the average American, it’s much more efficient to own and drive a car daily than to take regular Uber rides wherever you go.