With car ownership costing thousands of pounds a year and insurance costs rising, more and more people are turning to short term car rental for their transportation needs. So how does renting work out from a financial point of view? Is it cheaper, in the long run, to rent instead of owning a vehicle?
It mostly depends on how often you need a car. Let’s take a look at the data using a VW Golf as an example — the most popular vehicle on Hiyacar in 2018.
How much does it cost to own a car? 🚙
When it comes to owning a car it isn’t simply the cost of purchase that can put a dent in your wallet. Other yearly costs must also be factored in to get a true picture of how much your vehicle is costing annually.
These include unavoidable costs like depreciation as your car reduces in value, plus MOTs, car insurance, and car tax all have to be paid by law. Add to that roadside assistance and ongoing service and maintenance costs, the number can increase substantially. This makes the cost of ownership well over £2,000 per year for a used VW Golf. And that doesn’t even include the cost of residential parking permits if required where you live, or the cost of any car repairs that crop up while you own your car.
The largest expenses related to owning a car are likely to be the depreciation (which can be up to 30% of the car’s value in the first year) and insurance. For example, price checks from a leading price comparison site show it will cost at least £700 to buy cover from the largest car insurance companies in the UK for a 30-year-old driver of a 2014 VW Golf in outer London.
How Much Does it Cost to Rent a Car? 🚙
Hiyacar’s rates vary by the make and model of car and our car owners set their own prices. On the low-end rates are around £25 per day for a basic small car, rising up to £250 per day for a fully-equipped high-end executive model, like a top of the range Mercedes. Using the VW Golf in our example, the average all-in daily rental cost would be £55 a day, including the rental charge, booking fee and insurance coverage.
Owning vs renting
The big question is how does short term rental compare to the cost of vehicle ownership?
One way to compare renting vs. owning is to see how many days a year you could rent a VW Golf for the cost of owning one. Given the (conservative) annual cost to own a VW Golf of £2,234 a year and the daily Hiyacar rental cost of £55 per day, those needing a car up to 40 times a year would save by renting instead of owning. And remember, this doesn’t include potential costs that an owner might incur such as repairing problems that arise or buying residential parking if required in your area.
Short term rental works out as much more economical for those who need a car a few times a month or less. So another way to compare renting vs. owning is to see the potential savings depending on how often you need a car.
As you can see in the chart below, someone needing a car once a month could save over £1,500 a year with daily rentals as opposed to owning their car — that’s the difference between £2,234 ownership costs and 12 daily rental costs totalling £657. Someone needing a car twice a month would still be better off by around £1,000 a year by renting from Hiyacar instead of owning.
Based on the cost comparisons of rent vs own using our VW Golf we can see that short term car rental may be a financially sound option for many occasional users. If you are a driver that only needs the use of a vehicle a few times per month then the savings can be substantial when calculated on an annual basis. So for drivers living in a large city like London, Hiyacar can be the perfect solution for occasional vehicle needs.