# Discussion on auto sharing



## Jungle (Feb 17, 2010)

A recent article in MoneySense magizine states the CAA estimates your car costs you on average $830 per month. THe CAA then states that auto sharing costs $320 per month. Companies like zipcar.ca and autoshare.com let you pay a membership to use their cars like a rental service. They insure, maintain and even put gas in them. You just book online and pick it up, at your nearest parking lot. They offer a variety of plans depending on your frequency of use. 

Last year from Jan to Dec, we spent a total of $2500 on gas, maintenance and insurance for one car. The car's value also depreciated $6125 in one year!!  Cost and depreciation last year totaled $8652, or $721 per month. The most expensive plan with Zipcar costs $317 per month, or $3804 per year, still much cheaper then ownership. The cheapest plan costs $34/month, light use. 

Zipcar has a nifty example comparing the cost: http://www.zipcar.com/toronto/rates/savings-compare-own

I think transportation is the highest expense for most people. With cars depreciating in value and the cost of maintenance and insurance, over the long term, the cost can really add up. Of course, auto sharing does not really work in suburban areas. The cars are mostly concentrated in denser city areas.

How much do you spend a year on cars and would you consider saving with auto sharing if available?


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## HaroldCrump (Jun 10, 2009)

Jungle said:


> They insure, maintain and even put gas in them


Do you need to carry liability insurance or not even that?
I'd think you have to have liability insurance at the very least.
Regarding insurance, liability is the lion's share of your premium.
The other "stuff" like medical payments, comprehensive, etc. are just noise.

But yes, it is a good idea.
I'll certainly look into that.
I'd think this will give families the choice of having just 1 car and using something like zipcar as an alternate for the 2nd car.


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## brad (May 22, 2009)

HaroldCrump said:


> Do you need to carry liability insurance or not even that?


No, it covers everything (at least Communauto here in Québec does, even covering you if you drive in the United States), but I'm not clear on how it works if you go overseas and have to rent a car -- currently my auto insurance covers me for overseas rentals.

It has also been pointed out that if you get rid of your car and go with zipcar/communauto etc. and cancel your regular car insurance coverage, you'll lose any "safe and experienced" driver standing with insurance companies if you ever decide to own a car again. So that's a risk that you need to factor into the cost equation....your future premiums will be higher if you decide to go back to owning your own car.

I have been on the brink of deciding to ditch my car and go with Communauto for several years now...all the ingredients are right for me: I rarely drive (it takes me a couple of months to go through a tank of gas), there's a Communauto car about a 7-minute walk from our home, and we have no driveway or garage, which makes parking a hassle in winter especially.

There are two things that have been holding me back: 1) convenience (right now I can just hop in my car whenever I need to, no need to make a reservation or walk up the street to get a car) and 2) flexibility (when you reserve a shared car, you need to bring it back by the assigned time).

There are many reduced hassles with using a shared car: no need to bring the car to the garage for maintenance and repairs, no need to deal with changing tires twice a year and buying new tires when the old ones wear out, etc., but the reduction in convenience and flexibility is a hard hurdle to overcome...at least for me.


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## Jungle (Feb 17, 2010)

Good question. The insurance details for zip car states there is coverage up to $300,000 for third part body and property damages. 

They also state you will have to pay up to $750 for car damage during an at fault accident. 

The $300,000 liability seems low. If you hit a car with four people inside, could the injury liability cost exceed $300,000?

http://www.zipcar.com/how/faqs/one-faq?faq_number=28


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## Jungle (Feb 17, 2010)

brad said:


> It has also been pointed out that if you get rid of your car and go with zipcar/communauto etc. and cancel your regular car insurance coverage, you'll lose any "safe and experienced" driver standing with insurance companies if you ever decide to own a car again. So that's a risk that you need to factor into the cost equation....your future premiums will be higher if you decide to go back to owning your own car.


Apparently zipcar and autoshare provide you with a letter stating that you have been covered under their insurance to prevent any gaps in insurance. I wonder what the insurance companies think of that. 

Like you stated Brad, here in Ontario, if you have a gap with no insurance, they start you as a new drive with no experience.


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## the-royal-mail (Dec 11, 2009)

Yes, I have looked into this in the past and opted (in my car-less days) to simply rent a car when I needed one. I found this to be quite a bit of detail and logistics to consider, but that's just me. It could be I feel that way because of never having actually done it. I like the concept though, as cars are a very necessary thing. About all I can say is if you are considering this, then look into all the details and understand it carefully. I also don't believe this is available in smaller centers across the country and certainly not in the rural areas. Seems to only be a big city thing as mentioned above. A worthwhile option for consideration for the few who live within radius of this.


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## HaroldCrump (Jun 10, 2009)

Here in Ontario, $1M is the default minimum liability insurance.
Therefore, if you are at fault, the claim against you will be at least $1M.
So yes, $300K in this situation is (very) low.

On balance, it may be better to continue your own liability insurance (and cancel comprehensive, etc.) while switching to zipcar.
That maintains your continous insurance record.
Of course, it'll only save you maybe 30% in insurance (since liability is the major component) but other benefits of zipcar may outweight it.


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## LondonHomes (Dec 29, 2010)

I hate having to own a car, since they are total money sinks.

However, they are way more convient than having to really on public transport. I think company's like zipcar are actually in competition with public transit.


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## brad (May 22, 2009)

the-royal-mail said:


> A worthwhile option for consideration for the few who live within radius of this.


If car-sharing were available in every Canadian city, those "few" would amount to 80 percent of Canada's population, or about 25 million.

I'm not sure which cities currently have it -- here in Montréal, Communauto is very well distributed and widely used; it's very popular...there are about 23,000 subscribers here. Take a look at their growth curve:


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## Jungle (Feb 17, 2010)

Wow that's quite a growth. I believe auto sharing is available in some shape or from in every major city in Canada. It's also popular in the States. ( I think Zipcar is a Us company)


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## Four Pillars (Apr 5, 2009)

Jungle said:


> A recent article in MoneySense magizine states the CAA estimates your car costs you on average $830 per month. THe CAA then states that auto sharing costs $320 per month.


I'm not sure how valid that comparison is for someone who uses their car a lot. I can see how it's a good way to save money, but it certainly comes at a price of convenience (as others have stated).

I like Harold's suggestion that it could serve as a 2nd car for a one car family. I have a friend who does this, and he says it works great.


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## andrewf (Mar 1, 2010)

They seem great if you don't need a car for commuting. The option of renting a larger vehicle when you need it seems nice too. That said, I haven't tried it yet.


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## crazyjackcsa (Aug 8, 2010)

Jungle said:


> A recent article in MoneySense magizine states the CAA estimates your car costs you on average $830 per month. THe CAA then states that auto sharing costs $320 per month. Companies like zipcar.ca and autoshare.com let you pay a membership to use their cars like a rental service. They insure, maintain and even put gas in them. You just book online and pick it up, at your nearest parking lot. They offer a variety of plans depending on your frequency of use.
> 
> Last year from Jan to Dec, we spent a total of $2500 on gas, maintenance and insurance for one car. The car's value also depreciated $6125 in one year!!  Cost and depreciation last year totaled $8652, or $721 per month. The most expensive plan with Zipcar costs $317 per month, or $3804 per year, still much cheaper then ownership. The cheapest plan costs $34/month, light use.
> 
> ...


Sure, but depreciation doesn't really cost you anything. I've never understood why people factor that in to a cost. Do you factor in the depreciation on your TV? Clothes? How about food? the minute you eat it, it has zero value!


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## brad (May 22, 2009)

crazyjackcsa said:


> Sure, but depreciation doesn't really cost you anything. I've never understood why people factor that in to a cost. Do you factor in the depreciation on your TV? Clothes? How about food? the minute you eat it, it has zero value!


Right but with a car it does matter if you're planning to sell it. I keep my cars for 10 years or more, but many people sell their cars after a couple of years. If they buy a new or even lightly used car every couple of years, they're losing a lot of value through depreciation.


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## andrewf (Mar 1, 2010)

crazyjackcsa said:


> Sure, but depreciation doesn't really cost you anything. I've never understood why people factor that in to a cost. Do you factor in the depreciation on your TV? Clothes? How about food? the minute you eat it, it has zero value!


Well, you're factoring in depreciation when you buy a car. If you spend 30k on a car, keep it for five years and sell it for 15k, then your straight line depreciation in $15k/5=3k per year.

Do you not do any analysis of depreciation when buying a car? If you lease, the depreciation is built into the lease amount.


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## Four Pillars (Apr 5, 2009)

The upfront cost of a car minus the eventual sale price (which could be zero) is a cost that has to be factored in.

Because you generally keep a car for at least a couple of years, it makes sense to spread that cost over the ownership time, which gives you annual depreciation.

You actually pay the "depreciation" when you buy the car.


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## Jungle (Feb 17, 2010)

crazyjackcsa said:


> Sure, but depreciation doesn't really cost you anything. I've never understood why people factor that in to a cost. Do you factor in the depreciation on your TV? Clothes? How about food? the minute you eat it, it has zero value!


If there is a cheaper alternative (ie auto sharing), then there is the cost of lost savings opportunity. Add the depreciation over a life time and then see what that money could have done, if invested or paid debt. 

Of course, people who are suitable for auto sharing probably live in the city and only need to drive a few times per week/month.


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## brad (May 22, 2009)

Jungle said:


> Of course, people who are suitable for auto sharing probably live in the city and only need to drive a few times per week/month.


Actually Communauto (and presumably Zipcar as well) have daily commuter plans as well -- $15/day and 40 kilometer limit per day...it works out to about $4,000/year. That's almost exactly what I spent altogether on my car last year (including gasoline, insurance, maintenance and repairs, etc.), so even a car-share for daily commuting might make financial sense for some people.


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## financialnoob (Feb 26, 2011)

brad said:


> It has also been pointed out that if you get rid of your car and go with zipcar/communauto etc. and cancel your regular car insurance coverage, you'll lose any "safe and experienced" driver standing with insurance companies if you ever decide to own a car again. So that's a risk that you need to factor into the cost equation....your future premiums will be higher if you decide to go back to owning your own car.


It may vary on province. In Ontario, you wouldn't necessarily lose your safe and experienced standing. But a year without insurance would be seen as a "break" in insurance, which may alter some rates or disqualify the driver from some others. And with most companies, after one year, you'd then qualify because it's about whether the driver has a previous insurance history or not.



HaroldCrump said:


> Here in Ontario, $1M is the default minimum liability insurance.
> Therefore, if you are at fault, the claim against you will be at least $1M.
> So yes, $300K in this situation is (very) low.


The minimum amount in Ontario is $200K, and that doesn't mean the minimum claim will be that amount. 

But I would be uncomfortable with less than $1M. While car repair costs have increased, a lot of the increase is because of higher health care costs and legal fees associated with claims.


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## Jungle (Feb 17, 2010)

I'm not sure if the $300,000 liability I posted for Zipcar is correct, as this was coming from the FAQ and seems to be a USA based site. 

I just looked up Autoshare and they are 100% Canadian based out of Toronto, their liability insurance is $2million (much better) and you pay the first $750 in damage, if you are at fault for smashing up the car.

Seems pretty good if you ask me. 

The only thing outstanding is how insurance companies treat this as being continually covered under a policy.


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## Jungle (Feb 17, 2010)

From Autoshare's FAQ:

"And, I build an Insurance Record?
Members are considered to have been continually covered by AutoShare’s policy for the purposes of getting personal auto insurance. We can provide you with a Letter of Insurance Coverage from our insurance company certifying your coverage history with AutoShare. This is an important consideration because when a car is given up for a period of time, and later there’s a need to acquire another, insurance coverage is often charged at a higher rate – as if one had never had car insurance. This coverage does NOT apply to employee-drivers on a corporate account, nor members without Canadian drivers liscences. "

http://www.autoshare.com/how_qa.html#insurance


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## greeny (Jan 31, 2011)

Very nice example with this interesting growth.


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## HaroldCrump (Jun 10, 2009)

Jungle said:


> I'm not sure if the $300,000 liability I posted for Zipcar is correct, as this was coming from the FAQ and seems to be a USA based site.


Ah, ok, that makes sense now.
The common liability insurance coverage in the US is much less (than Ontario, at least).


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## hboy43 (May 10, 2009)

Hi:

I was 35 years old before I had an ownership interest in a car, that is 19 years I avoided the cash sinkhole that is an automobile after turning 16 and being eligible to drive. This savings easily paid for my first house, in fact my net worth exceeded the value of my house at age 28.

There are few things that have the financial impact of gaining or losing a vehicle on the personal payroll.

My wife and I were running two cars the last 3 years, but now are thankfully back to one again. Mostly kept the older vehicle around so that the new one's warranty expired on time instead of distance travelled.

hboy43


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## nathan79 (Feb 21, 2011)

If you need to drive a new car then this is a very good idea. Otherwise just buy soemthing used and put basic insurance on it. I ran the numbers and I spend about $250/mo all in (including depreciation).


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## eggroup (Mar 29, 2011)

Is there a service like this in Montreal?


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## brad (May 22, 2009)

nathan79 said:


> If you need to drive a new car then this is a very good idea. Otherwise just buy soemthing used and put basic insurance on it. I ran the numbers and I spend about $250/mo all in (including depreciation).


It's not as simple as that, though. My car is 6 years old and I bought it new with cash so I never had any interest to pay; even so I would come out ahead if I sold this car today and went with car-sharing instead. The money I get from the car sale would fund several years of car-sharing, and I'd avoid the expense of buying another car, plus I'd avoid all the repair and parts bills in the future. And my insurance costs would be lower, since my insurance payments are tied precisely to how much I drive.

A large part of the equation depends on how often you need a car, how far you drive, and the reliability and repair costs of the car you own.

If you need your car every day, owning your own car probably makes sense regardless of the financial considerations because the convenience of having your own car has value (which has to be balanced against the inconvenience of having to deal with maintenance and repairs, etc.).

But for someone like me, who typically drives once or twice per week and can get around by other means (foot, bike, public transportation), car-sharing will make more financial sense than owning even if someone gave me a car as a gift, because the annual cost of car-sharing for me would be lower than the annual costs of maintenance, repair, parts, and insurance on my own car.


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## Eclectic12 (Oct 20, 2010)

brad said:


> No, it covers everything (at least Communauto here in Québec does, even covering you if you drive in the United States), but I'm not clear on how it works if you go overseas and have to rent a car -- currently my auto insurance covers me for overseas rentals.
> 
> It has also been pointed out that if you get rid of your car and go with zipcar/communauto etc. and cancel your regular car insurance coverage, you'll lose any "safe and experienced" driver standing with insurance companies if you ever decide to own a car again. So that's a risk that you need to factor into the cost equation....your future premiums will be higher if you decide to go back to owning your own car.
> 
> [ ... ]



What I've heard of before is that when dropping the coverage on the old car, the owner requested copies of their insurance history. Then if enough time passes that the car insurance companies have purged their records, there is proof of an established history. It won't make up for time without coverage but will avoid the "no history = same premiums as an eighteen year old driver".

The same idea works for utilities like gas or hydro. Opening a Hyro account in a new city, the standard business policy was "no history = deposit required". I supplied a copy from the previous city's Hydro stating that I was a good customer with a fifteen year history. The end result was that the deposit was waived - even though there was a two year period with no Hydro.


Cheers


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## Eclectic12 (Oct 20, 2010)

crazyjackcsa said:


> Sure, but depreciation doesn't really cost you anything. I've never understood why people factor that in to a cost. Do you factor in the depreciation on your TV? Clothes? How about food? the minute you eat it, it has zero value!


Agreed ... but with with a car, buying a demonstrator or last year's model on clearout, changes the price dramatically, with minimal change to what is received and how long is lasts.

I wouldn't want to be buying a t-bone steak that was from two years ago!


As for other items - that's why I love garage sales. Spending $5 for a hammer compared to $29 plus taxes, a scoop shovel for $2 plus a $0.15 screw in addition to five minutes labour compared to $39 plus taxes makes it easier to have money for other things, such as investing, vacations, TVs etc.



Cheers


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## Sherlock (Apr 18, 2010)

I wouldn't consider car sharing because I like the freedom of having my own car. I also like driving a powerful car and most zipcars are usually 4 cylinders. The percentage of my income consumed by car-related expenses is easily tolerable. It would have to increase considerably before I would consider giving up car ownership.


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## the-royal-mail (Dec 11, 2009)

This will make addy happy:

_Car-sharing revs up in city
Winnipeg's first-ever auto co-op set to start_

http://www.winnipegfreepress.com/opinion/columnists/car-sharing-revs-up-in-city-119828694.html


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## balexis (Apr 4, 2009)

eggroup said:


> Is there a service like this in Montreal?


Yep: www.communauto.ca


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## Synmag (Apr 16, 2011)

I think as long as you have to return the car to the same location it doesn't make much sense if you commute daily, especially if you have to pay for parking. These companies should innovate and come up with a system where you can drop off at other locations. This way they could grow past inner city limitations. Last time I checked it would be cheaper to rent a car than use car share for commuting if you have a full time job. Most of the "cost" is when the car is sitting idle during the day when no one is using it. 

It's a viable option to run errands but even for that a cab might make more sense. The other issue to factor in is the social aspect. How often are you going to decline invitations to social occasions because you don't want to pay for the cost of auto share? This is what I often hear with people who lease. Their issue is they don't want to go over the yearly km limit. I laugh when I hear someone won't make a trip because they want to "save" kms. If you own your car and an occasion comes up you just jump in and go without even considering the cost. 

With current gas prices auto share is going to make more sense however since they include gas I would imagine they will be forced to increase prices.


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## financialnoob (Feb 26, 2011)

Synmag said:


> I think as long as you have to return the car to the same location it doesn't make much sense if you commute daily, especially if you have to pay for parking. These companies should innovate and come up with a system where you can drop off at other locations. This way they could grow past inner city limitations. Last time I checked it would be cheaper to rent a car than use car share for commuting if you have a full time job. Most of the "cost" is when the car is sitting idle during the day when no one is using it.


That would be great. But parking is incredibly expensive in Toronto, often costing more than gas even for most commuters. 

The current model isn't really built for commuters though. And I'm not sure it'd be financially feasible to accommodate commuters. They'd have to buy a ton more vehicles that would all be rented out during the same peak hours, and then find a place to house them the majority of the day.


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## brad (May 22, 2009)

Synmag said:


> I think as long as you have to return the car to the same location it doesn't make much sense if you commute daily, especially if you have to pay for parking.


See http://www.canadianmoneyforum.com/showpost.php?p=57812&postcount=18

With the commuter plan, you can leave your car all day at your work but not pay by the hour; you have a flat fee per day. The costs over the course of a year (assuming your commute is less than 40km/day) add up to about the same or less than what you'd be paying in maintenance, repairs, fuel, insurance, etc. each year if you owned your own car -- but the big difference is that you don't actually have to buy a car. So you'd save about $20K this way right off the bat.


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