Do I Need to Actually Own a Car?

America is a car culture; we tend to drive everywhere. 

To be fair, our country is pretty spread out. While you can easily walk around many European city centers, the same cannot be said for most American cities and suburbs. 

Even so, today there are more ways of transportation than ever before. We can drive, walk, bike, hail a taxi, call an Uber or Lyft or hop on any form of public transportation. 

And even when we do need a car, we can use car-sharing services to borrow a car for the day or for a long weekend. 

Is a car really necessary? Do I need a car? There are so many questions, and we’ll work through the answers in this article.

The true costs of car ownership

Cars are expensive to own, and in 2022, with used car prices and gasoline at elevated levels, costs are higher than ever before. 

How much does the average car cost? Recent data suggests that on average, a car costs $5,264.58 per year or around $439 per month to own and operate a vehicle in the United States. This figure can rise to over $9,000 in some states. And that’s per year, not total.

This all-in annual cost adds up the various expenses associated with car ownership, including:

• Car payments

• Car insurance

• Gas

• Maintenance and repairs

• Parts and supplies

• Tolls and parking

And the number above is the average for all cars combined, from brand-new SUVs to decades-old clunkers. The average costs for new cars are even higher. 

An American Automobile Association (AAA) study found that the typical cost of new car ownership is $9,282 per year, largely due to the higher cost of car payments. 

There are still some valid reasons to buy a new car, but it’s important for drivers to understand the true costs of car ownership. 

The costs of public transit and car alternatives

It’s more difficult to measure the costs of car alternatives, but we can estimate based on the data we have.

For instance, the average monthly bus pass for unlimited bus transit was $58.53 per month in 2019. And the average monthly pass for light rail was $83.37 per month. 

For many people, a bus or rail pass could cover most transit needs, but you would still need to budget for cab rides, Uber rides or the occasional car rental. 

• The average Uber costs around $1 to $2 per mile, plus around $0.40 per minute. A 5-mile route may take approximately 15 minutes and cost between $10.60 and $15.60. 

• Average cab rides vary but are generally more expensive than Lyft or Uber.

• The average daily car rental was $109 per day in 2021, but this figure may decrease as shortages resolve.

• Typical costs for car-sharing programs like Zipcar are around $13 per hour or $90 per day. The average Zipcar user spends $314 per month on the platform. 

If we add all the car alternatives up, monthly costs may look something like this:

• $58 for a monthly bus pass

• $150 Uber, Lyft or cab budget to cover approximately 10 to 15 short rides

• $314 per month budget for car rentals or car-sharing services — this covers approximately 3 full-day rentals per month or around 32 hours of hourly Zipcar rentals

This brings us to a total of $522 per month, or $208 per month without the car rentals or sharing. 

Compare this to the average cost of owning a car — $439 per month for all cars, $774 per month for new cars — and it’s easy enough to see that it’s generally cheaper not to own a car. But that’s not always the case. 

Do I need a car?

Ultimately, the question of whether you need a car is highly subjective and depends on your specific situation. Here’s what to consider when weighing the advantages and disadvantages of public and private transport. 

Where do you live? 

If you live in a city-center apartment, getting around on public transit will be relatively simple. For rural residents, owning a vehicle is much more important.

How often would you truly need a car? 

If you do give up car ownership, think about how often you’d need to rent a car or use car-ride services like Zipcar. If it’s more than a few times a month, it may make more financial sense to own a car. 

How much is the cost difference for you?

We compared some average costs of cars versus public transportation options above, but it’s a good idea to compare real-life costs for your situation. How much would a car cost you per month in your area compared to public transit options?

What are the non-financial considerations for you? 

Not owning a car can save you money, but money isn’t everything. What is important to you? And how might your transportation options influence that? For instance, a car gives you a lot of freedom to get up and go wherever, whenever. 

What does the future hold? 

Here’s an interesting point to consider: In the future, self-driving vehicles may make ride-sharing much cheaper and more accessible. RethinkX, a think tank, made the bold prediction that as early as 2030, 95% of miles traveled in the U.S. will be via autonomous, ride-share vehicles. 

While this timeline may be ambitious, it is certainly true that the world of transportation is changing. It’s up to you to decide how you might change with it.

Mastering your money

The decision of whether to own a car is an important consideration for your life and for your money. 

If you do decide to buy a car, it would be helpful to know how to negotiate a car purchase. 

You may find that a used car would be a better choice; in that case, here’s what to ask when buying a used car. 

If you have credit card debt to pay off before you can fit a new car or the necessary car alternatives into your budget, Tally† may be able to help. Tally is an app that offers a lower-interest line of credit that can help qualifying Americans potentially pay off credit card debt faster and save money on interest along the way. Learn more here. 

†To get the benefits of a Tally line of credit, you must qualify for and accept a Tally line of credit. Based on your credit history, the APR (which is the same as your interest rate) will be between 7.90% - 29.99% per year. The APR will vary with the market based on the Prime Rate. Annual fees range from $0 - $300.