Ridesharing with services like Lyft and Uber have become very big business. Recently, Uber announced that it hit the 1 million ride per day mark. Many people today are getting rides instead of driving. So is ridesharing cheaper than owning a car?

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What’s It About And How Do You Save?

When you enlist a ridesharing service, you get picked up by a driver who has been connected to you by a smartphone app. This revolutionary service even lets you see your driver’s location as they approach. Typical wait times are less than five minutes. Plus, all drivers are identified and rated, so quality and conduct are generally very good.

This could translate into savings such as no parking or gas. Even bigger savings might appear if you gave up your car completely. Then you wouldn’t have to pay for maintenance, financing, insurance, etc. But is it worth it?

In one experiment, using ridesharing alone was cheaper than car ownership at $527 vs, $640 during a month’s worth of testing. But if you dig deeper into Josh Waldrum’s informative and entertaining story, he changed other behavior a bit during the test. For example, he packed his lunch and limited his errand running since he couldn’t use his own car.

Looking At The Stats

When we take an even closer look at the numbers, the biggest cost to Josh was his car payment which was 52 percent of his car ownership costs. Insurance was listed at 16 percent. Both of these payments might be areas where – if Josh did a little homework – he might be able to significantly cut his costs.

According to NerdWallet, car ownership is actually still less expensive than relying on ridesharing alone. This was based on a survey conducted in 50 cities around the country. They recommended ridesharing alone for those with a checkered driving history or for those who use their car very infrequently.

Solutions Vary

In the real world, many ridesharing users are car owners too. Calling Uber or Lyft if you’re planning a night on the town is definitely a wise choice. Or ridesharing may be advantageous if it is very costly to park at work. In other cases, it may be better to have your own vehicle, like if you have to drive your kids around a lot, or if you have a long commute.

Tip The Scales In Your Favor

If you really want to save though, look at your car costs. Have you checked into refinance rates recently? If not, you might be leaving thousands of dollars on the table every year.

Josh also mentioned the emotional component associated with having your own car that you can drive where and when you want. In the end, people still love their cars.

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Published in CARCHEX Auto Finance Resources by CARCHEX on June 12, 2015