The Cost of Owning a Vehicle Vs. Ridesharing Vs. Public Transportation
Life is busy, and in today’s world, we all need a way to get to work, run errands, take children to school, and even go out for fun. Luckily, whether it's a big city or a small town, there are always several options to get around. Each of these options comes with its own set of advantages and disadvantages, and the costs play a significant role when it comes to choosing one of them, so it can be challenging to determine which one is the best for you.
At SmartCapitalMind, we care about your finances, and so we wanted to uncover and compare the costs of different means of transportation. After some research and calculation, we’ll share new data on the costs of owning a car versus using ridesharing services versus taking public transportation in 2023 to help you make an informed decision about which option is right for you.
How much does it cost to own a vehicle?
Driving a vehicle is the most popular way of transportation, according to a Statista’s Global Consumer Survey, as “76 percent of American commuters use their own car to move between home and work.” Though owning a car is a quintessential part of the American dream since it offers the freedom to travel at will and explore the open road, it definitely comes with a significant financial commitment.
To get the average cost of owning a vehicle, we must consider different factors, such as the costs of the car by itself, whether paid entirely or financed. On average, used cars cost around $33,341, according to CNBC, while brand-new cars could cost $20K more than that price and even more. Considering financing is more commonly seen in used car deals, on average, paying for a used car is $515 per month—$6,180 per year to be fully paid in 5 years.
Insurance and registration fees also add to the cost, with insurance being around $147.5 per month—$1771 per year—and registration fees at around $5 per month—$60 per year— but these vary depending on the state and are usually paid only once a year. These are the ownership costs that account for all the expenses generated solely by becoming the owner of a car.
Then, the operating costs—which are the ones that come from using the car—include maintenance, repairs, and, of course, fuel. Maintenance and repairs, depending on the needs, can cost around $1,425 per year.
On the other side, the cost of fuel depends on how much we travel. In recent years, gasoline consumption has hovered around 400 gallons per capita. At the time of research in January of 2023, the average national cost of fuel was $3.83 per gallon. Combining those two factors, the average yearly cost of fuel comes to $1,532.
When contemplating all these numbers, one can determine that owning a car can cost a single person almost $11k per year, which translates to nearly $1K per month. When it comes to considering the other modes of transportation, this one is definitely the most comfortable and reliable.
How much does ridesharing cost?
Taxis or cabs have always been a reliable option whenever we need an immediate solution, and ridesharing services like Uber, Wingz, and Lyft have become increasingly popular over the years. While ridesharing may seem like a convenient solution, which requires little maintenance as you don’t own an actual vehicle, it's important to consider all the expenses involved between per-ride service fees and tipping.
Ridesharing services can cost anywhere from $1 to $2.70 per mile, and in some cases, even more. On average, every trip costs around $1.90 per mile, which can cost around $27K a year—not including the tips costs, which are optional but highly encouraged.
Tips are usually between 15% and 20% of the total ride cost, meaning they add between $0.28 and $0.38 per mile to the total cost. Considering that someone can travel around 14,263 miles per year, solely the tip total accounts for around $4K per year. This gives us a total number of $31.5 K per year, which translates into $2.6K per month. This is nearly the current average cost of renting a home in the US—around $2K per month. With these numbers, we can determine that ridesharing can be an on-the-go, quick solution but maybe not the best option for everyday use due to the extremely high cost.
How much does it cost to use public transportation?
Public transportation has long been a reliable and affordable option for getting around in many cities and towns. As a matter of fact, people use public transportation 34 million times each weekday, according to the American Public Transportation Association. While it may offer a lower level of convenience than owning a car or using on-demand ridesharing services, public transportation can be a significant money-saver.
We looked at the cost of riding a bus and subway in different cities across America. The average cost of a bus ticket is $3 per one-way. Assuming the most common trip someone takes daily is home-work-home, it means that they would only need to use public transportation twice a day, for a total of $6 per day. The average cost of a subway ticket is $2.43 per one-way—$4.86 per day. Seeing public transportation as a whole between bus and subway rides, the average cost that someone might spend is $2.72 per one-way—or $5.44 per day, often regardless of how far the individual is traveling.
Assuming an individual uses public transportation 6 days per week for 52 weeks each year, for a total of 312 days each year, this brings us to a total of almost $1.5K per year, and less than $150 per month, making public transportation the most economic option for your wallet.
While cost is an extremely important factor to consider when it comes to modes of transportation, there are other factors that can come into play.Sustainability, convenience, the area we live in, and accessibility to different modes of transportation can all affect the way we travel.
While public transportation and ridesharing can be more sustainable options, someone who lives in a rural area may not have access to a bus or subway, and ridesharing services may be hard to come by if they are really far from a big city, so owning a vehicle is the only feasible option. On the flip side, for those living in a big city with a dense population, public transportation is cost-effective and sustainable for daily use but can require a lot more time for traveling, and owning a vehicle can be hard due to limited parking availability and there can be lots of traffic, so when you need to get somewhere quickly, you’ll have to pay the extra money for a rideshare to get there on time.
The way each of us travels is going to vary, as we all have different needs and priorities, so take these other factors into consideration, along with the cost of each mode of transportation, to decide what will work best for your lifestyle and your wallet.
We reviewed and analyzed various sources reporting on the costs of car ownership, ridesharing services, and public transportation. We used the following sources, among others linked within our report:
- Used Car: CNBC - Consumers are shelling out an average $10,000 more for used cars than if prices were ‘normal,’ research shows
- Financing: Bankrate - Average auto loan payments: What to expect in 2023 (accessed in January 2023)
- Insurance: Bankrate - Average cost of car insurance in March 2023 (accessed in January 2023)
- Registration: World Population Review - Car Registration Fees by State 2023 (accessed in January 2023)
- Maintenance: Bankrate - Average cost of car maintenance (accessed in January 2023)
- Fuel: AAA - National Average Gas Prices (accessed in January 2023)
- Uber: Ridester - Uber Cost: Fare Pricing, Rates, and Cost Estimates
- Lyft: Ridester - Lyft Cost 2023: Lyft Rates, Fare Pricing, Fees & More
- Wingz: Sidehusl - Wingz Driver Review | How it Works and What to Expect
- Taxi/Cab: Numbeo - Taxi Fares in United States
- Bus: How Much Is It - How Much Does a Bus Ride Cost?
- Subway: Business Insider - Here's what it costs to ride the subway in 11 major US cities