The good news for lenders is that owning a car, and all the costs that come along, is still cheaper than exclusively using a rideshare program like Lyf tor Uber. The bad news is that in some cities, that gap is closing.
That’s according to a new study conducted by Nerdwallet, a financial services consultancy, entitled, “Should I Ditch my Car for Lyft & Uber?”
The answer, the study found, is “Maybe not just yet.” In every city analyzed, according to NerdWallet, it was less expensive to make car and insurance payments than to exclusively use UberX or Lyft. However, in some urban cities, like Miami, overall costs were close, with difference of only $3,000 a year.
The study analyzed 50 U.S. cities with both Uber and Lyft availability, using a Toyota Camry, due to its popularity and relatively low operating cost, to find out how much it would cost to exclusively use ridesharing services for every trip instead of driving, and how many Lyft or UberX rides could you take each week if you spent your yearly car ownership budget on ridesharing services, rather than owning a car?
Using the rideshare company’s estimated fares on its websites and a calculation that considered miles and times traveled per year, among other things, Nerdwallet found that in cities like Albuquerque, NM the cost of using either rideshare was $32,632, while owning a car was at $11,945, making it an easy choice. However in cities like Detroit, MI, where using Lyft was $17,460 a year, while the cost of owning a car was an estimated $15,608, the gap was narrowed significantly.
Although the study found that Lyft was cheaper in 29 of the 50 states analyzed, Uber was labeled as a potential disrupter to the auto finance industry multiple times during the recent Auto Finance Summit in October. William Jensen, senior vice president and national retail lending credit executive for Chase Auto Finance, even advised lenders to consider ways to develop finance programs for Uber drivers during his presentation on the future of Indirect lending.
Arjan Schutte of Core Innovation Capital referred to a “back-of-the-envelope” calculation his firm had done that determined rideshares would save users $2,000 a year in dense cities such as San Francisco, where the cost of parking is a significant expense.
Uber has come under scrutiny in the media recently for reportedly pressuring drivers with poor or no credit to sign up for subprime auto loans. But overall the company is expanding rapidly, with its website boasting availability in 45 countries and growing. Its most recent valuation put it at $18 billion. That may now be $25 billion, according to some reports.
The Nerdwallet study concluded that drivers with children or long commutes would benefit financially from owning a car, while drivers who live in walkable communities, have access to public transportation, or have a checkered driving history that makes insurance rates high, may benefit from ditching their car and pinging Uber.