Buying a car or using Uber: What’s best for you financially?

In 2015, UberX announced that Australians had taken 10 million rides. In 2016, Uber was introduced in new Australian cities, and is now available in no fewer than 14 different locations countrywide.

For those that have tried this new style of taxiing, they’ll know the fantastic benefits at hand. If you’re new to Uber, the main differences between it and an ordinary taxi are that you order it via an app, it estimates how much the trip will cost before you go, payment goes directly from your account, and most importantly, it’s often a lot cheaper. In fact, UberX claims to be as much as 40 per cent cheaper than comparable forms of transport.

The price difference has raised an interesting question: Which is cheaper? Using Uber or buying a car?

To buy a car or to Uber

The car vs Uber question has already been debated by some, and it has raised a few important points.

When entrepreneur Kyle Hill ran the numbers, he found that the cost of driving a mid-sized car for a year (including insurance, maintenance, fuel, registration) is US$8,876 per year. Currently, that’s just over $11,900 Australian.

An Uber, if you were to drive it roughly the same distance of around 24,000 km, would cost over US$18,000 per year – roughly $24,000 Aussie.

However, he then took a look at how much it would cost if you didn’t drive all that much, such as 16,000km a year. In this case, it actually becomes cheaper to use the app service. This is because all the extra costs of car ownership work out at a higher rate on average if you’re driving shorter distances.

Note that these calculations were completed for an American market, so may not be identical here in Australia.

The argument for personal cars

While it might sound impressive, there is still a strong argument for getting a car loan and purchasing your own vehicle.

For starters, your car can be resold in future, and even with depreciation, it is still an asset you can cash in on at a later date. Additionally, your Uber driver might not be too impressed should you request a long road trip, or even a short trip down to the shops when you can’t be bothered walking. Plus, as quick as Uber is in getting to your location, there’s no beating the convenience of your car already waiting for you in your garage.

Of course, the two options are not mutually exclusive. Many car owners still use Uber for trips within the city when a car isn’t convenient, or for nights out where drinks are involved. When you have the option of either at your fingertips, you get the best of both worlds!

If you decide to save the Uber rides for nights out and get a personal vehicle for everything else, Beyond Bank can set you up with a car loan to make it happen.