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Small Business calculations: Zipcar or own company car

Written by on June 01, 2012

Having a small business requires not only determination, motivation and know-how but it also requires money. Every penny counts, so it is always useful to find ways to save as much money as possible. As most businesses require cars, you will have two options: to have your own car or to rent one.

Nowadays more and more people start using different car rental companies. One of our Invoiceberry team member’s uses Zipcar.

Zipcar

zipcar offers car rentals

Zipcar is a self-service car sharing company that provides its members cars. It was founded by Robin Chase and Antje Danielson in 1999 in Cambridge, Massachusetts. The aim of the business is to provide affordable car rental service. Cars are available in many countries, including the United States, Canada and United Kingdom. If you want to start renting a car using Zipcar, you have to become a member. There is £59.50 annual fee and no deposit is required.

There are different plans you can choose from: ‘weekday’ and ‘weekend’. In the ‘weekday’ plan the hourly rates start from as little as £5 and daily rates start from £49. However, the ‘weekend’ plan is not that much more expensive – hourly rates start from £6 and daily rates from £55. The best thing about the Zipcar self-service is that it includes gas, insurance, 40 free miles and congestion charge. So if you need to use a car 10 hours per week you end up paying approximately £60 a week or £240 per month.

Comparison: Zipvar vs. buying a car

Let’s compare how much it would cost if you own a car. As an example we will buy a Renault Clio 1.2 litre made in 2001. Obviously, the running costs will vary from car to car and from person to person. But let’s start with petrol costs. This formula was used to calculate the petrol costs:

[stextbox id=”info” image=”http://blog.invoiceberry.com/wp-content/uploads/2012/06/calculator_image.png”]Cost per mile = 40 (litres put in) x 81p / 400 (number of miles) = 8.1p per mile
Yearly Cost = 8.1p (cost per mile) x 12,000 (average mileage) / 100 = £972
[/stextbox]

 

The next important point having your own car is car insurance. Car insurance costs depending on many factors including age, marital status, job, car etc. We used this formula to calculate the insurance expenses:

[stextbox id=”info” image=”http://blog.invoiceberry.com/wp-content/uploads/2012/06/calculator_image.png”]Yearly Cost = £350 (annual insurance bill)
Cost per mile = £350 (insurance bill) / 12,000 (annual car mileage) x 100 = 2.9p
[/stextbox]

 

When you own a car you always have to remember that the car might break at any point and that you need to take care of it. Car service is another point that we included in owning a car. Car service depends from car to car, where you get the service and how often you need it.

[stextbox id=”info” image=”http://blog.invoiceberry.com/wp-content/uploads/2012/06/calculator_image.png”]Yearly Running Cost = £250 (annual service bill)
Cost per mile = £250 (service bill) / 12,000 (annual car mileage) x 100 = 2.1p[/stextbox]

 

As well, we should not forget car taxes that we have to pay if we own a car and the tax depends if the car is more or less polluting.

[stextbox id=”info” image=”http://blog.invoiceberry.com/wp-content/uploads/2012/06/calculator_image.png”]Yearly Running Cost = £100 (car tax bill)
Cost per mile = £100 (car tax bill) / 12,000 (annual car mileage) x 100 = 0.8p[/stextbox]

 

Moreover, there are costs that we usually forget to take into account – car wear and tear. It includes small things such as replacement of old tyres, changing light bulbs, car wash etc.

[stextbox id=”info” image=”http://blog.invoiceberry.com/wp-content/uploads/2012/06/calculator_image.png”]Yearly Running Cost = £179 (all items bought for car)
Cost per mile = £179 (total) / 12,000 (annual car mileage) x 100 = 1.5p[/stextbox]

 

So does it make sense to buy a car or use Zipcar?

So here we are, to have a Renault Clio costs £1,849 a year or £154 per month. As you can see, to have your own car is approximately £80 cheaper than using the Zipcar service.

However, you should have in mind that when you use Zipcar you do not need to care about gas, insurance, general repairs, congestion charges and having your own parking space. As well, you can pick up your Zipcar from many places around London.

Of course, everything depends on your own needs if you prefer to own a car and feel like ‘at home’ then to have personal car is the better choice. If you ever tried to use Zipcar, already using or planning to use it do not hesitate to write us about it.

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