Should I consider purchasing a used vehicle instead of renting one this summer?

The coronavirus pandemic has disrupted travel plans for millions globally. In the U.S., many have shifted their travel from air to road, with AAA projecting that Americans will embark on 700 million road trips this summer.

Even though only 45% of New Yorkers own cars, this trend hasn’t bypassed America’s largest city. NYC-based TPG team members, including myself, TPG Reporter Chris Dong, and TPG Editorial Director Scott Mayerowitz, have rented cars multiple times throughout the coronavirus pandemic, traveling to various regions in the Northeast.

For me, renting vehicles has turned into a regular practice during the pandemic — sometimes for just a day, other times for a week. However, it’s a costly habit as well. Despite utilizing my alumni code and other strategies to reduce rental rates, the expenses have begun to accumulate, prompting me to consider: should I simply purchase a used car?

I’ve been grappling with this decision for the past few months and wanted to share my insights with you today. I’ll evaluate the costs of car ownership — along with all its related expenses — compared to renting at least twice a month. Let’s dive in!

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The expenses associated with frequent car rentals

While renting a car might appear straightforward in theory, as mentioned in earlier articles, this isn't always the reality. The first step is to secure the best rental deal — you can achieve this by looking for rentals with Autoslash, applying alumni and corporate codes, and comparing prices across different rental agencies.

However, here's the catch: rental rates can change at any moment. Similar to airfare, the price of a rental car varies by date, time, and duration of the rental. This variability complicates the planning of car rental expenses.

For this article, my analysis is based on reserving a rental from Friday to Sunday and Thursday to Sunday. The cars will be picked up from two different local spots in New York, both through my preferred rental company: Hertz.

Evaluating a typical weekend rental

The shorter Friday to Sunday rental came to $175.69 when using the AAA Northeast corporate code. I have access to this code through my AAA membership, which is intended to provide up to a 20% discount on the car's base price. This rental is scheduled to be picked up at Hertz's location on 55th St in Manhattan and returned at LaGuardia Airport.

This is — however — before considering other related expenses. Since I currently don’t own a car or have car insurance, I choose to purchase the Liability Insurance Supplement from Hertz. This adds an extra $17.95 per day. Fortunately, I don’t need to pay for the $12 per day damage waiver, as my Chase Sapphire Preferred Card provides this coverage at no additional cost.

I typically avoid prepaying for gas, as it tends to be pricier than refueling at a local gas station. I won’t factor in gas costs in this article, as it would balance out whether I own or rent a vehicle.

One additional expense to consider is the transportation to and from the Hertz location. I reside in Long Island City, Queens, making it easy to take the F train to the Hertz office on 55th Street. This ride costs $2.75 each way.

Returning home from the LaGuardia Hertz location is slightly more challenging. There’s no direct route from the rental area to my apartment, so I typically opt for a Lyft ride. With my Lyft Pink discount, the fare is approximately $18.56 to get home.

In total, this brings the cost of a two-day weekend car rental to an impressive $232.90, factoring in insurance and transportation to and from the rental lot. While this is a significant amount for a weekend trip, it is still less than airfare. It also aligns closely with the price of Amtrak tickets for two traveling in the Northeast.

Evaluating a long weekend rental

For the long weekend rental — from Thursday to Sunday night — I will assess a reservation made approximately a month ahead. This will involve the same pickup and drop-off locations, utilizing the same AAA corporate code.

For this rental, the total comes to $263 before adding insurance. The charge for the Liability Insurance Supplement remains the same at $17.95. Since we’re picking up and returning the vehicle at the same location, I’ll include the same $21.31 for transportation costs.

This results in a total cost of $377.95 for the long weekend. While this is quite a bit, it’s not too bad for having access to a car for a few days.

Summary of my findings

If I were to rent cars twice in a single month, my total would amount to $610.85 for the weekend. Clearly, this isn't a set expense, as I won’t be renting twice every month, but that’s been my pattern since May.

The monthly expenses of owning a used car for leisure purposes

Having a car has never been an absolute necessity for me. I grew up in a suburb near Chicago and relied on biking or public transport to get around. The same was true during my time in Chicago and New York City.

In the pre-coronavirus era, I commuted to the TPG office in Manhattan via subway or worked remotely while traveling. Most of my daily transportation needs were handled by the subway, my bicycle, or Lyft.

Additionally, I took Amtrak for shorter journeys, while my frequent trips back to Chicago and other domestic flights were generally booked using miles and points.

In the current climate, owning a car seems increasingly attractive. It could serve as my go-to for weekend getaways and allow me to drive my girlfriend to her office twice a week, helping her save on subway and rideshare costs.

Let’s crunch the numbers and determine if purchasing a car during the pandemic is a wise choice.

The vehicle under consideration

In recent weeks, I’ve delved deeply into the prospect of purchasing a car. I can’t rationalize the expense of a new vehicle since it will mainly be used on weekends. However, I desire a car that is dependable, environmentally friendly, and equipped with modern features like a backup camera and Apple CarPlay.

Ideally, this would be a Tesla or another high-end electric model. Nevertheless, most of these options exceed my budget of $15,000, prompting me to explore the possibility of a plug-in hybrid instead.

For the purpose of this article, let’s say I acquired a used 2016 Ford C-Max Energi. This plug-in hybrid boasts about 19 miles of all-electric range, aligning perfectly with my needs.

Moreover, the Kelly Blue Book value is set at $13,840 with the features I want. I’m optimistic that I can buy the car used for around $13,000 from a private seller.

Analyzing the monthly expenses associated with low-mileage ownership

Car ownership involves four main expenses: the car payment, insurance, maintenance, and fuel.

Let’s examine how these costs apply to the 2016 Ford C-Max I mentioned earlier. Since I don’t currently own the vehicle, I’ll rely on publicly accessible data to estimate these expenses.

Before we get started, I’d like to emphasize that these figures pertain to low-mileage ownership. If I decide to purchase a used car, my intention is to use it for weekend trips, short excursions around town, and possibly picking up friends from the airport. Regular commuting is not in my plans.

Calculating the car payment

Although I intend to pay for the vehicle in full, I want to determine the monthly expense spread over three years. To keep things simple, I won’t be considering depreciation in this calculation. Instead, I’ll focus on how much I need to reimburse myself for the purchase over a period of 36 months.

There's also the matter of used car tax to consider. In New York City, we face an 8.75% tax (4% state tax plus 4.75% city tax) on all used car acquisitions, which amounts to $1,137.75 on a $13,000 purchase.

This calculation is quite simple: if I spent $14,137.75 on the car (including taxes) and spread that expense over 36 months, it comes out to $392.72 monthly for the car. While this might vary when considering depreciation, it serves as a solid starting point.

Car insurance

Before we delve into this section, I want to share a quick disclosure: I'm a 24-year-old residing in New York City with no driving history aside from rentals. This may lead to a higher insurance quote for me compared to yours, so I will reference the average insurance premium in New York City for this discussion.

As per our friends at Bankrate, the typical car insurance rate for residents of New York City is $2,814. This averages out to $234 monthly, which is quite a hefty sum for merely insuring your vehicle.

However, there are many factors about that figure we don’t fully understand. For instance, the actual insurance cost for a used C-Max might be lower, especially for an older model. Nonetheless, for the purpose of this article, I believe it’s reasonable to use that figure.

Maintenance expenses

Assuming I acquire the car without any significant problems, Edmond's estimates that the initial three years of owning a used C-Max Energi would incur around $3,562 in maintenance costs. This estimate is based on driving 15,000 miles annually, which is far more than I anticipate driving.

Since this vehicle will primarily be used on weekends, I anticipate driving about 400 miles each month, mainly around the Northeast U.S. Additionally, I plan to take the car back to my hometown of Elmhurst, Illinois, twice a year instead of flying, which is a round trip of 1,624 miles from Queens.

Ultimately, I expect my annual mileage to be around 8,000 miles. In an ideal scenario, this translates to approximately $1,857.59 in maintenance costs over three years, averaging out to $51.58 per month.

Fuel expenses

One key reason I chose the C-Max Energi for this article is its excellent fuel economy. Considering its plug-in battery along with its gasoline efficiency, the EPA rates the car at 88 MPGe for combined city and highway driving. Conversely, it achieves 38 MPG when solely relying on gasoline without the electric motor.

I bring this up because I don’t have an electric car charger at home. As a result, I’ll need to depend on public charging stations, which is perfectly fine: there are plenty available in New York City, and I can also charge at hotels during road trips.

For this article, let's assume I can recharge the electric battery five times each month, providing me with about 100 miles of electric driving range overall. This implies that I would cover 300 miles using gasoline each month (based on a total of 400 monthly miles), which amounts to just under 8 gallons of gas.

At the time of writing, the average gas price in New York state is $2.20 per gallon. This results in a monthly gas expenditure of only $17.60. Keep in mind that this figure can fluctuate as gas prices change.

However, I won’t include this cost when deciding whether to buy or rent a car for leisure purposes. Regardless of whether you rent or own, you’ll need to pay for gas, making this aspect neutral in the comparison.

Parking considerations

Parking is a bit of a mixed bag — some residents of New York choose to purchase a covered parking space, while others depend on street parking.

I plan to align myself with the latter approach. One of the main reasons I sought out an older vehicle is to avoid the hassle of finding garage space. In my neighborhood, there’s usually ample street parking available near my home, and I intend to get comprehensive insurance that would protect my car from vandalism.

For this article, I’ll consider the cost of parking the vehicle as $0. The only situation where I anticipate needing to pay for parking is when I’m out and about. Even then, the expense would be the same whether I rent or own the car.

Should I keep renting or invest in a used car?

Up to this point, we’ve examined the costs associated with renting a car twice a month versus owning a used vehicle for leisure purposes in Queens, NY. Let’s take a moment to summarize the expenses for both options.

Renting a car for five days each month might run you about $610.85. Of course, this can vary depending on when and where you decide to rent. Still, it provides a good benchmark for today’s travel environment, especially when flying may not be ideal.

Conversely, I discovered that — excluding fuel costs — the average monthly expense for owning a 2016 Ford C-Max Energi (or a similar model) would be around $678.30 if purchased used. Here’s a detailed look at all the associated costs:

Surprisingly, these figures are only $70 apart, making the decision more complex than I initially expected. As you weigh the choice between weekend rentals or buying a car, here are a few factors to consider.

Do you have a designated parking space?

Earlier in the article, I mentioned my plan to utilize street parking. However, this may not be feasible for everyone. For instance, if you reside in Manhattan, your options for street parking will be quite restricted.

Considering this, it’s important to include parking costs in your budget if you need to secure a monthly parking space. According to the New York City Parking Authority, which monitors parking fees, the average monthly rate for parking is about $430.

This is a concern that exists globally. While having your own garage or parking spot is undoubtedly more convenient, many apartment residents in major cities often don’t have that option.

Will having a car simplify your life?

One significant advantage of car ownership is the immediate access you have whenever you need it. If you expect to drive more than twice a month—whether for quick errands or extended trips—this convenience can be a major appeal. You can simply get in the car and set off for your destination.

Even post-pandemic, owning a car can prove beneficial. It allows you to bypass public transportation whenever you choose, and save on expensive Uber or Lyft rides when exploring a new area. This is particularly relevant if you have concerns about using public transport during a global health crisis.

Are you genuinely planning to take trips every month?

While it’s easy to claim you’ll embark on weekend getaways each month, turning that intention into reality is a different matter. You should only consider buying a car for leisure if you’re confident in your commitment to making those trips a regular occurrence.

I strongly suggest that you rent a car and embark on a trip you’ve always wanted to take before committing to a purchase, particularly if it’s been a while since you last drove. Remember, driving in urban areas can be quite nerve-wracking, and not everyone finds long hours behind the wheel enjoyable.

Think about a short-term lease

If your need for a vehicle is temporary, especially during the coronavirus pandemic, leasing might be a suitable option. You can either go through your local dealership or seek out a short-term leasing company that meets your requirements—calculate the costs and see what works best for you.

In summary

This article detailed the expenses associated with renting a car twice a month versus owning one for leisure in New York City. I also compared these costs and highlighted important factors to consider when deciding whether to rent or purchase a vehicle.

Clearly, there isn't a one-size-fits-all answer to this dilemma. It ultimately comes down to whether you believe you'll drive enough to make car ownership worthwhile. If that’s the case, owning a reasonably priced used car will save you more than renting twice a month.

Conversely, if you don't anticipate driving every month, renting will be the more economical option. Moreover, rental car prices can vary, and there are numerous strategies to lower your rental costs if you know where to search.

I urge you to conduct your own research before making a decision. Reflect on all the points I presented in this article and calculate your own figures before purchasing a used vehicle. Be sure to customize your calculations based on your location, car needs, and anticipated driving frequency.

Featured image by Mikbiz/Shutterstock