Park the car permanently and start counting the cash

Owning a car now costs the earth, in every sense. Why not go without?

More than a million people are likely to be disappointed by their experience of the Government's attempts to improve the democratic process. They may have signed an online petition against road pricing, but ministers are determined to push ahead with plans to make it more expensive to drive. The Government is convinced that this is the only way to reduce congestion and the environmental damage caused by motoring.

But why wait until you are forced off the road by costly charges? You may enjoy the convenience of your car, but the truth is that for huge numbers of people, owning a car makes little financial sense. You'd be far better off giving it up and relying on other forms of transport.

"I'm 47 and I've never owned a car, despite having a job that requires me to travel all over the South-east to visit clients," says Donnachadh McCarthy, an environmental expert who specialises in advising people how to be more green. "A car is a huge financial commitment, as well as being a psychological addiction. Not owning a vehicle is far more practical than most people realise."

It may seem as if cars have never been cheaper. After all, it is now possible to buy a brand new car for less than £4,800 - the Perodua Kelisa, if you're interested. There are plenty of decent vehicles you can buy straight from the showroom for between £5,000 and £7,000. And, of course, if you buy second-hand, the prices will be even lower.

However, the falling purchase price of cars masks the fact that it has never been more expensive to own and run a vehicle. The RAC's estimate is that the cost of running a car rose by more than 10 per cent last year alone.

The motoring organisation puts the annual cost of running your own vehicle at an average of £5,539, or £107 a week. And, while drivers who do less or more than the average mileage each year will spend correspondingly less or more, many of the costs of car ownership are fixed - and therefore unavoidable.

Depreciation - the fact that your vehicle loses a large chunk of its resale value each year - is one problem, accounting for £2,420 a year, according to the RAC. The cost of finance packages, which most people have to resort to to pay for at least part of the price of a new car, has also been rising - to an average of £1,040 a year.

Then there's insurance, maintenance, tax and breakdown insurance, all of which will cost you broadly the same amount, however many miles you do. Only fuel costs are truly variable. But, while petrol prices are the most visible indicator of the cost of running a car, for the typical driver they account for less than one-fifth of the real costs each year.

In other words, leaving aside all the practical and psychological barriers to giving up your car, in financial terms doing so makes sense for many people.

Take the cost of public transport, for example. In London, the most expensive city in the UK, the most expensive annual travel card, allowing travel in any zone at any time, costs just over £1,700. You could give up your car and still have thousands of pounds to spare to spend on occasional car hire.

In fact, assuming that you have the most expensive travel card in London, you could hire a cheap car from a company such as easyCar for about 30 weeks a year, and still be better off overall than if you own your own vehicle.

Not that car hire is necessarily the most cost-effective option for people who are prepared to do without a car but may still need to drive occasionally.

Streetcar, one of several "car clubs" with growing numbers of members, reckons that using its vehicles twice a week, every week, for a year, would cost you just £700. Streetcar's model works very similarly to those of its main rivals, Citycarclub and Whizzgo. These three companies, which now operate in 20 of Britain's towns and cities, charge their members a refundable deposit - £150 at Streetcar - and then provide them with an electronic smartcard. This enables members to get into the vehicles, which are left parked in set locations, and the keys are then found in the glove compartment. Members pay an hourly rate for the car - £4.95 is the cost at Streetcar - and return it to the same spot, or to a different designated parking place.

Car sharing is an increasingly popular option for people making the same journeys regularly - to and from work, for example. Many companies run schemes that help colleagues who live near to each other and work in the same place to contact each other so they can share the journey to work. Liftshare and Carshare (at www.liftshare.com and www.carshare.com) are two national organisations that maintain online databases of people who would be prepared to team up.

Other people may be able to replace part or all of their journey to work - or any journeys, for that matter - with low-cost transport such as a bicycle, or even by just walking. And the more you can reduce your car use, however you gain access to it, the more you will save.

'The train is a much nicer way to travel'

"I don't own a car and I never have," says Sean Dempsey, a solicitor who lives in Stoke Newington, north London. "I struggle to understand how so many people can afford to have cars - all I would see sitting outside the house would be a depreciating asset with huge costs."

Rather than running his own car, Sean has an annual bus pass that costs him about £550. He spends £30 a week on cabs and hires a car very occasionally - maybe three times a year. For trips outside the capital he takes the train, buying tickets in advance to secure cheaper fares. "I prefer the train to driving, wherever possible, because it's a much more pleasant way to travel."

His transport costs add up to about £3,000 a year, just over half the typical cost of running a car.

Sean accepts that living in a city offers him the luxury of choosing not to own a car, particularly as he doesn't have children. "It's so doable here, we even get our supermarket shopping delivered," he says. "I like public transport; I can do more on the bus than I would be able to in a car; it's the only time I get to read a book or a newspaper."

Donnachadh McCarthy, who helps families to reduce their carbon footprints, thinks more people need to make the same sort of choices as Sean, for both financial and ecological reasons.

"Millions of people simply don't need a car, but there's a fear about using a bike to get to work, or even public transport," McCarthy says. "The fear factor is the biggest issue that we need to resolve and we should be working with people to reduce those fears."

McCarthy's believes Sean could save even more - and further reduce his carbon footprint - by cycling to the office from time to time. He could do his supermarket shopping the same way.

"The choice at the moment for many people is between public transport and driving, but there are other options," says McCarthy. "And there's no reason why people such as Sean shouldn't be able to work from home much more often, for example."

'If we need the car, then we really need it'

Susan and Mark Gardner live in St Albans with their children Matthew, four, and Charlie, two. "We are quite dependent on our car," Susan says. "We actually drive very little, maybe 4,500 miles a year, but when we need the car, we really need it."

The issue for the Gardners is they need transport for small trips where time is critical, or where there are practical issues - getting the children to nursery, for example, particularly in poor weather.

"I also do one very big supermarket shop a month, which would be impossible without a car," Susan says. "Plus, from September, Charlie will be starting at a school eight miles away, and we'll need to drive him there."

Susan believes that local authorities don't do their bit to help people reduce car use. "The schools here are hugely oversubscribed, so there's no guarantee your children will end up near by," she says. "And there's not even a cinema in St Albans, so walking to go out in the evening just isn't an option."

Donnachadh McCarthy's advice to the Gardners is that even though they can't do without their car - for both financial and practical reasons - that doesn't mean they should do nothing. It's good news that Mark walks to the station in the mornings, for example. "Within the constraints that you have, whatever you can do to reduce your emissions is worth doing," McCarthy says.

The couple should think carefully about all the journeys they make by car. Could some of them be replaced by other forms of transport? It's also worth thinking about the vehicle they drive. Even if they can't afford a smaller - and therefore greener - car, is it the cleanest vehicle in its class? "Carbon dioxide emissions can vary by 30 per cent within the same class of cars," McCarthy says.

Ultimately, he would like to see the Gardners, and other families in a similar situation, think about making their work fit their lives better. That might mean working from home more often, using modern technology, say, or even finding jobs closer to home.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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