Stalled by the costs of car ownership? Join the club

Urban car clubs are great if you are on a budget but still want access to a vehicle, reports James Daley

With the price of oil hovering just below $100 (£51) a barrel, motorists all over the country have been feeling the pain from rising fuels costs. By the end of December, the average cost of a litre of unleaded petrol was 104.2p, according to the AA; a litre of diesel would have set you back 109.2p. Across many parts of the country, petrol prices have smashed past the 110p mark.

But the rising price of fuel is only the tip of the iceberg when it comes to the cost of motoring. According to Sainsbury's Bank, the average cost of running a car, excluding petrol, is now just over £1,000 a year. And if you have borrowed money to buy your vehicle – as most car owners have – the costs are even higher.

The astronomical expense of motoring has encouraged many people to reconsider whether they need to own a car at all. If you live in a city and only have the occasional need for a set of wheels, it could work out considerably cheaper to ditch your vehicle and join one of the growing number of urban car clubs – services that allow you to rent cars near your house for anywhere between half an hour and a month at a time.

At the moment, the best availability is, perhaps unsurprisingly, in London, where the country's four biggest car clubs – Streetcar, City Car Club, Whizz Go and Zipcar – all have a number of vehicles. Limited services are also available from some of the companies in Brighton, Southampton, Maidstone, Guildford, Cambridge, Bath, Bristol, Poole, Camberley, Edinburgh, Norwich, Portsmouth, Newcastle, York, Leeds, Liverpool, Manchester and Worcester – and more locations are being added by the month.

All of the clubs have a joining fee – between £25 and £75 – and some require you to pay this annually to keep your membership active. If you want to put a friend or partner who lives with you on the account as well, there's usually a reduced rate. After that, the pricing structures vary depending on how much you want to use the car. Two of the clubs – Whizz Go and Zipcar – charge between £25 and £250 a month for their main packages, although both also offer pay-as-you-go packages for which there is no monthly charge. City Car Club and Streetcar, for their part, do not charge monthly fees on any of their packages.

If you are on a monthly tariff, it tends to work as a pre-paid allowance, from which your hourly rate for using the car is deducted. Drivers are given a set daily mileage allowance, including fuel, after which additional deductions are made. If you need additional fuel, you fill up using a special pre-paid card, but you will only be billed according to the mileage you do. After you've got through your free miles, additional ones cost between 20p and 24p.

Most clubs will give you the choice of larger cars for a slightly higher cost. However, there will need to be one in your area. And for the moment, this is one of the main limitations of car clubs: if you don't live close to where the car you need is kept, it can be impractical. Furthermore, there's always a chance that someone else has beaten you to the booking on any given day.

It's also important to watch out for all the extra tariffs. With City Car Club, for example, don't book over the phone – it will cost you an additional £1.50 a call. And if you get hit with a speeding or parking ticket, the company will charge you an extra £20 administration fee – on top of whatever fine you owe.

Car clubs will also make you pay for late returns, taking the car abroad, getting it dirty or even leaving the lights on. And if you're driving in London, it's important to check whether your plan includes the congestion charge. Some do, others don't. It's also worth examining the insurance deal. All the car clubs provide full comprehensive cover, but most of the basic packages are subject to an excess of £500 – meaning you'll pick up the first £500 of any damages that you cause to the vehicle. You can usually pay an additional monthly fee to reduce this excess. The good news is that if the car conks out, breakdown cover is included.

The new breed of urban car club should not be confused with traditional car clubs, which give motoring enthusiasts the opportunity to drive expensive cars. Membership in these clubs can cost more than £10,000 a year – and you're unlikely to be able to pick up your Maserati from the parking bay at the end of your road. Such clubs are generally the preserve of the wealthy. Urban car clubs, however, are the perfect way for anyone on a budget to maintain access to a car.

www.streetcar.co.uk; www.citycarclub.co.uk; www.zipcar.com; www.whizzgo.co.uk

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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