The freedom of the road - but pay as you drive and it won't cost the earth

Want to help save the planet, and save yourself £1,000 a year at the same time? Why not join a car club?

Imagine a car that transforms from a hatchback to a people carrier whenever you want. You can forget about service or maintenance costs too - oh, and don't bother with a road tax disc.

What might sound like a motorist's dream is, in fact, now on sale to growing numbers of consumers in UK cities in the shape of car-hire club membership.

For a monthly fee, you can book a car for anything from 30 minutes to six months, and be charged according to how long you have the vehicle and how far you drive.

And you won't have to trek all the way across town to pick up your car. You can collect it from a parking bay close to your home - and leave it there when you're finished with it.

According to Carplus, a British charity set up to promote and support car clubs, if you drive less than 6,000 miles per year, a scheme such as this could save you £1,000 to £1,500 a year.

"Most members spend about £30 a month with us, and find that they cut their car usage by about 35 per cent," says Sean O'Brien of CityCarClub, which operates in 10 cities including London, Bristol, Edinburgh and Portsmouth. "That's because they think about their car use more and make fewer unnecessary journeys."

A car club can have tax advantages if you use it for business too. Instead of being saddled with company car tax, you can simply claim your car-club bills as an expense.

However, for most people, the main motivation for joining a club is to save money on personal motoring costs. The scheme has proved particularly popular among families with at least two cars.

For the average motorist, the annual cost of motoring, excluding any interest repayments on loans taken out to purchase a car, is now £2,050, according to Sainsbury's Bank. This is double the cost in 1996.

Insurance and fuel make up the biggest part of the bill, with motorists spending an average of £460 a year on insurance and £1,100 on petrol. Factor in tax, MOTs, servicing, repairs and parking, and most of us end up paying well over those amounts.

However, the benefits of joining a car club are not purely economic. Because most members end up using their cars less than before, the environment benefits too. It is not surprising, therefore, that the Government is urging local authorities to include provision for car clubs in their 2006-07 to 2010-11 transport plans.

Streetcar, another car hire club, reckons its members have reduced their CO ₂ emissions by a total of 500 tons per year, thanks to a 64 per cent reduction in their car use after they join. The club's membership has doubled every six months since it was set up in April 2004, with just eight London-based cars.

Today, Streetcar has around 5,000 members and a 150-strong fleet of VW Golfs, which are also available to drivers in Brighton and Southampton. It is aiming for 20,000 members by the end of 2007.

Andrew Valentine, who founded Streetcar, says most of its members spend around £25 a month with the club.

"It may be more convenient to own a car but you have to decide how much you are willing to pay for that convenience," he says. "Are you willing to pay thousands of pounds a year to have a car outside your house rather than five minutes' walk away?"

CityCarClub markets its own service in a similar vein, showing how customers can have the freedom of a car when they need one - without the cost and hassle when they don't. With 9,000 members and 200 cars, it charges "gold" members - those who use the service most regularly - £15 a month plus £2.80 per hour or £18 a day (£36 on the first day).

The club issues its members with a separate fuel card for use at garages. Petrol costs 17p per mile, added to the monthly bill.

Customers get a choice of five-door hatchbacks and a limited number of larger family hatchbacks or estate cars, which cost slightly more. There is also a one-off returnable deposit of £100, but membership includes comprehensive insurance with an excess of £100 in most cases.

Anyone over 21 can join CityCarClub but drivers need to have a fairly good driving record, especially those under 25. The club runs address and credit checks on all applicants. If you're 21 or 22 you must have a clean licence, and not more than one accident in the past three years.

If you want to join at the age of 23 or 24, you're allowed a minor conviction, such as a speeding offence, and not more than one accident. If you're aged 25 or over, you can have a maximum of six points on your licence but must not have been involved in more than one accident in the previous three years.

At Streetcar, you can join online in a few minutes, and a representative of the company will complete the registration with you over the phone. Members are sent a "StreetCard" by post and can book a car on the internet or phone. They will then be told where the car is located - normally only five minutes or so from their home or office.

To unlock the car, the StreetCard is held against a reader on the windscreen. The keys to the ignition are in the glove box. You then have to enter a pin number to start the car, and off you go. At the end of your hire time, you drive the car back to one of Streetcar's parking spaces.

Streetcar's members pay £25 for life membership (there is no monthly fee) and a returnable £100 deposit. It charges £4.95 an hour for use of a car, or £35 for 24 hours (weekdays) or £49.50 a day at the weekend. You can also hire a car from Monday to Friday for £150, or for a week for £195.

Streetcar provides 30 miles' worth of free petrol per calendar day; after that, additional mileage is charged at 19p per mile. Fully comprehensive insurance is included for all members, with an excess of £500, although this can be cut to zero if you pay an extra £95 a year.

Streetcar drivers are checked against the DVLA's database before they join, and the club also carries out checks to make sure they live where they say they do and have a good driving record.

Motorists must be over 21, have held a licence for more than a year and not have had more than one accident that led to a claim on their insurance policy.

Contacts: www.citycarclub.co.uk www.mystreetcar.co.uk

'It makes you think what you need a car for'

Fiona Cameron, 32, has been a member of Streetcar since she moved into her flat in Putney, south-west London, last September.

Because she lives in a car-free housing development, she had to sell her old car when she bought the property. It was a link-up between the developer and Streetcar that prompted her to join the club.

"I was apprehensive when I had to sell my car, as it's so convenient to have your own transport," says Fiona, "but joining a car club has worked out really well.

"Last month I spent about £20 - it's so cheap compared with the cost of insurance, petrol etc when you have your own car, and you don't have all the hassle if it gets broken into.

"It also makes you think about what journeys you really need a car for."