If you have been following the blog for a while, you may remember that we are a one-car family. And that our singular car has been paid off for just over a year.
This was the first ever brand-new car for me and for Mr. PiN, and I had hoped to keep it for at least 8 years, maybe 10, before having to think about replacing it. We were definitely not planning to buy a new car this year.
So, when our car broke down on a long trip this Spring, and was unusable for about 3 months, we had to make some adjustments.
We were able to use my father in law’s car for around town trips. However, we had a road trip planned, for which his 20 year old sedan was definitely not suitable. We rented a car for our repeat trip to Maine.
Once our car returned to us, we were happy to use it for errands and short trips, but we were a little scarred by our Spring experience, and elected to rent a vehicle again when we had to drive more than an hour from home. We have done that for more 2 trips since actually having our car back in our possession.
With the car shortage, it turns out that renting a car is both more expensive and less fun than it used to be.
My mother is not-so-subtly pushing for us to get a new car. However, cars aren’t all that inexpensive these days either.
After looking to rent a car again for a Thanksgiving trip, I thought it might be time to revisit my assumptions about the financial benefits of sticking with our car and renting for a trip, vs. sucking it up and going shopping for a new vehicle.
Rental Costs in 2022
Our first rental was for our summer vacation. Not counting gas or tolls, which we would have paid in our own car (though our car is likely more fuel efficient), we paid $638. Also paid: some anger extreme irritation that we were charged a fee for an extra driver, even though it was supposed to be waived. Yes, I am still annoyed 6 months later.
Our second rental cost $466, not counting tolls (which we would have paid anyway) and gas (which cost probably twice as much, because we got stuck with a gas guzzler). Also paid: lots of annoyance as the original location closed early, and it took about 3 extra hours, and extra money, to bring our rental (not at all what we had reserved) back to the house.
Our third trip consisted of 2 rentals, each one-way to an airport for a trip abroad, our first since the pandemic. Having each be a one-way meant a drop off fee, which costs more. However, it also eliminated a parking fee, and the worry that the rental car would be damaged in the lot and then we would be stuck with extra costs. Net cost (rentals minus parking) ran $253.
In all, for one half-year’s worth of road trips, we spent $1357 to rent vehicles.
We also had to deal with a lot of aggravation, whether from extra fees or the inconvenience of dealing with certain rental locations.
On the other hand, we did get to drive several different vehicles–sort of a very expensive test drive.
If we were to continue this practice of renting a car for out of town trips, I would expect 2 more long trips this year, totaling at least $900 based on this year’s expenditures.
All in all, we are probably looking at (rounding a little) $2260 a year to rent cars for out of town travel, or $188 a month.
Costs of a new car
I have plenty of wiggle room on this category, as I can posit buying an expensive car, a cheap(er) car, paying cash, and/or financing all or some of the purchase price. I haven’t seriously compared insurance costs if we switch our current car for a different one, or state-levied costs for registration/taxes/etc.
We currently have a small (very fuel efficient) sedan. Based on discussions with Mr. PiN, I think we would be leaning towards buying a new SUV, either a hybrid or a plug-in (electric and gas motors). My browser is offering up ads for new vehicles ranging in price from $38K to $71K.
Our current vehicle, which does still run just fine around town, might sell for about $19K according to Kelly Blue Book. (Which is crazy, as it was supposedly worth only $12 K three years ago.)
Our car purchase fund (fueled by my secret savings account) should be adequate to cover the difference between the sale price of one car and the purchase of a new one.
Therefore, most of the extra costs in buying a new car would be from increased insurance and fees, which I am estimating at $300-400 a year. Much cheaper than our car rentals.
But wait! you say. What about the opportunity cost of using that cash?
If I were to posit that we bought the most expensive car, giving up about $50K in cash to make the purchase, we could calculate the loss of interest on the money ($1000 if we can get 2% on savings, maybe $1500 if we can get 3%).
That brings the total extra cost of a new car to $1900 a year.
We are starting to approach the monetary costs of renting a car 4-5 times a year. Buying on the cheaper end of the spectrum will most certainly cost us less, if that means we can take it on the road with us.
Of course, if we didn’t have the money put aside to buy a new car, then car payments would almost certainly exceed monthly car rental fees.
The plan
I have been eying rental costs for a trip next week (Thanksgiving week), which are squarely in the $400-$450 range.
Mr. PiN surprised me the other day, proposing that we avoid all the car rental craziness, and just drive our (repaired) car for 2 full days over the top holiday traffic period in the U.S. (This is a surprise because he was originally the stronger proponent of renting something for our road trips.)
We’ll see how this goes.
Either we’ll make the trip as easily as ever (which is to say, risking our lives on busy roads with crazed holiday drivers), and save money on this and future road trips.
Or, we’ll break down during a very busy time and might miss a family gathering (possibly not Mr. PiN’s worst-feared outcome), and we’ll be shopping for a new car this winter.
What would you do in this situation?