Car Finance

Financing a Car Versus Ride Sharing

By Mike Richards Updated: 09/11/2023 Posted: 07/13/2018

For most people, owning a car is a necessity of modern life. However, not many people can afford to buy a car without financing. Worse still, not everyone can qualify for financing a car.  Besides, even when you qualify for financing, the fees and interest rates involved can make owning a car very expensive.

Luckily, nowadays many options will allow you to enjoy many of the benefits of owning a car, even if just for an hour or a couple of days, or even months, at a fraction of the total cost of actually owning one. Options range from car leasing, car-sharing, ride-sharing, and, of course, the old-fashioned car rental. But in this article, we are going to take a look at one phenomenon that is gaining widespread popularity.

Ride Sharing

The term ride sharing is used to refer to situations where you get all the benefits of owning a car without actually owning one. Championing these crazes are Uber and Lyft. These companies use a simple system where you open an account with them. You then download a mobile app, which you use to request a pick-up. It works more like a cab service, except for the fact that you don’t have to call the cab driver. In this case, you just log on to the app and request a ride. Using Google Maps, the driver nearest to you picks you up at a specified location.

Ride-sharing is cheaper than traditional cab services. Besides, you can pool resources with friends and share the cost. You also don’t need to book the ride hours in advance. Ride-sharing acts more or less like your own car – you get to use it when you want. Within minutes of requesting a pick-up, the ride car that’s nearest to you will be at your service.

The Benefits of Ride Sharing

The main benefit of using ride-sharing services such as those provided by Uber and Lyft comes down to one word: convenience. Besides the fact that ride-sharing is highly cost-effective compared to traditional cab services, the convenience of being picked up wherever you are, whenever you want, gives you a discretion that can only be compared to that of having your car.

Ride-sharing services use the convenience of modern mobile technologies. The sheer number of smartphone users in the world has presented ride-sharing companies such as Uber and Lyft with a platform that makes instant communication and locating where people are very easy. Besides the convenience of being picked up wherever you are, ride-sharing also makes it convenient for you to pay for your rides. Unlike the traditional cab services where at the end of the ride you could find yourself short a few dollars, with ride-sharing you already have your credit card on file. With just a few taps on your smartphone, your ride is paid for.

The mobile applications used in ride-sharing have several advantages. First, you don’t have to pay cash. Second, you can track wherever your driver is at any given time. Third, you get notified when your driver arrives; and, fourth, you are always in contact with your driver. These advantages are at the core of the ride-sharing success that has put a scare on traditional cab services.

Another benefit of using ride-sharing services is that drivers are very polite and friendly.

This is perhaps fueled by the fact that the ride-sharing app allows clients to rate the drivers. So it’s not surprising that they have a special incentive to be polite and friendly.

With ride-sharing, you don’t have to worry about parking. In most cities, getting a place to park your car is a nightmare. And if you succeed in getting one, the parking fees can be very expensive. When using Uber or Lyft, or any other ride-sharing service, parking is something you don’t need to worry about. Even if you are visiting or living in an area with high incidences of crime, you don’t have to worry about your car being vandalized.

Among the many other benefits of ride-sharing is the fact that the cost of hiring a ride is much lower than that charged by traditional cab drivers. Besides, you can join forces with your friends to use one car and lower the costs even further. Even if you are not able to afford to buy your own car at the moment, knowing that you can get the same convenience of having one whenever you want is quite comforting.

Getting Car Finance

As many advantages as ride-sharing may have, securing car finance means that at the end of the day you will own the car. However, before you get to own the car, you will have to go through a series of stages.

To begin with, you will need to apply for car financing and pray that your application will be approved. With pre-approved car financing in your hands, you then head to the dealer where you get to buy a car within the loan amount approved by your lender. To get to this place, however, your credit score better be good.

The catch with car financing is that it can take up to 72 months to complete paying for the car, depending on your circumstances. That’s the time you can really say you own the car. By this time, your car will be greatly depreciated in value.

Benefits of Car Financing

The benefits of owning a car through car financing are many. Besides the pride of owning and driving your own car, the convenience of driving it whenever you want is incomparable. Having your own car also gives you independence since you don’t have to rely on others to move around. You can come and go as you please and also set your own schedules. The caveat, however, is that the vehicle, whether used or new, should be a good-quality car. The last thing you want is for the car to break down on your way to an important meeting.

With your own car, you can choose whichever route you want to take. You can also make impromptu stops along the way without worrying about paying more (with a ride-share, this type of flexibility will cost you). The flexibility of having your own is simply incomparable.

Besides, if your credit score is good, getting financing for a new or used car at low-interest rates is within your reach. You can also choose to pay in easy regular installments, but for a longer term; or own it quickly by going for a shorter repayment term.

Car Financing Versus Ride Sharing

Although it’s impossible to beat car ownership, whether, through car financing or cash buys, ride-sharing presents people with comfort, convenience and flexibility that come close to owning a car. Riding on the back of a mobile technology that has seen a proliferation of smartphones and expanded the reach of social media, ride-sharing appears to provide many who cannot afford car financing an opportunity to feel like they own one, even if for a few fleeting minutes or hours.

But is ride-sharing cheaper than owning a car through car financing? Well, while it may appear to be a cheaper option, in the long run, the convenience and flexibility of driving your own car are simply unbeatable; and depending on how frequently you procure ride-share services, it may even be more expensive to ride-share than to buy a used car.

The bottom line is that although it is better to own a car than to hire one, ride-sharing is here to stay. In some cases, even people who own a car find it more convenient to ride-share depending on the situation or where they are going, e.g. ride-sharing to and from airports.