Thinking About Buying a Car? Here's Some Advice!
Updated: Nov 1, 2022
Oil price surge, persistent supply chain issues and interest rate hikes have continued to make the cost of car ownership at all time high. During this uncertain time, you might be re-evaluating your mobility options: either buying/selling your car, using more “on-demand” alternatives such as public transportation and car sharing, or simply biking or walking.
If you can't decide which option is best for you, hopefully this article can help you make up your mind!
#1 Use this Simple Formula
This recently published article on Nature estimates the value of private car ownership and use in selected U.S. cities. It brings up this simple formula that can help us think about car ownership:
Total Value =
[Use Value of getting from A to B] +
[Non-Use Value (e.g. flexibility, recreational use, status)]
According to the study, the median value of car ownership ($11,197) in the metro area, outweighed the annual cost of owning and using a car ($9,282 (in 2019 levels)).
However, the majority of this value ($6,497, or 58%) can be attributed to ownership/non-use value rather than use value!
For example, if you don't think you need a car to get around (i.e. low use value), but you enjoy driving for enjoyment and the freedom to travel wherever you want at any time (i.e. high non-use value), then having a car is perfectly justified for you!
Furthermore, you are likely underestimating the "Non-Use Value" of owning a car before you really get one. Once you really own a car, you will likely discover additional "Non-Use Values". You will most likely find creative ways to make the most use of owning a car by going to places you never thought about before, and feel a sense of accomplishment or simply a spark of joy every time you see your car (this is also a "Non-Use Value"!).