Cut Your Car Costs In One Easy Step

It's easy to cut your car costs by thousands of pounds, according to Harvey Jones.

The main reason I could afford a deposit for my first flat at age 28 was that I had never owned a car.

Cars are expensive to buy, drive, maintain, insure and repair, and as a single man living in London, I decided I could easily do without one. I was right, and saved myself thousands of pounds a year, which I spent on an asset that went up in value, rather than down.

If I still lived in London, didn't have kids, or a girlfriend who likes to be ferried about, I would have dispensed with my current motor long ago.

Especially since I have just been landed with a £1,200 repair bill for some technical fault that wasn't causing me any problems, but for some reason the computer in my dashboard took exception to.

I think it was the brakes, or something minor like that.

Fuel-ish community.

The average motorist spent £6,133 on their car last year, up 19% on 2007, according to the RAC.

More than half, £3,183, went on depreciation, with another £1,322 on fuel, £510 on finance, £483 on car insurance, £381 on maintenance, £118 on tax and £136 on, um, RAC membership.

That's an awful lot of moolah for a motor.

Everybody is desperately trying to cut back on their spending these days, and it's hardly surprising that car sales have suffered a reversal.

New car registrations fell 11.3% last year, their lowest point since 1996, according to the Society of Motor Manufacturers and Traders. The used car market also stalled, with sales falling 21%.

I doubt many people are actually renouncing car ownership, merely deciding against replacing their pride and joy. And I won't incur the wrath of Fool posters by rashly suggesting it would be a jolly good thing if you all surrendered your cars and went everywhere by foot or bus. I've made that mistake before.

But if you're looking to save money, ditching your motor would surely be one of the quickest ways of going about it.

Motor-holics anonymous.

There's an organisation, or rather a series of local clubs, waiting to embrace reformed motor-holics.

I've just been sent figures by car club WhizzGo, which claims the average motorist could save £3,500 a year by becoming a member, provided you drive less than 6,000 miles a year.

That kind of saving is worth considering in these straitened times, but of course it all depends on your personal use.

With a car club, instead of owning a set of wheels, you rent them by the hour, so you only pay for the time you actively use the car.

That means you won't have the satisfaction of having a motor sitting in your driveway, but you don't have the fixed costs either, such as car insurance, tax, running costs, depreciation and servicing.

Imagine not having to pay for all that. Makes you feel lightheaded, doesn't it?

You still have to pay for petrol, of course, but if you don't have ready access to a motor, you'll probably burn a lot less fuel nipping to the shops and carrying out other local errands.

Plus you also have the pleasure of getting fit by walking to the shops in the rain, or wondering why your cycle lane has suddenly disappeared and you're dodging lorries on the north circular.

Join our club.

Of course, car clubs only make sense if you live somewhere urban, specifically, those towns that actually have a car club. They include London, Leeds, Bristol, Edinburgh, Brighton, Liverpool, Manchester, York, Cambridge, and the numbers are steadily growing. You can find the nearest on website www.carclubs.org.uk.

The cars are dotted around your local vicinity, you book them online or by telephone, unlock the door with a smart card, and the keys are in the glovebox.

When you're done, you park the car in the same spot, and the cash stops magically draining out of your wallet.

That's convenient-ish, although not quite as convenient as stepping aside your front door and zooming off whenever you well feel like it.

But you knew that anyway.

Whizz. Go. Pay.

So how much does joining a car club really save you? First, you save an instant £3,183 on depreciation, if you take the RAC's figures seriously.

Plus a further £510 on finance, £483 on insurance, £381 on maintenance, £118 on tax and £136 on RAC membership. I bet your fuel costs halve, at the very least, saving you another £661. Total saving: £5,472.

Of course, more than half of that is taken up by depreciation, so if your motor is a little on the cheap side, or has already depreciated as far as it can, your savings will be closer to £2,289.

So how much do car clubs cost? Typically, an annual membership fee of £50, plus around £5 an hour for each hour you have the car.

Plus, if you live in London, you are exempt from the congestion charge.

To work exactly how much a car club could save you, use this cost calculator on the carclubs.org website.

Of course, no-one in their right mind would use a car club for commuting, so unless you can walk or cycle to work, you'll need to factor in the cost of using public transport.

Step on it.

So why aren't more people signing up to car clubs? In fact, they are. The major car clubs doubled their membership in 2008. Some 50,000 now belong to a car club, albeit 70% of them in London.

Set of wheels, or a new home?

In my pedestrian and public transport days, joining a car club would have made a lot of sense.

But now I live in rural Suffolk and the nearest Tesco is 15 miles away. In fact, the nearest anything is three miles away. Plus I don't fancy refitting the baby seat into a club car every time we nip out.

Still, I would heartily recommend car clubs to one demographic: would-be first time buyers saving for their first home. Lose the car, and you'll have your deposit in no time. It worked for me.

And what would you rather own? An asset that depreciates the moment you drive it out of the showroom, or one that depreciates on average every 10-15 years?

Although admittedly, when house prices do depreciate, they make up for lost time. But that's a whole other topic...

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