Tuesday, 27 November 2012

Should I buy a car or use GoGet?

by Rob d'Apice
So, you want your own wheels?

I hear you. They're pretty damn useful. But they are also phenomenally expensive. And not in the 'I know this is an expensive purchase and I'm cool with it' way, but in the 'these expenses keep adding up and I have no idea how much I'm bleeding' way.

Sit back. Let's prosple* this out together.

How much does a car cost?

New cars are expensive. To get your hands on some of the cheapest rides on the market, expect to pay around $16k for a standard Mazda 2 and $19k for a Toyota Yaris. So, without a spare $19k in the bank, you might be thinking what's my alternative? Should I get a car loan? Long-time readers will know that I'm not keen on car loans: you'll lose a huge amount of resale value in the first few years of ownership (we call this 'depreciation'), and you'll be chalking up hefty interest payments on your loan. (FYI: the golden rule is to avoid using loans to pay for ANY depreciating asset).

A new Yaris will set you back $19,929.51 as a driveaway price

Still desperate for a car of your own? Think about getting a used car.  You can find a 2009 Toyota Yaris for around half the current sales price on CarSales. The best option is to pay using cash savings. In 10 years, you'll be much richer than your friend who's dropped a car loan to get that new Lexus.

What are the running costs of a car?

The upfront cost is only a small component of a car's true cost. Keeping your car on the road is pricey - a combination of a bunch of different expenses:

  • Registration. This will depend on your state and the weight of your car, but in NSW it has generally been around $300-$400 per annumMore details on the RTA Website.
  • Compulsory Third Party Insurance. AKA the 'green slip' in NSW. This covers the costs of injuries to passengers, drivers and pedestrians in an accident caused by you. The amount will depend on your age (men pay more) and gender (younger people pay more). As a 27 year old male, mine has been around $700 per annum - but this gets substantially cheaper the older (and more female) you become.
  • Third Party Property Insurance. This is optional insurance that covers you for any damage you inflict on other property (vehicles, houses, etc.) as a result of an accident. I'd encourage everyone to get at least this level of optional insurance, since you can cop a massive bill if you run into the back of a BMW - it's not worth the risk. This has been around $400-$500 per annum for me, but will depend on a bunch of different risk factors. You can also get full 'Comprehensive' insurance, which will be more pricey but will also cover damage to your car in an accident, and will generally cover theft of your car. I was quoted more than $1000 per annum for comprehensive insurance - I chose not to get it, given the value of my car is less than $5,000!
  • Servicing. It's recommended that you get your car services twice a year. This can prove pricey, and the costs can be quite unexpected. I've had services for less than $100, and services that were more than $700, depending on what needed to be done to the car. If you're car is older, your services will typically get more pricey. I'd generally spend between $400-1000 per annum on my 1998 Toyota Camry.
  • Petrol. This will depend on how much you drive. Find out the fuel efficiency of your car - google 'fuel efficiency' with your car name and have a look; my 1998 Toyota Camry goes about 9km per litre of fuel. Given I've travelled about 10,000km per annum, I'm spending roughly $1,600 per annum on fuel. If you travel for work, I'd expect this to be much higher.
  • Depreciation. This is a hidden cost, but the value of your car decreases every year. Think about it this way: if you just bought a $5,000 car, your $5,000 isn't 'gone' - you could resell your car and probably get about the same price. But next year, the value of your car will decrease - that's money you've effectively lost. Depreciation is curved - you'll lose more 'value' each year when the car is younger. Choice suggested you'll lose about 14% of the value in the first 3 years, and about 6-8% in the remaining years. For me, I'd expect I'm losing about $400 per annum in depreciation (given that my car is not as state of the art as I'd like).
  • Parking, Cleaning, Tolls... There are a bunch of other charges you're likely to cop when driving, and while they're small they can really add up. The rain cleans my car - it's cheap, but it's probably not doing great things for my car's resale value! Living in the inner-city, make sure you factor in the 'opportunity cost' of your parking space - if you have off-street parking, you could be renting that out for $50-$100 a week. That's money you're losing by owning a car.

All up, my (humble) wheels are probably costing around $4,000 - $5,000 a year.

How much does carsharing (like GoGet) cost? 

What the hell is carsharing? You're out of the loop, bro. It's a new model of shared car ownership. Basically, you sign up with a company that has a bunch of cars parked in dedicated parking spaces around the city. When you want to use a car, you book online, and then go to the car and unlock it using your membership car. You'll generally pay a fixed hourly rate and a per km rate, depending on the company and the particular plan you are signed up to.

GoGet is the largest of the carsharing companies (you can also check out Flexicar and GreenShareCar). They have 3 different plans to get you started, but my analysis shows that if you're using a car for more than ~3 hours per week, you're best off on the highest plan ("go frequent"). That means you'll pay $29 per month, $5.65 per hour and $0.40 per km. You'll also need to pay a $500 refundable bond when you sign up.

So how much does that actually amount to? If you hire a GoGet car for two four-hour sessions each week, you'll pay roughly $2,800 per annum on the "go frequent" plan - that includes the $29 monthly fee.

You can also hire the cars for a full day for $69 per day. If you do that once every fortnight, you'll pay another $1,800 per annum. In total, you'd be paying about $4,600 a year - probably roughly similar to the cost of driving around my beat up 1998 Toyota Camry.

So is it worth it? There's a bunch of advantages to GoGet that we haven't spoken about:

  • Easy parking. GoGet have dedicated parking spots for each car, so you're never searching for a park when you get back home.
  • Petrol included. GoGet pay for all petrol, so there's no additional cost there. If you are out of petrol on a long trip, there's a petrol card in the glovebox that can be used to fill up for free.
  • No hassles. Forget servicing, cleaning, insurance, etc. GoGet do all this for you so you waste much less time.
  • Range of vehicles. GoGet have hatchbacks, utes, vans, and convertibles - if you're moving house, you can get your hands on the car you need really easily.
  • Good for the planet. GoGet use more fuel efficient cars. Carsharing is more efficient too - if we all carshare, we need much fewer cars, which means less resources consumed in car production.

There are a few downsides you should consider before you sign up:
  • Less spontaneity. You have to book the amount of time you want your car, and if you want to extend your trip, you have to call up GoGet. If someone else has booked the car for that period, you may have problems.
  • Locations. There are a heap of cars in the inner city, but if you're in the 'burbs, you might not have any cars close to you. Check out GoGet's locations online.
  • 21 and over. Age discrimination, yeah?

Free interstate car hire!

You heard me right. TransferCar is an online service that advertises cars that need to returned or relocated, generally from rental car companies. The most common relocation routes are between Adelaide > Alice Springs > Brisbane > Cairns > Darwin and Perth > Sydney & Melbourne - although other routes do pop up. TransferCar is a free transport alternative for travellers (sometimes you'll need to pay a minimal cost) and the vehicle is often supplied with the added incentive of free petrol and insurance. The vehicles can vary in size and you need to be 18+ and hold a full license to become a driver. By signing up online, TransferCar can notify you of their latest deals via their website, through email notifications, Facebook, Twitter or via their blog - so keep an eye our for your next free trip!

You should also check out Jayride. Combining the benefits of TransferCar, shuttle bus services and ridesharing, Jayride is perfect for the modern day organised hitchhiker and traveller. Particularly useful for interstate transport, vehicle owners can advertise cars to be relocated or available spaces for you to join them on their trip - often with a small asking price. You may ride in a car, camper or bus, meeting people along the way as you reduce your carbon footprint and save cash. 

This post is based on our weekly money segment, Insufficient Funds. You can tune in to FBI Radio 9:30am every Monday, or catch up on all our episodes via podcast.

*Yes, prosple is a verb now.

Thursday, 22 November 2012

Getting discounted car rentals

by Rob d'Apice
With some products, I always feel like I'm getting squeezed. I put car rentals in that category - I feel like it's an up-selling endurance sport. Do I need the additional insurance cover? Probably. Throw in a GPS navigation system? I don't want to get lost. Pay my tolls in advance? I guess that makes sense. Only $30 more per day for a convertible? Well that seems like a bargain.

Suddenly, you're credit card is maxed out.

Cheap Car Rental

Here's a pro-tip. Most universities have negotiated discounted car rental rates for their staff, students and/or alumni - and they post the discount codes on their website. Contact your university to check what codes they have, and if you can use them. They may even publish them on their website, for example, you can use University of Sydney's Thrifty discount codes and ANU codes right now!
Using these will provide massive savings - and you can use them online super easily.

Best transport to & from the airport

Car rental is often cheaper than alternative transport to and from the airport. In Melbourne, using the discount codes above, you can lock in a hatchback for ~$60 for a weekend. That's roughly the price of a one-way cab ride from Tullamarine or 2 return tickets on the shuttle bus. Basically - you'll save money by renting a car.

Getting around town

Using your rental car to get around is great, but navigating the CBD can turn into a massive parking fees. Don't worry - there's more savings to be had! You should look out for free transport systems for tourists, like the 555 in Sydney (running from Central to Circular Quay) and the Melbourne Visitor Shuttle (that loops around the CBD).

Free walking tours

Want more free options? I've got one more tip up my sleeve!

If you do want to take in a bit of culture but can't fork out the cash, most major cities offer free walking tours. Tours usually run each day from a central point in the city and information can be accessed from most hostels. In Europe, SANDEMANs dominates the free walking tour scene - check out the website for more info.

How to find cheap flights

by Rob d'Apice
Cheap airfares are a tricky beast. Finding the best deals is certainly an easier task with the advent of many online fare comparison websites, but there are still plenty of insider tricks to finding bargain prices.

Relax, though. We've done the dirty work to find out where the best fares our hiding, and formatted them into 5 simple tips!

1. Compare online

Maybe a little obvious, but your first stop should be online comparison. The best site I've seen is Webjet, although it ain't the prettiest. I always check Adioso - a rocking new internet startup based out of Melbourne. They'll create a pretty graph for your flights that show you the cheapest days to take off.

Don't book through Webjet. They'll add around $30 to your fares. Use it to find the cheapest flights, then book directly through the airlines' websites.

2. Use Jetstar's Price Beat Guarantee

Do you like Tiger prices? Do you also like leaving on time? Great news - you no longer have to choose between the two!

Jetstar offer a Price Beat Guarantee. They'll match the prices of flights with similar fare rules leaving within 1 hour of a Jetstar flight... then beat it by 10%! The best way to find the best domestic fares is to compare all flight options on Webjet, then call Jetstar's dedicated price match hotline - 1300 369 516 - and quote the Tiger prices. This gives you the best value on domestic flights you can find.

Another added benefit? No Credit Card fees when you're using Jetstar's Price Beat Guarantee!

3. Get Your Student Discount

Often, you're likely to find the best possible domestic fares using online comparison. This isn't true for international flights, though: airlines generally offer discounted international fares for students. To access them, you'll need to go through a student travel agent - like STA Travel or Student Flights. Make sure you've done some basic comparison online before you see the travel agent, so that they know what price they need to beat!

4. Avoid Peak Travel times

Fares increase substantially during peak holiday seasons, and there's generally nothing you can do about it. If you have the option, plan you're trip outside of December/January, and avoid major school holiday periods. If you're travelling domestically, avoid Friday nights and Sunday evenings as they are peak times for weekend getaways.

5. Book early

Generally, flights get more pricey as you get closer to date - so make sure you book as soon as possible. Make sure you don't miss out on special prices though - they are generally available 3-9 months before the travel date, so keep your eye out for them.

6. Frequent Flyer? Go Round the World.

The best value you can get from Qantas Frequent Flyer points is a 'Round the World' ticket. They come in at 140,000 points (worth about $1,400), and let you travel around the whole globe. I recently used it to book Sydney > London > Berlin > Madrid > Mexico City > Sydney. Amazing value. This deal isn't well advertised - you'll need to call Qantas to hook it up.

If you're not a frequent flyer, a Round the World ticket can still be great value - check out the deals from STA Travel and Student Flights. They'll let you customise their advertised itineraries. Oneworld also offer Round the World tickets, but the cheapest fares are around $4,900 - farely pricey!

Want a Travel Agent you can trust?

In Sydney? Check out STA Broadway. A good friend of mine, Ally, is the manager there and always manages to find me great deals on international flights. Tell her Prosple sent you!