Should you ditch your personal car to save money?

December 15, 2020

personal car vs bolt

Which will save you more money in the long run – using a personal car for your commute and weekend trips or switching to ride-hailing mixed with public transport and car rental? We did the math.

The cost of owning a personal car

It’s no news that a personal car comes with regular costs. But how big are they exactly? We took a 6-7 year old Toyota Camry as an example to make the following calculations. Please keep in mind that depending on the car model, fuel consumption and other costs may vary.

On average, in Lagos, you may spend around NGN 138,889 monthly on hire purchase, loan repayment or saving towards the car, NGN 232,356 on yearly repairs and maintenance, insurances take NGN 25,000 out of your pocket. Not to mention the amount of money that goes into the fuel tank and on keeping your steel horse clean.

Another thing we need to take into account to understand if keeping a personal car is financially feasible is the average car usage. For that, we created a coefficient that goes from 1 to 3:

  • 1 = the person uses their car on every second day in a month for 2 back and forth trips;
  • 1.5 = the person who uses their car 4-5 days a week and makes 2 back and forth trips on each day;
  • 2 = the person uses a car every day for 2 back and forth trips;
  • 2.5 = the person uses a car every day. They make 1 trip to a certain location (e.g. 1 trip to work), then drive to a nearby location (0.5 trips as half the distance) and then take a trip back home (1 trip);
  • 3 = the person uses a car every day and moves around quite a lot. They drive 3 times the average Bolt ride distance in a day (for Lagos it’s 36 km), usually travelling around 20-25 km per day.

In Lagos, this coefficient for an average person is 3.0.

Summing it all up, it equates to about NGN 193,082 spent on your car on a monthly basis. Or NGN 2,316,984 annually.

But what if you switched to on-demand transport? Would you actually save money?

The monthly cost of on-demand transport

In Lagos, the average monthly public transport cost per person is NGN 30,000. But you’d probably like to get out of town from time-to-time, wouldn’t you? For these occasions, you’d have to get a long-route public transport ticket for upwards of NGN 1,500 or rent a car. Based on speaking with car hire operators the average price for one rental trip is around NGN 9,000. It still amounts to far lower spend compared to the car costs described above.

Let’s add some extra convenience and introduce ride-hailing into the equation. We all need a car ride from time to time, right?

An average trip in Lagos with Bolt is 11.9 km long and costs NGN 1,574.

Taking into account the costs of different modes of transportation used for getting from A to B, daily distance, the money spent on car ownership and the price of travelling one kilometre, we estimate that an average person in Lagos could save up to 34% on transportation costs by ditching their personal car and, for example, opting for on-demand transport instead. Switching from ride-hailing to micromobility would increase the saved amount even more.

That means you could save up to NGN 64,731 on a monthly basis by giving up your car. That’s NGN 776,772 a year.

Time for New Year resolutions

2021 is already knocking on our doors and that means it’s time for some New Year’s resolutions.

How does “This year I’ll spend 34% less on transportation and save that money for add the thing you’ve really-really wanted for a long time here” sound? Considering the unknown ahead, having to worry less about monthly expenses doesn’t seem too bad either.

Ride smart, ride with Bolt.

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