Image source: Car Next Door
The Car Next Door carsharing service has reported a 245% increase in customer numbers during the pandemic months, as people look for ways to save on their expenses.
Car Next Door, a carsharing service that allows people to rent their own car or use someone else’s car for a fee, reported this spike in car ads on its platform between April and October 2020.
This is the equivalent of 12,000 additional people who register each month to its platform.
There are 135,148 borrowers on the platform and 4,018 cars.
Exactly one year ago (October 2019), that figure was 88,000, a growth of over 50% since then.
The number of trips made also doubled to Victoria and Queensland.
In the market for a new car? The table below shows auto loans with some of the lowest fixed interest rates in the market.
Car Next Door CEO and founder Will Davies said interest in car sharing apps has never been higher, which he says is because people are looking for a way to reduce their spending if they had been hit hard by the pandemic.
“I think the combination of job losses and reduced working hours, as well as continuous work from home means that having multiple cars for a household or even one car per person becomes a less justifiable expense,” Davies said.
“By taking care of rego, insurance, fuel, maintenance and tolls, it costs about $ 8,500 per year to own a car. Many households are feeling the financial pressure. “
Car next door Will Davies. Image provided.
That figure of $ 8,500 is roughly what various reports show, such as the Australian Automobile Association’s (AAA) Transportation Accessibility Index or the RACQ Running Costs Report.
According to these reports, paying for fuel, registration, insurance, maintenance, auto loan payments and depreciation can cause some cars to cost more than $ 10,000 per year, depending on their location. cut.
For those who have started working from home, for example, there may be less need to pay the cost of owning a car.
“There’s also a lot less driving,” Davies said.
“We are seeing that a lot of people are changing the ownership of their cars and looking to sell or lease their car when they’re not in use.”
Can such a service save you money?
Some subscription or car sharing services cover all the usual costs of owning a car such as insurance.
At the end of last year, the co-founder of another car-sharing service Carbar told Savings.com.au that these platforms can save drivers from all the hidden costs of owning a car. .
“Is the subscription a solution for everyone? No. There are still cases where owning a car may be a better alternative, ”Des Hang said at the time.
“But at a time when sourcing auto finance is more difficult than ever and cars are expected to depreciate faster than ever before, we are happy to be able to provide a new solution to the market that sidesteps both of these issues.
Car Next Door user Spencer Kirk, of Redfern in Sydney, said he saved thousands of dollars in a year after selling his car which cost him $ 7,000 a year to sit on his driveway.
After moving to Car Next Door to rent a car, he said his expenses fell to $ 150 per month, or $ 1,800 per year.
Are people turning away from auto loans?
While there are signs of positivity in the auto market, October 2020 marked 31 straight months of declining car sales.
The largest drop hit 48.5% in April, an unusually high figure due to coronavirus restrictions.
But this reflects a broader market downturn, and the demand for credit for purchasing cars through auto loans has also fallen sharply.
Equifax’s latest quarterly Consumer Credit Demand Index for the September 2020 quarter showed auto loan applications were down more than 15% from the same quarter in 2019.
However, this is expected to be a temporary trend that will subside once the government’s stimulus measures end.
“As the government’s stimulus measures begin to roll back, we expect personal lending may experience a resurgence, especially among subprime borrowers who may not be eligible for other types of financing,” said Kevin James , Managing Director of Equifax, Consulting and Solutions.
Mr. Davies expects the growth of carsharing to continue for the foreseeable future.
“We expect to see even more growth as soon as the lockdown restrictions are lifted and people start to move even more freely,” he told Savings.com.au.
“Once the QLD borders open to the major cities of Sydney and Victoria, we expect to see even more bookings, especially in Brisbane and the Gold Coast and surrounding areas, which are still popular hot spots. during the warmer months.
“Likewise in Victoria – most car trips in recent months have been shorter bookings due to the lockdown and many cars hired by people wanting to avoid public transport.
“We are already seeing a lot of longer advice being taken in and around Victoria.”
The entire market was not taken into account in the selection of the above products. Rather, a small portion of the market has been envisioned, which includes retail products from at least the Big Four Banks, the Top 10 Customer-Owned Institutions and Australia’s largest non-banks:
- The big four banks are: ANZ, CBA, NAB and Westpac
- The top 10 client-owned institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management as of November 2019. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
- The largest non-bank lenders are those who (as of 2020) have more than $ 9 billion in Australia-funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
Products from some vendors may not be available in all states.
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*the Comparison rate is based on a loan of $ 30,000 over 5 years. Please note: this comparison rate is only true for this example and may not include all fees and charges. Different terms, fees, or other loan amounts may result in a different comparison rate.