Car vs Public Transportation – The Great Student Dilemma

I have to admit to not being the most frugal student during my time in school. My first year of university I decided to leave the car at home and do the public transit thing due to cost and my lack of knowledge about urban driving. I survived, but vowed to get a vehicle for my second year. I am an impatient person by nature and so the time constraints involved with public transportation were extremely frustrating to me. That being said, I definitely paid a heavy financial premium for the choice to own and operate a car. When comparing the cost of having a car versus that of public transportation, we often forget to factor in a lot of vehicle costs that we just pay and forget about. If I would have known all the costs I still would have chosen to own the car, but everyone should definitely know all of the facts before they make their own decision.

Car vs Public Transportation – The Big Debate

Car vs Public Transportation
  • Facebook
  • Twitter
  • Google+

Figuring out the cost involved with public transportation for students is pretty straight forward since most cities have a special pass for post-secondary students. In Winnipeg it is currently about $60 per month. This obviously comes to $720 per year, but that is not the true cost. The government wishes to encourage public transportation for a variety of reasons so they give a tax break for this bus pass in the form on a non-refundable tax credit. This lowers the price even more, but it is tough to give an exact number due to individual tax situations. Other than your time there are very few hidden costs involved with public transportation that I know of.

The same cannot be said for owning a vehicle. The first thing a student decides on when they buy a vehicle is what kind they want, and to be new or used. The vast majority of students I know only want the basic transportation of a used car, however some do get sucked into buying new. If you choose to buy new and finance the vehicle you have to include the considerable interest charges you will pay through financing. The special finance offers you see in advertisements are for people with great credit scores, not students. You will be paying a premium for the loan. I could go into more details, but for now my strong advice would be not to go into financing a car if you’re a student.

The initial price of the car is the obvious part of what it will cost to own it. Some people believe that they don’t ‘lose’ that money since they now own a car that it is worth that much, but a car is not like a house or land purchase, it depreciates quickly. Various estimates put the average depreciation value of a car at 10-20% per year depending on the make and model. For those you like myself who aren’t math whizzes, think about the difference of 20% of a new car price, and 20% of a 3 year-old used car. The money you are losing is considerable. For example, say you buy a used car that is a few years old for $10,000. The next year you would likely sell it for 8,500 or so. Year 3 of ownership 7225, year 4 about 6150, and by year 5 you might be able to sell that car for about $5000 or so. That depreciation is part of the true cost of owning the vehicle.

The yearly costs of owning a car are often underestimated by people. First and foremost is the insurance. Young drivers, especially males, have the worst driving records of anyone on the road and so they pay the highest insurance rates. You can cut back on this by having your parents register as the legal owners of the vehicle and insuring the vehicle in their name, but if you get in an accident the rates go up. Manitoba has some of the lower insurance rates around and I paid about $120 a month to register my basic 4 door sedan.

The next big hit is yearly repairs and maintenance. The simple rule of thumb is the more maintenance you do the fewer repairs you have to take care of, so I recommend taking an hour to read the owner’s manual and know when your car should have proper fluid changes etc. I usually do three oil changes in a year which costs roughly $150 if you don’t do it yourself. No matter how much maintenance you do some repairs are always necessary including the basic changing of tires, brake pads, alternators, batteries etc. The cost of repairs can vary widely depending on the make and model of your car, but a hopeful estimate would put most used vehicles at $1000 per year.

Electric cars might be the way of the future but they’re not here yet. This means gasoline prices must factor into your analysis. The simple supply and demand rules dictate that with more and more people in developing countries buying cars, and only a certain amount of crude oil coming out of the ground, something has to give. The price at the pumps will continue to rise for the foreseeable future. If you fill your tank up twice a month you are staring at a minimum of $100. A much more likely monthly figure is $150, and many students easily pay $200 or more per month on gas.

Finally, we get to every student’s favourite issue of parking. Parking rates are obviously different across Canada, at the University of Manitoba it cost $500 per 8-month year for a residence parking spot as of 2009. Most apartments would be somewhat less than this, but still close. Then you have to factor in the times you will park off campus. In Winnipeg you can get away with usually finding relatively cheap parking, but for many people this is not an option. You could probably throw in at least another $200 per year in most cities for random parking costs.

A cost I won’t bother to factor in, but one that affects many students is parking and speeding tickets. You all know the drill, a group meeting runs late, you don’t get to the meter, you miss your alarm for your final exam and are trying to make up time etc. These tickets can range from a minor annoyance, to a week’s worth of part-time wages.

By my count, once you add up all of these costs you are looking at a true vehicle cost of about $5000 per year in addition to the depreciation of the car. This value is Manitoba-based. If your province charges higher insurance rates, or you live in a large urban city like Vancouver or Toronto and have to deal with higher parking charges you could be looking at a significantly higher number. For those of you keeping score at home this means that the financial sacrifice for the convenience of having a car while you go to school is pretty much a minimum of $4500 per year and could reach a lot higher than that, plus the up front original price and any tickets you get. Again, with my time-obsessed personality having a private mode of transportation was worth it, but for many people the numbers simply don’t add up.

5 1 vote
Article Rating
Notify of

Newest Most Voted
Inline Feedbacks
View all comments
12 years ago

Where I’m at, they had this great program where you pay $20 a month and you get unlimited public transport. Heck, for $20 a month I would say “screw the car!” :)

That’s not even half a tank of gas these days.

12 years ago

That is a great deal! The thing with Winnipeg’s system is that I don’t think many people would mind paying the fee if it was worth it, but our troubles with public transport (specifically rapid transit) are legendary.

8 years ago

You guys are lucky in Manitoba. In Toronto the insurance premiums for a drive like myself is about $600 a month. And, the parking at my University is $900 for 8 months. Yet still, the transit is horrid enough that I am still getting a car.

8 years ago
Reply to  tois95

Ouch – that’s a rough budget line Tois! Part of me is glad in a “misery loves company” type of way that Winnipeg wasn’t the only one with a terrible transportation set up!

Would love your thoughts, please comment.x
Share This