Zipcar is sold as an alternative to owning a car for urban consumers. Instead of buying a car, you pay an annual membership fee, and then an amount per hour or day for how much you use the car. This fee includes gas and insurance and covers the first 180 miles you drive. Customers who use a car more can get the annual fee waived and a lower rate, in return for a commitment to spend at least a certain amount of month. Weekend rates are sometimes higher.

One of Zipcar’s biggest selling points is that it is cheaper than owning your own car. It is also sold as a no-hassle option as you don’t have to worry about maintenance, the car ending up in the shop or finding the right insurance plan. However, is it actually cheaper than owning a car?

Using Washington, D.C. as an example, a ZipCar member is charged a one-time $25 application fee and a $60 annual fee. The driver then pays $7.75 an hour, $73 a day Monday through Thursday or $82 a day on weekends. If they go beyond the 180 mile per day limit, they are charged 45 cents a mile. Of course, the company reserves the right to tweak those rates, and you may not know how much you are going to pay until you get the car. You also may not be able to get a car at a given time, or may have to travel halfway across the city to find one, as most Zipcar stations only have one or two cars. This mitigates part of the ‘no hassle’ aspects of the service.

Oh, and those rates are ‘starter’ rates. A larger vehicle will, of course, cost more. On the face of it, those rates don’t seem too bad. The 45 cents a mile is less than the current Federal government mileage (as of 2011) rate of 51 cents a mile…that’s what the IRS lets you deduct for mileage on your own vehicle. The rates are certainly cheaper than a taxi.

On the other hand, how much does it cost to own a car? In 2010, the average household spent $5,477 on gas and other car related expenses. To reach that amount, you would have to use a Zipcar for over 700 hours a year, or just under two hours a day, seven days a week. Assuming you work 5 days a week you would need about a 2 1/2 hour total commute time to make a Zipcar cost more than owning a car.

By the numbers, therefore, Zipcar is cheaper than owning your own car for the urban commuter. It is, of course, even cheaper if you live in the city and are able to commute by public transport, bicycle or, if you are really lucky, foot. Unless you are a very heavy vehicle user, then Zipcar is a cheaper option. However, if you are going out of town, the mileage cost may make traditional car rental a better option.

In other words, for the average urban consumer, it is worth considering getting a Zipcar account. Unless you use a car either excessively or extremely rarely, it is a cheap and relatively hassle-free option for personal transportation and for those times when you simply need a vehicle to carry all of your stuff.

Zipcar may be the cheapest alternative for your driving needs. If you are looking to cut down the amount you spend on your vehicle, do some comparison shopping at Kanetix to see which insurance providers offer the cheapest auto insurance quotes. In minutes, you can find out which provider can save you the most money.

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