

Sharing a car with roommates. What's the right price?
December 31, 2012 3:26 PM   Subscribe


I've looked at past discussions of car sharing, but these have involved much older cars and I'm not sure about the insurance. Any suggestions for my circumstances?

I live with 3 other people in Chicago. We share rent, utilities, food, chores, pets and other household things. Earlier this year we thought about buying a used car together because we would all appreciate having one available from time to time. After much searching and not much success on the used car market, I decided to buy new with a financing plan.

I bought a new 2012 manual little car with great gas mileage to commute to work just outside the city. I, as the owner, am the primary driver. I drive about 250 miles per week. My 3 roommates are all listed on the car insurance and we all split that fairly. Roommate #1 is a 20 yo male, so his rates are higher. This insurance policy covers us as drivers of other uninsured or underinsured cars, which some of my roommates wanted regardless of whether I bought a car or not.

I have an arrangement with roommates #1 and #2 that they take the car one day per week to work (I carpool that day), they drive at least 40 miles, sometimes more. I taught #1 to drive stick on this car and will be teaching #2 soon. Roommate #2 also uses the car most weekends when I don't need it, for variable distances. Roommate #3 uses the car less often, maybe once or twice a month. Occasionally the car gets taken on longer weekend road trips by all of us, together or separately.

Currently #1 and #2 pay me $100 per month (total, arbitrarily determined) for use of the car. I fill up the gas because it's cheaper where I work and they reimburse me based on mileage. The price we set for use of the car should reflect depreciation, maintenance, and gas, but not insurance since we pay that separately. Because we wouldn't include insurance, the IRS rate of 55.5 cents per mile would be an overestimate and not useful for our calculations.

What is a good way to fairly charge for car usage? This isn't the initial situation we planned on, of buying a beater to use for a few years that we would all contribute to more or less equally. I made the decision to go new because I was suddenly driving more and I will also take the car with me after moving out, if that happens. My roommates do appreciate having a car to use and want to contribute, but we don't know how to set an amount. Help!
posted by chrysanthemum to Work & Money (16 answers total)
Start with the IRS mileage rate. 55.5 cents per mile. If their rate is inclusive of insurance then reduce it by some amount. It is not perfect, but it is as fair and simple as you can get.
posted by zippy at 3:37 PM on December 31, 2012

For a reduction guess, I'd take an average annual insurance amount for a full time driver and divide by 10k miles (an estimate of the amount of miles for an average driver) to arrive at a per mile estimate for insurance, and then subtract that from the IRS's rate.
posted by zippy at 3:40 PM on December 31, 2012 [1 favorite]

There's a 99% chance your roommates are going to fuck up your car.

Right now, you need to figure out worst case scenarios.

If roommate 1 leaves the light on all night and the battery dies the next day when you're driving it, who pays for it?

If the car gets towed from a spot that two of you drove to, who pays for it?

If the car gets broken into and the radio gets jacked, who pays for it?

If food gets spilled on the seats, who pays for it?

Who pays for routine maintenance? Who pays to fix a flat tire?

Some of these are obvious (e.g. the person who got the flat pays to fix it), but nothing makes people back out of responsibility faster than being financially on the hook for something in a borderline situation. Get this settled now (in writing) before agreeing to let them use your car.
posted by phunniemee at 3:43 PM on December 31, 2012 [45 favorites]

phunniemee has the right idea, and posted faster than I could manage.

Assume from the beginning that your car is going to be destroyed and work out an arrangement based on that. If your arrangement does not handle you receiving a new car somehow within a couple days of your car being destroyed as well as handle your alternate transportation while you wait to receive a new car, your arrangement is insufficient.

The IRS standard reimbursement rate does not provide you with a new car. By that, I mean you would only end up with $0.55 if your first roommate crashed your car in the first mile of driving. In other words, it is not an overestimate - it isn't even nearly enough to start your agreement. Liability here is much more important than what you charge per mile.
posted by saeculorum at 3:47 PM on December 31, 2012 [3 favorites]

This sounds like a nightmare waiting to happen. What are you going to do if one of your roommates gets in an accident and decides to sue, arguing that you did not maintain the vehicle? What are you going to do if one of your roommates gets in an accident and causes serious injury or death?

What you really ought to do is figure out how to form your own car-sharing cooperative, incorporate or whatever, and transfer the title of the car to it. You would ideally have some sort of governance where the directors/society assumes equal responsibility for risk.

You could also set up a share system or something so that you can recover your investment, and liquidate if need be when the time comes to buy a new car or move away and dissolve such a cooperative.

However, at the moment you are really leaving yourself open for all sorts of risk. I wouldn't be able to sleep at night.
posted by KokuRyu at 3:54 PM on December 31, 2012 [6 favorites]

Can you explain why the the IRS rate doesn't apply to you? (insurance isn't included in the mileage rate, it's a separate deduction).

On preview: I think this answers zippy's first comment

Good luck with this, really, but at the very least you're going to be stuck with a massive depreciation of this new car very quickly.
posted by artdrectr at 3:57 PM on December 31, 2012 [1 favorite]

I think you need to be clearer on whether this is your car, which you let your roommates borrow on a regular basis or a shared car that everyone has equal access to. Because it sounds like the situation is the former but you're trying to treat it like it's the latter. If your roommates need to ask your permission to use your car, then it's not really their car. I think you should be solely responsible for repairs and maintenance, whether scheduled or not, and then just charge them for use of a car. You could do it so that there's a monthly charge for insurance and then a charge for different types of trips:
-weekday commute (flat)
-weekday evening (hourly)
-weekend day/evening: could be the minimum of an hourly and daily rate, with different rates for long trips to suburbs and within city.

All that said, I think this is a bad idea. There's just too many grey areas and possibilities for misunderstanding, especially if somebody feels like it's your car and someone else feels like it's a group car.
posted by matildatakesovertheworld at 4:08 PM on December 31, 2012 [4 favorites]

For the love of all that's holy, I really hope you got Gap Insurance! If someone wrecks your car, you don't want to be stuck for the difference between what you owe on the car and what's it worth if the insurance company totals it!
posted by Ruthless Bunny at 4:15 PM on December 31, 2012 [3 favorites]

Wow this sounds like a tricky situation. I don't mean to be harsh but I wish that you had posted this *before* getting into this situation. I agree that you should be less concerned about usage cost and more about "who is responsible when something goes wrong?" And I don't mean "if" I mean "when." And nothing makes friendships/roommate relationships go sour faster than money issues.
posted by radioamy at 4:23 PM on December 31, 2012 [1 favorite]

Although the initial goal was to buy a car together, this is MY car. I loan it out and my permission is needed to use it. I should have mentioned that Roommate #1 and I do have a written contract that he may use it for a fee and is responsible for damages. I'm not worried about worst case scenarios right now. I just want to determine what that fee should be.

I actually kind of like KokuRyu's suggestion of forming a cooperative and incorporating. I'll look into that...
posted by chrysanthemum at 4:26 PM on December 31, 2012 [1 favorite]

Given the age of the drivers, and the number of drivers, and the use of the car, I would be very, very worried about a worst-case scenario because of the likelihood it will happen. However, I guess that is what insurance is for. I would go over the insurance details with your insurer though, to discover what would happen in various scenarios.
posted by KokuRyu at 4:32 PM on December 31, 2012 [1 favorite]

The 20 yo is the outlier, the rest of us are in our late 20s. Very responsible people.
posted by chrysanthemum at 4:42 PM on December 31, 2012

Wait, so you are the owner of the car, and the primary driver. The car is available for your three roommates' use one day a week and sometimes on weekends, at your discretion.

If it were me, I'd pay the bulk of the note yourself. This is clearly your car, you are the primary driver, and on the chance that you move out or one of the others buys a car or whatever, you own the car.

In terms of what it's fair to charge your roommates for use of the car, I would prorate it by day. So let's say your note is $400/month. That's $100/week. If there are five work days in the week, that's $20 per work day. It sounds like your roommates carpool on that day, so they should pay a shared $20 per weekday that they use it to commute. Which would be a flat $40-50 per month. To keep it fair, charge roommate 3 $20 per workday that she uses the car to commute (or otherwise uses it on a weekday to drive comparable miles).

Assuming that, on weekends, the car is sometimes available to them, but not always (because it's primarily your car that they are allowed to drive, not a shared car), and that none of them is putting that many miles on it, consider the car free for weekend short trip use (grocery shopping, say). If someone wants to do a more significant trip (IKEA three towns away, weekend road trip, etc), you guys agree on a fair amount in that particular situation. Like $50 for taking it out of town for both Saturday and Sunday, or $10 for a day out and about within Chicago.

For gas, I'd do totally separate math based on how much they are actually using. If you get good mileage, 40 miles is like a tenth of a tank of gas. In my car, in my city, that'd be about $4 per day that they commute. Which is kind of a silly amount to pull out the calculator over. If it's a super regular thing and they're racking up $15-20 worth of gas charges per month, let them get you dinner or buy you a beer every once in a while, and you're even.

Charging each of your roommates $100 per month plus gas worked out to the penny is ridiculous, and if a roommate of mine proposed such a scheme I would change my mind about being interested in "sharing" a car.
posted by Sara C. at 5:00 PM on December 31, 2012

I'm of the opposite mind of Sara C.; all that negotiating would be a pain in the ass IMO.

If I was one of the roommates here's how I'd want it to work:

1) Everyone pays their share of the insurance as this seems the fairest way of splitting a fixed cost. IE: if one roommate is at his girlfriend's from Friday afternoon till Monday morning you wouldn't cut him a break on the cable bill.

2a) Everyone except maybe you agrees to return the car only after having filled the tank at the nearest agreed gas station. This neatly covers the situation where someone has the car long enough to require a fill up without being a hassle for you. You make sure the car is filled up before lending it out.
2b)The other way to handle this is for you to reimburse anyone for any gas they put in the car. Better if you don't mind extending credit to your roommates and vice versa.

3) Charge everyone a flat rate per number of kilometres. This handles wear and tear and depreciation. Adjust the rate depending on whether you are supplying gas or they are.

You are going to find that you end up charging somewhere around weekend rates for a rental car. If you are charging less than that you probably aren't covering your expenses.

PS: it's not only the young male drive who is a high risk. Anyone without several years of experience is also high risk.
posted by Mitheral at 6:12 PM on December 31, 2012 [1 favorite]

Don't think about worst-case scenarios all you like, but know that as the owner of the car, you have 100% legal responsibility for any accidents that occur in your car, whether you are driving or not. Ask my ex, whose 20-year-old nephew borrowed his car and caused an accident. Nephew had no money. Ex HAD (past tense) a house and high salary, both of which were fair game in the lawsuit.

You need to be insured to the frickin' GILLS, and then some.
posted by 2soxy4mypuppet at 2:29 PM on January 1, 2013 [1 favorite]

You could list the car on RelayRides, which would provide an extra layer of insurance and legal cover (in exchange for a cut of your fees). There is some question about how safe renting your car out on RelayRides is after a fatal accident which they failed to cover completely, but they are undoubtedly better than an informal arrangement.
posted by miyabo at 8:49 PM on January 1, 2013

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