Guest Author - Jill Browne

Should you rent a car or drive your own when you take a long road trip?

Comparing apples with apples, renting may be the better choice.

If you have a car in reasonable working order, chances are that's the one you'll drive for your vacation road trip. But, would it possibly make sense to rent a vehicle for a week or two?

Here are some things to consider when making that decision.

First, what is your objective: to save cash dollars, or to drive a newer, perhaps safer vehicle, which may be bigger or smaller than yours? Let's assume that all you are interested in is saving money, and so you will rent a car around the same size as your own, but, being a rental, it's probably going to be newer.

It will probably get better mileage. Check the mileage on your own car now – how many miles are you getting to the gallon? Now look up the mileage for the car you are considering renting. If the two numbers are different, figure out approximately how many gallons you will save by renting (if any) and multiply that by the average cost per gallon.

Will you save on maintenance? In the short run, yes. You will be able to delay that next oil change a little longer if you don't put the miles on your own car. All you save there is the interest on the price of an oil change for the period of the delay. So if instead of getting a $30 oil change on September 1, you rent a car and don't need to change your own oil until October 1, you have put off spending the $30 by one month. Not much of a saving.

One payoff may come in actual wear and tear and depreciation on your own vehicle. To find out whether it will make a difference, ask yourself whether you are planning to sell the car soon. Will the trade-in value be significantly less after you put another 1,000 miles on? (Or however far you are going on your holiday). Will it be less than the cost of the rental?

Let's say you have a two-year-old car in great shape. It has 5,000 miles on it. With 5,000 miles, you could sell it for $16,0000. With 6,000 miles, you could get $15,000. That means your holiday driving just cost you $1,000 in depreciation. Instead, you could have spent $200 or so to rent a car for a week.

Of course, it's rarely that simple, and you never know exactly what a car will sell for until it sells, but by checking the dealerships and the newspaper, you should get an idea of your own situation.

Finally, is your vehicle getting to the end of its life? That's when renting may make a lot of sense. If you drive about 8,000 miles a year at home, and you are going on a 1,000-mile holiday, that extra 1,000 miles might shorten the life of your vehicle by a few months. By renting for long trips, you may be able to put off buying a new vehicle by a couple of years. That saving is equal to the price of your new vehicle (net of any trade-ins), times your interest rate, multiplied by the length of time you can delay the purchase.

For example, Al and Bob both have old cars on January 1, 2005. Al rents a new one for $200 for a week in July 2005 and drives the rental 1,000 miles. Al is still driving his old car on July 1, 2006.

Bob chooses to drive his own car on the same holiday in July 2005. By the time the next holiday comes around on July 1, 2006, Bob's old car has packed it in and he has to buy a new one.

Al and Bob each buy the same kind of new car for the same price, $20,000. Bob pays $20,000 on July 1, 2006. Because Bob has unpaid credit card debt of over $20,000 at 18 percent interest, that is the interest rate used for this calculation.

Al buys the same $20,000 car on January 1, 2007. He too has a personal interest rate of 18 percent.

By delaying the purchase of the new car by six months, Al saved six months interest at 18 percent on $20,000. That is a savings of $1,800. Deduct the $200 paid for the car rental back in July 2005 and Al's saving works out to $1,600.

These numbers will vary a lot from one person to another, and not everyone is paying 18 percent interest. However, using this line of thinking, you can determine whether it makes financial sense to take your own vehicle on vacation.