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Running an informal car club

| Car club & car share, Help | October 24, 2012

Reproduced with kind permission of City Car Club, 0845 330 1234,

Setting up and running an informal Car Club isn’t that complicated and shouldn’t involve much more work than goes into being an individual car owner. After all, informal Car Clubs already exist within many families that have several drivers who share the use of one or more cars. The only difference is that money may not change hands.

An important point to remember is that your Car Club is exactly that: yours. So set it up in a way that suits your group of drivers and try to keep things as simple as possible. By taking some time over planning your Car Club it will be more likely to run smoothly. Listed below are some of the issues you will want to consider as you plan.

Despite the name, Car Clubs are really about people rather than cars. Sharing car use in this way works best if there are alternative ways for members to make some of their journeys. For example, it will be easier to establish a Car Club among drivers who don’t rely on a car to get to and from work every day. A Car Club with a mixture of trip-makers, such as some who are mainly daytime users and others who are predominantly evening users one weekday along with weekend users, will have fewer conflicting needs.

Most Car Clubs will need some form of booking system for the vehicles(s) and should have a way of establishing priorities in case of clashing needs. If you think about it, there are often alternative ways of making many trips, or the trip can be rescheduled, or not made at all. And as money will be saved through the Car Club membership on car ownership costs, some can be spent on public transport, occasional use of taxis or conventional car hire especially for longer trips such as holidays.

As with buying a car, a Car Club should be seen as a reasonably long-term commitment. Items such as insurance, tax, and MOT are normally renewed annually so the aim should be to have a Car Club that will last a minimum of one year. It would be wise to start your club with people who are committed to living in a certain area and will not be changing jobs or moving house in a few months, unless you’re confident they can be replaced. Spend some time getting to know potential members, a Car Club made up of people who know each other quite well already and have an existing level of trust is more likely to last.

Obviously any Car Club needs at least one vehicle. If there is a car owner willing to join and put their car in the club – and it is the right type of car – then that will save time and effort. Otherwise a car can be bought. When choosing a vehicle for your Car Club you will need to consider body type (2-door/4-door, saloon/hatchback/estate/MPV). Petrol/diesel/hybrid/LPG, engine, price and age. Issues such as child seats, roof/bike racks, tow bar and security devices should be discussed too.

Vehicle location
Having got a vehicle, you will need to establish where it will normally be kept. This may depend on the distance between members’ houses or on which member has the most suitable garage or parking space.

Work-mates and employers
If the members of your Car Club happen to work at the same place such as a hospital, office or factory, you could exchange the car between members at work: “I’ll have it half of the week; you have it the other half”. Also, you maybe able to combine the Car Club form of sharing with lift sharing to and from work.

Each driver in a Car Club has to contribute to the vehicle’s full operating costs, mainly in proportion to how far they drive it. This means doing some calculations to work out what those costs are and how much each driver should be charged. The following section includes examples of how to do these calculations for bother newer and older cars. It is possible to set up a Car Club using a brand new car too but as the average private car in the UK is 6 years old, doing so may not be that common an occurrence.

How you work out your Car Club charges is up to your members. The important point is that no profit should be made by any member. Demonstrating this to the nearest pound isn’t possible or necessary but it can be done within reason. Otherwise, rather than just saving you money, the club becomes a car hire business with consequences that are outside the scope of this information.

Payment arrangement and charging methods
Most Car Clubs find that a combination of an all-inclusive mileage charge and a deposit is most appropriate. Setting charges on the conservative side and refunding any excess in the account at the end of the year makes life easier. If unexpected costs do arise, such as a high repair bill, then members need to contribute more.

All-inclusive charge per mile
The total estimated annual costs are divided by the estimated annual mileage to give the charge per mile. This has the advantage of simplicity and shows drivers how much each car trip will cost them.

In addition to the above, it is best to set a deposit for each driver joining the club. This will start the club account off with a good opening balance which can pay for unexpected costs. By paying a deposit, members demonstrate their commitment to the club. For higher value cars, the deposit can include each member’s contribution to the purchase cost of the vehicle.

After six months or a year of operating, charges can be adjusted according to the actual costs and miles one by each driver. Any over payments should be refunded in proportion to the number of miles driven by each member.

Example of an older car (over 80,000 miles)
In the following example Maureen, the owner of a VW Golf (80,000 miles on the clock) and her friend Clare have decided to set up a two-person Car Club between them. Maureen did an average of 6,000 miles a year and estimates that this will drop to 4,500 when the car is being shared in the Car Club. Clare thinks she will only do about 50 miles a week in the car which comes to about 2,500 miles per year.

They first estimate what the total cost for the year will be. The table shows what Maureen was paying as an individual owner with the estimated Car Club costs alongside. A nominal depreciation of £100 is entered in row A. The insurance cost increases due to adding Clare’s name. Additional total miles increase the amount spent on petrol but are not estimated to affect maintenance costs very much.

Item Maureen Car Club
A Depreciation £100 £100
B Road Tax £150 £150
C MOT Test Fee £28 £28
D Road Rescue Service £70 £70
E Insurance £270 £320
F Amount spent on tyres, servicing and maintenance £550 £600
G Miles per year 6,000 7,000
H Average fuel consumption in miles per gallon 38 38
K Fuel price per gallon = Pence per litre (73) X 4.55 £3.32 £3.32
Amount spent on fuel per year (G/H) x K £524 £611
Total £1692 £1879

The total cost of £1879 for 7,000 miles means the cost per mile is 26.8p. The estimated amount paid by each driver is:

Maureen: 4,500 x 26.8p = £1206
Clare: 2.500 miles x 26.8p = £870

Charges and payment arrangements
Maureen and Clare open a bank account for their Car Club. Maureen puts her car into the Car Club and Clare pays in a deposit of £200 to give her, roughly, a 50% share in it and to the account a reasonable opening balance. If at any time unexpected costs arise, such as a high repair bill, they agree each will pay an additional lump sum into the account. Maureen agrees to be the treasurer.

To keep things simple, they decide on an all-inclusive charge of 27p per mile which is higher than the estimated true cost per mile and so on the safe side. At the end of each month, Maureen adds up the number of miles done by Clare and herself from the trip record book and multiplies the two totals by 27p. They each pay their due amounts into the bank account, less any money spent on petrol and similar running expenses. If they drive the estimated total of 7,000 miles between them in the year, then they will pay a total of £1890 into the account.

At the end of the first year of operating they will recalculate what the true cost per mile was depending upon the actual bills paid and exact numer of miles one by each driver. If the true cost turns out to be less that 27p per mile, then the excess can be refunded to each driver in proportion to the number of miles they did or carried forward towards the next year’s operating costs. The deposits can be carried forward too.

Booking the car
Sharing the use of one or more cars isn’t difficult. With a bit of planning ahead, most of the drivers should be able to use a car when they want to. Keeping a booking sheet in each car or secure wall-mounted box, will enable each driver to reserve the car for when they want it, or make other arrangements if it is already booked. A simply diary sheet will do. An alternative would be to have fixed time slots during the week so each member that can be traded by agreement. An example is shown below with overnight being a single slot. The free slots are available to any of the drivers.

8-12 12-4 4-8 8pm-8am
Monday Barry Barry
Tuesday Janet Mary
Wednesday Mary Mary
Thursday Sarah Sarah
Friday Janet Janet
Saturday Barry Barry Barry
Sunday Sarah Janet

Depending upon the drivers in your Car Club, you might also decide on guaranteeing a certain number of full weekend uses per year and perhaps longer periods in the summer for holiday use.

If one person books to use a car and then changes their mind, it is important that the other members are made aware of the change so they can make use of the car if they want to.

Returning the car after dark and personal security
If the car is normally kept at a fixed location some distance from certain driver’s homes then they should be allowed to take it to their house if returning late at night and they are concerned about walking home. They should return it to the normal location first thing in the morning.

Paying for fuel
If the car needs more fuel, then the driver should buy it as usual with their own money but remember to get a recept from the petrol station. The driver makes a note in the trip record book of the amount bought and keeps the receipt safe. When the time comes to pay for using the car the amout paid for fuel is deducted from each member’s bill.

Legal requirements

You should not need any special car insurance for a car that is in shared ownership. A Car Club can operate using normal car insurance so long as no profit is made by the keeper or any of the owners and you inform the insuurance company.

So, on the insurance proposal form:

If applying for named driver cover, give the required details for each driver in the Car Club and include the following note in the comments section of the form – “All named drivers are also owners of the vehicle.”

If applying for any driver cover,

  • Specify the minimum age of the driver (eg 25 years)
  • State that only drivers with clean licences will drive the vehicle (if true!)
  • And include the following note in the comments section of the form –
    “This vehicle is owned by ……………….. (insert keepers name) and others. All the owners will drive the vehicle.”

If the insurance company questions the annual mileage, state the following, if true: “The annual mileage of the vehicle is not anticipated to exceed normal household levels of use.” (This can be regarded as 10,000-12,000 miles a year)

For any car there has to be one driver who is “the insured” and in whose name the insurance policy is taken out. Having the oldest and most experienced driver as the the insured will help keep the cost down. To avoid losing a no-claims bonus, possibly through another member’s accident, it would be wise to have it protected which can be done quite cheaply. All drivers will have to declare any previous accidents or penalty points on their licences.

At present insurance policies allow the insured to benefit from accumulating a no-claims bonus. If other drivers in your Car Club want to build up their own no-claims bonuses then the person being “the insured” can be rotated on an annual basis. Most companies will take into account a driver’s accumulated no-claims bonus for three or four years after they cease to have their own policy so drivers joining Car Clubs shouldn’t lose out if they decide, after a time, that being in a Car Club isn’t for them.

The registered keeper
Every car on the roads in the UK must have an up to date Vehicle Registration Document V5. This document is issued by the Driver and Vehicle Licencing Centre in Swansea (DVLC). It states who the Registered Keeper is and points out in block letters that “THE REGISTERED KEEPER IS NOT NECESSARILY THE LEGAL OWNER”

The keeper of any vehicle has certain legal obligations, which include being responsible for its use on public roads. This means the keeper must ensure the vehicle:

  • Is showing a valide tax disc
  • Has an MOT certificate and
  • Is in a road worthy condition

The keeper is the person whom the police and other law enforcement agencies normally wish to contact about the vehicle’s use on the road. However any Car Club member driving an untaxed, uninsured, or “no MOT” vehicle will be committing an offence themselves also.

So if a Car Club member is caught on a speed camera or gets a parking ticket the authorities will write to the keeper in the first instance. But it is the person who was driving when the event took place (which can be determined from the trip record book) who is responsible for paying the fine or ticket.

The keeper is not responsible for an offence committed by another driver. To be doubly sure the trip record book (see below) must be rigorously kept.

The Trip Record Book
Every car in a Car Club should have its own trip record book that is signed by each driver at the start of every trip they make. By doing so, individual drivers take responsibility for the car while they are using it.

The trip record book can simply be a small notebook kept in the car with columns marked as shown in the example below. It is very important that the book is filled in at the start and end of every trip. It shown which member was driving at the which time and is used to work out the bill for each driver.

Date Start time Start miles Condition/Initials End time End miles Expenses Signed
1/12/02 10:30 42,451 OK / PW 12:15 45,570 ….. P White

The “Expenses” column is used to record amounts spent on fuel or other items bought during a trip so they can be deducted for the drivers bill.

Reproduced with kind permission of City Car Club, 0845 330 1234

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