The pay-as-you-go car

At a time when the last thing many people need is a major capital investment, companies offering cars on a pay-as-you-go basis are booming.

Car clubs offer vehicles for an hourly fee, with pick-up and return to a parking bay in their local area. It can save occasional drivers an ­estimated £2,000 a year.

Last month, car rental firm Hertz launched a scheme, Connect, to compete with the four London car clubs.

City Car Club saw an 88 per cent increase in members in 2008, bringing the total to 3,000. The company’s chief executive, James Finlayson, claims that 200 Londoners join each month because “it’s so much cheaper, less hassle and environmentally friendly”. The club has 350 cars and plans to add 50 more to meet demand.

The joining fee is £75, which includes the annual membership of £50 plus £25 in driving credits. Members’ partners can join for £25 a year, and business membership is £30 per driver. The hourly fee is £4.95 and includes 50 miles of fuel in each

24-hour ­period – after that you pay 24p per mile.

Covent Garden residents Claire Ribbens, a 26-year-old account manager, and her husband Jon, 33, a technical director, joined last March.

“We still get to drive, but without the added costs,” says Jon. “The city is not a good place to drive, so we pick a car that’s located in the direction we are heading. For instance if we’re visiting my wife’s family in Berkshire, we’ll take the Tube a few stops and pick up a car from West Kensington.

“It means we can combine different modes of transport.”

The clubs all use the same basic system. You book the car online or by phone, pick up the car from a bay near you, ­using your membership smart card to get in. The key is ­either released by PIN number, or tethered to the steering column. You ­return the car to the same bay. ­Journeys are logged via an on-board ­computer.

WhizzGo is the greenest club, ­using low-emission Citroens exempt from the congestion charge. The ­company claims that each of its cars takes up to 20 private cars off the road.

Annual membership costs £49.50 and the hourly rental starts at £4.35. WhizzGo is based in Camden, where it is championed by the council.

Zipcar (£25 per year) offers £25 of free driving to new members. Its 200 cars in London include Minis and BMWs, and it pays the ­congestion charge. It is ­forming partnerships with universities to provide on-campus bays for students, who will be entitled to driving credits and reduced fees.

Streetcar uses VW Golfs, Polos and Transporter vans, and rental is from £3.95 per hour or £39.50 per day. ­Annual membership costs £49.50. It’s the UK’s largest car club, membership having doubled in 2008; it boasts 50,000 members and 1,000 cars.

Paul Johnson, a ­spokesman for Streetcar, says that in the past members joined mainly for ­environmental ­reasons, but now it’s all about saving money.

“With the credit crunch, lots of ­people are being more ­pragmatic about their ­finances,” he said. “So along with the ­traditional greens, we’re ­getting young City types who find they need to watch the pennies.”