Getting Your Rideshare Car to Drive for Uber or Lyft
Should You Buy, Lease, or Rent A Car for Lyft or Uber?
Deciding on how to get a Lyft or Uber car is probably one of the hardest decisions for a majority of new drivers. As you probably already know, expenses generated by your rideshare car could affect considerably your earnings. So what is better – to rent, lease or buy a vehicle?
Taking into consideration the reliability and cost of vehicles, here is a guide that will help you in making the right decision.
Buying your rideshare car for Lyft or Uber
Buying a car for Lyft or Uber is normally the best choice that you can make in case you can afford it. You may have to make monthly car payments. Nonetheless, the car is yours. Additionally, the rental and leasing options usually will cost you double what it costs to own a vehicle. By purchasing the vehicle, you will have equity on the car, and you can sell it later, and get some money.
However, before you decide to purchase a car for Lyft or Uber, there are several factors that you need to consider:
Income from ridesharing is decreasing
Income from rideshare driving has significantly reduced over the past few years. Glassdoor reports that driver’s income across the country is at an average of between $14 and $15 per hour. This is before expenses are deducted. Take for example an hourly rate of $15, subtract 2 gallons of gas ($5) and another $1 for wear and tear, depreciation, general car maintenance, and other expenses, and you are down to an hourly rate of about $9. As you can see from the above calculations, you do not want to spend many funds on a vehicle if ridesharing is the only reason for buying it.
This is one of the most overlooked and most significant expenses of car ownership. For instance, suppose you buy a brand-new car in 2014 for $16,000. You drive it full-time for Lyft and Uber for several years, and during this time you put 50,000 miles on the car. Then, you take it for valuation, and you find that it is only worth $7,500. You have lost $8,500 over the past two years. That $8,500 comes to approximately $88 per week.
Now, suppose you had a $320 monthly car payment and a $150 monthly insurance payment. That will amount to $470 a month or about $117 per week.
Leasing the same vehicle for rideshare will cost about $200 a week. If you add the $88 weekly depreciation cost to the $117 insurance and weekly car payments, it amounts to $205 per week. This shows that a considerable portion of your lease payment or monthly rental fees is used in covering the depreciation of the vehicle.
The difference with car ownership is that even though you will be accumulating more and more depreciation costs steadily, you will not have to pay for it until you decide to get rid of the car. On the other hand, when it comes to leasing, you will have to pay for the depreciation costs each week. A majority of Uber or Lyft drivers prefer deferred expenses instead of the high weekly payments.
Leasing your rideshare car for Lyft or Uber
Renting a Lyft or an Uber car is also a great way of acquiring an available car without having to invest large sums of money on a purchase. A lease will typically cover vehicle maintenance and depreciation, and this makes it easy for the driver to make one payment each month. One of the most significant benefits of leasing a Lyft car or an Uber car is that you won’t have to commit large amounts of cash. While you have no equity in the car once the lease term has expired, you don’t have to invest a large sum of money to purchase the vehicle.
There are two ways of leasing a vehicle, and both of these fall under the same requirements and categories:
1. Standard dealership vehicle lease
The first way is the standard car lease; in short, a lease from a private party or a dealership. In this particular method of leasing, you go into a vehicle dealership and tell them that you are looking to lease a car.
For rideshare drivers, the main problem with leasing a car from a dealership is that consumer leases usually forbid the use of the vehicle for commercial purposes.
Since the first rideshare trip that you take will make you in violation of the terms of the lease, standard leases are not the best choice for you. Nonetheless, some leasing firms have sprung up, and all they do is lease vehicles to Lyft, Uber, and other rideshare drivers.
2. Rideshare program lease
In the state of New York, for instance, there are numerous rideshare leasing firms. Mid-size cities usually have either one or two companies. You can search online to get a rideshare leasing company that has a branch in your city.
If you choose to lease from a commercial leasing firm in your local area, always remember that leasing is an alternative that is equivalent to buying a brand-new vehicle at a higher price. However, as earlier discussed, you will have to pay all the associated car costs which include insurance, depreciation, and also the full amount of the vehicle upfront as you pay off the lease.
Renting your rideshare car for Lyft and Uber
The advantage of renting a vehicle is that all maintenance and car expenses are taken care of. This includes depreciation, vehicle insurance, and registration. Just as in leasing, the price that you pay each month is high since it needs to be enough to cover other expenses.
So, what is the actual advantage of renting?
The actual benefit is that there is no long-term commitment to pay for car expenses. To lease, you need a 2 to 3-year commitment. With renting, you can get the vehicle for even seven days, and first, try things out.
Renting gives you the chance to check what you can make before you make any long-term commitment to rideshare.
You should keep in mind that this industry is extraordinarily unpredictable and things can change suddenly and dramatically. If you decide to rent a vehicle, you will be able to get out of the sector instantly when the situation changes.