I am “uber” excited to have this guest post from Lexi Carr. Lexi is a freelance writer with a passion for finance, research, and helping others. Feel free to drop her a line on her blog. Contact me if you are interested in contributing or advertising (on the cheap!).
Rideshare companies such as Uber or Lyft have revolutionized how people travel, as well as opened many opportunities for those looking for a side hustle. Although there are lots of positives to this seemingly easy cash cow, it is important to know the facts before you take the plunge – including the reality of what this will cost you after what you make.
The Major Pros
There are a number of major pros to working with a rideshare company including:
- Being your own boss
- Schedule flexibility
- Staying in the comfort of your own car
- Easy money for little work
Being your own boss and deciding your own schedule are two aspects that appeal to many drivers. You can work as little as a couple hours a day before another full time job or spend hours on the clock if you so chose. And if you don’t feel like working at all one day, you can just turn the app off.
The Major Cons
Of course, nothing good is ever free. Some of the drawbacks to working for a rideshare company include:
- Car maintenance
- Additional miles to your car
- Paying for gas
- No benefits
- Keeping track of your own taxes
- No guaranteed work
What many do not know before signing up to be a rideshare driver is that you are technically not an employee of the company but an independent contractor. This means you are responsible for paying the taxes your employer would have to such as Social Security and Medicare taxes.
Also, you are responsible for maintaining your own car. Paying for gas, insurance, and upkeep of your car will all come out of the commission you earn (i.e., your pocket). Plus, keep in mind that there will be lulls during your shifts with no rides to drive which will also affect your earnings versus the cost.
Owning The Right Type of Car
Rideshare companies such as Uber and Lyft have very specific requirements for what type of vehicle you can use, and the vehicle will vary based on location and desired level of service. Luckily, specifications for both are relatively basic. Your car must pass local inspection, have four doors, and be made between 2000 and 2005, depending on the city you live in. Taxis and other marked vehicles are not allowed as well as the use of Crown Victoria’s.
Positives of Owning a Bigger Car
Rideshare companies also offer a higher level of service for riders who need more space in the car they call. Owning a larger car can expand the number of rides you can give and has more earning potential since the rides also cost more. For both Uber and Lyft, this service comes at a higher price compared to UberX and Lyft Economy and Shared.
The vehicle requirements also aren’t that much stricter. The car must comfortably seat at least six passengers, not including the driver. Similar to UberX, the car must also be 2000 or newer, although age varies per city. For example in Los Angeles and San Francisco, the car must be 2000 or newer, while in New York City the car is required to be 2011 or newer.
To Buy or Rent for the Job?
Part of driving for Uber or Lyft means your car will have a constant flow of strangers that will ride in your vehicle. Keep in mind that you have to maintain and pay for all the wear-and-tear that comes with the job, such as late night accidents, dirty shoes, and all the spills, messes, and smells.
If the idea of cleaning up after strangers makes you uncomfortable, or if you want to be an Uber or Lyft driver but do not own a qualified car (or even one at all), there is a solution. Both companies also now partner with rental companies to provide their drivers with rental cars in larger cities. These rentals vary from weekly to daily rates, often include insurance, and often do not require a credit check.
When applying for Uber, select “I need a car” and you will be directed to the rental companies partnered with Uber. For Lyft, you can apply to the Express Drive program. This program will allow you to proceed with the background check as if you already have a car, streamlining the hiring process. Both rental services require you to pay minimal weekly fees, but insurance and unlimited mileage are included.
The biggest downside to the rental programs are the weekly cost. It can often be very high, and is not available in most cities. Also, rental companies run the programs based on their car availability, leaving you vulnerable to missing out on work if there are no cars left over.
The best option is to use the car you already own because that payment will always be lower than the lease or rental payment you would give to the rideshare company. If the car you already own does not meet the rideshare company requirements, it would not be a financially smart decision to purchase a new car. The only exception to this is if you are considering investing in a vehicle that would meet the UberBlack requirements. Other than that, stick with what you already have.