Should I Rent, Lease or Buy a Car for Uber and Lyft?

Uber and Lyft both started with the same basic idea…

Find people who already own cars and give them a platform to earn a little extra money, working their own hours with their own cars.

The idea originally was for people with cars (and jobs) to earn a little extra spending money.

However, as these two companies became more well-known, more and more people began to see them as a way, and perhaps the only way, for themselves to earn a living.

Now, hundreds of thousands of people across the country drive for Uber and Lyft full time and it is their primary source of income.

For those who haven’t joined in yet – work as a rideshare driver makes for an appealing option because they don’t require anything that traditional jobs require – namely a certain level of education and prior experience.

These companies will pretty much take anybody who comes along with a driver’s license, and who can meet a few basic requirements, and pass a criminal background check.


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Getting a Car for Rideshare Driving

Today, many people use their own personal vehicles for rideshare driving. Sometimes though, whether they don’t have an eligible vehicle or get into an accident, many drivers will actually buy, rent or lease a car for the sole purpose of driving for Uber and Lyft.

Let’s take a look at the options drivers have for obtaining a vehicle, when they don’t already own one or need one in a pinch.

The four main options are:

  • Owning an eligible vehicle
  • Purchasing a vehicle
  • Leasing a vehicle
  • Renting a vehicle

Obviously, there are pros and cons to each option, which we’ll dive deeper into below.

But first, get acquainted with each rideshare car option by taking a look at a quick overview we put together:

Purchasing a Vehicle for Uber and Lyft

Purchasing a vehicle for Uber or Lyft is obviously the best route if you can afford it.

Key Benefit: While you may have a car payment on the purchase, the car is yours without having to worry about mileage. In addition, the leasing and rental options will cost you roughly double what it costs to actually own a car, but with a purchase, you build equity in the vehicle, which is money back in your pocket if you decide to sell.

However, there are several factors you’ll need to consider when purchasing a car for the primary purpose of rideshare driving.

Income is Decreasing

Earnings from rideshare driving have decreased dramatically over the last few years. Glassdoor says driver earnings across the country average around $14-$15 per hour – before all expenses are taken into account.

Take $14.50 an hour and subtract possibly two gallons of gas ($5), and subtract another $1 for general vehicle maintenance, insurance, depreciation, wear and tear and other expenses and you’re down to about $8.50 an hour in real income to you.

So, you can see, you do not want to spend a lot of money on a car – if ridesharing is your primary purpose for purchasing it.

With the rental and leasing options, which we’ll look at in a minute, you’ll see that you end up paying about double what your monthly car and insurance payments would be if you purchased a vehicle. But in the end, you’re paying about the same either way.

When renting or leasing, you’ll pay the total expense of the car, including depreciation, up front.  When purchasing, a major portion of your total ownership expense, namely depreciation, is deferred until a later time – possibly several years down the road.

Depreciation

One of the largest and most overlooked expenses of car ownership is depreciation.

It’s easy to overlook because you can’t see it, feel it or hear it!  But it will come back to bite you eventually – it’s just a matter of when.

The easiest way to visualize depreciation is this…

Suppose that in 2014 you purchased a brand new Hyunda Sonata Hybrid for $26,000.  You drive full-time for Uber and Lyft with it for a couple of years, during which time you put 50,000 miles on it.

You go onto Kelly Blue Book to look up its value and you find out your beautiful Sonata, which still looks and drives like new is now only worth $12,000.  You have lost $14,000 over the last two years.  That $14,000 comes to $134 a week.

Now, let’s say you had a $420 monthly car payment and a $250 monthly insurance payment.  That comes to $670 a month or about $168 per week.

You know that leasing this same car for rideshare would cost about $300 a week and you wonder why leasing is so much higher.

Well, if you add the $134 weekly depreciation cost to your $168 weekly car payment and insurance costs, it comes to $302 per week!  Which puts owning a car in the same ballpark of what it would cost to lease a rideshare vehicle.

In other words, a large part of your rideshare rental or lease payment is going to pay for the depreciation of the car.  The dealer who owns the car has to pay this, so of course they are going to pass this cost along to their customers.

The difference with vehicle ownership is while you are constantly accumulating more and more depreciation costs (in this case finally amounting to $14,000), you don’t actually have to pay for it until you’re ready to get rid of the car.  It’s at that time that it will bite you.

When you go to trade it in or sell it, instead of being worth the original $26,000, it will only be worth about $12,000.  Now, you’ll pay the piper!

With leasing you paid him each and every week.  When you sell it, that’s when you will pay the cost of the $14,000 in depreciation.

But some people, probably most people, find this deferred expense easier to swallow than a high weekly payment.  But, there is a better way.

Buy Used

Let’s look at a slightly different scenario; you’re still going to buy a car, but this time you’re going to purchase a used one.

Let’s say you buy this same Sonata after it’s already two years old and has 50,000 miles on it and you purchase it for $12,000.

You keep it another two years, put another 50,000 miles on it and go to sell it.  Now, it will be worth approximately $8,400.  Your depreciation cost comes to just $3,600 over two years, compared to $14,000 if you had bought the car new!

$3,600 comes to just $35 a week instead of $134 – so purchasing a used car represents substantial savings.  It’s far cheaper in the long run than leasing or renting and we consider it the best option.

Now, look at this.

You’ve owned the same basic car for the same amount of time and you’ve earned the same amount with it.  But in the case of the new car, you had a huge $14,000 depreciation, in the case of the used car though, your depreciation cost only comes to $3,600.

You made a far larger profit on the used car than you would have with the new car.

In the screenshot below, you can see this working in reality.

The first image is what the car would be worth after two years and 50,000 miles.  You could purchase that car for around $12,000.

Then in the second image you can see what it would be worth two years after that with 100,000 miles on it and you see it would be worth only about $3,600 less than you paid for it.

Many drivers have gotten into two- and three-year leases only to find themselves unable to make the payments after the rideshare companies lowered rates or in some other way changed things so that they were no longer earning what they once did.

So, please be very careful getting into a long-term commitment in this industry that is changing so drastically and so rapidly.

With that said, if you still want to rent or lease, the options are…

Leasing a Vehicle for Uber and Lyft

Leasing an Uber or Lyft car is a great way for drivers to acquire an eligible vehicle without going all in from a cost perspective.

A vehicle lease typically covers depreciation and vehicle maintenance, allowing the driver to pay one simple price every month and work towards making at least that much when driving.

Key Benefit: One of the biggest advantages to leasing an Uber lease or a Lyft lease is that drivers won’t need to put as much cash down up front, or in the long-term. While they have no equity in the vehicle once the lease term expires, they don’t have to commit to buying a vehicle.

There are two ways to lease a car, and both fall under similar categories and requirements.

Standard Dealership Car Lease

The first way is the normal way any private individual would lease a car; from a dealership or private party. In this method of leasing, you go into a car dealership and tell them you’re looking to lease a vehicle.

We could go into more detail on this, but that would be an entire post’s worth of content along. Instead, just check out the vehicle lease basics by watching the video below.

The problem with leasing a vehicle from a car dealership, for ridesharing, is that consumer leases usually don’t allow you to use the car for any commercial purpose at all – and they’re very strict about that.

So, your very first rideshare trip will put you in violation of the lease terms.  This is probably not the way you want to go. Instead, leasing companies have sprung up that do nothing but lease cars to Uber, Lyft, and other on-demand drivers.

Rideshare Program Lease

The other method is to lease from a car dealership that specializes in livery and for-hire vehicles. Most large cities have such dealerships.

New York, for instance, has a lot of them.  Mid-size cities usually have one or two.  It is not within the scope of this article to list every commercial lessor in every city.  The best thing to do is search online for the ones in your city.

If you do decide to lease from one of these commercial lessors in your local area, remember that leasing is an option which is the equivalent of purchasing a brand new car at full sticker price, but where you pay all associated car expenses, including depreciation, insurance as well as the full purchase price of the car, up front, each week as you pay off the lease.

They will tell you all that is included in the price – but yes, it’s included in the price.  Meaning, the price you pay is enough to cover all those expenses.

The former leasing arm of Uber, Uber Xchange, is now defunct and with it went most of the options for leasing.

Renting has now become the de-facto substitute to owning.  So, let’s look at your rental options.

Renting a Vehicle for Uber and Lyft

The benefits of renting are that all the maintenance is taken care of and all car expenses are paid, including registration, vehicle insurance, and depreciation, etc.

Again though, just like in leasing, the price you pay is as high as it is because it includes enough to cover all these expenses.

Key Benefit: The real benefit to renting is that there is no long-term commitment involved.  Leasing used to require a 2-3 year commitment, but now you can rent a vehicle for as little as seven days, giving you a chance to test things out.

You can see for yourself what you can really make before you decide to make any kind of longer-term commitment.  There is no better way to know, there is no better research you can do on how much you will make and whether or not you’ll like it than to try it out for yourself.

Just keep in mind that this industry is very volatile and things can change dramatically and suddenly.  If you keep renting a car, you’ll be able to get out at a moment’s notice if things take a turn for the worse.

Hertz

Hertz is a great example of a company that is updating their business model to include the new on-demand companies.

With Hertz, you can rent a car from 7 days up to 28 days, giving drivers a variety of options to suit their needs.

You will get a basic mid-size vehicle, nothing fancy, just a typical Uber X type car – like a Toyota Corolla.  Prices start at $214 a week, not including taxes, fees, fuel costs or other additional charges.

  • You must be an approved Uber driver in order to rent from Hertz.
  • Your weekly payments will be taken directly out of your Uber earnings, so you must drive for Uber enough each week to make the weekly payments.
  • They will put a hold of $200 on your credit card, which is their way of taking a security deposit.
  • 24-hour advance reservation is required.
  • Hertz provides all insurance which applies when you’re online and offline with the Uber app.
  • All maintenance is included.
  • You are responsible for the repair costs of any damages that you caused.
  • Hertz provides 24-hour, 365-days a year of roadside assistance.

Hertz is available in these 11 cities:

  • Anaheim, CA
  • Atlanta, GA
  • Boston, MA
  • Chicago, IL
  • Denver, CO
  • Fort Lauderdale, FL
  • Fremont, CA
  • Los Angeles, CA
  • Miami, FL
  • New Orleans, LA
  • San Francisco, CA

GM’s Maven Gig

Maven Gig is GM’s new car rental service, specializing in renting to anyone and everyone who wants to earn money with a smartphone and a car.  That includes drivers for Uber and Lyft, as well as delivery companies such as GrubHub, DoorDash and Amazon Flex.

The good thing about Maven Gig is that it’s not tied to one company (the way Hertz is tied to Uber, for instance).  So, they don’t mind who you work for, which gives you the flexibility to work for whichever app is best for you.

Tip: Check out the video below to discover some great money-making strategies by using multiple apps:

Maven prices start at $189 per week and go up to $229 per week.  Typical cars you can choose from are the Chevy Cruze, Malibu and the all-electric Chevy Bolt.

Right now Maven Gig is only available in eight cities:

  • Baltimore
  • Boston
  • Detroit
  • Los Angeles
  • San Diego
  • San Francisco
  • Washington, D.C.

For a limited time Maven is offering free charging for its Bolt vehicle – which means you can drive without incurring any fuel cost at all.

You have to rent for a minimum of 7 days, but you are free to return the car anytime after that.  This could be a good way to check out rideshare driving to see if it’s right for you before making a longer-term commitment to it.

Lyft Express Drive

Lyft Express Drive is Lyft’s car rental program and it is available right now in 18 cities.

The program is actually provided by either GM Maven or Hertz so all the details, including applicable fees and rates, will be determined by which provider you go through and what city you’re in.

The rental period is flexible and there are no long-term commitments.  Insurance and maintenance, as with all rental programs, are included in the rental cost.

Prices vary by city, so it’s not possible to give a detailed breakdown on price here, but check with the Lyft site for your city to get the details for your city.

The cars have unlimited mileage and you can use the car for personal use.  You can also switch between cars, so if you have your own car but also rent a car through Lyft, you can switch back and forth between them.

You must be an eligible Lyft driver to access this program and you will initiate the rental process through Lyft’s Driver Dashboard.

If your car is provided through Hertz, you have to renew your weekly rental every seven days by going to the Driver Dashboard and hitting the “Renew” button.  You can do this for up to four weeks.

After four weeks you’ll have to show up at the Hertz office in-person to renew again.  Hertz will inspect the car and approve it, or perform service on it if needed.

If your car is provided through GM Maven, the rental period varies by city and you’ll have the option to renew via the app every few weeks.

One thing to note is that if your car is provided through Hertz or GM Maven and there are any damages to the car, you may be charged if they determine you were at fault.

HyreCar

HyreCar is an interesting option which is kind of like the Uber of car renting.

Rather than ridesharing, it’s like car sharing.  Regular people who own cars can put their car on HyreCar and offer it for rent.  It’s actually a great way for drivers who can’t work for a while to still make money off their car.

Related: Make Money By Renting Your Unused Car On Turo

If you own your own car and get sick or are going on a trip, why not try offering your car for rent while you’re gone!  On average, it can bring in a couple hundred dollars a week and should at least help you keep up with the car payments!

To rent from HyreCar all you have to do is go to their website and:

  • Enter your location and the dates you’d like to rent
  • Search among the available cars that will be presented
  • Click “Book Now” to request the vehicle. Owners have 24 hours to confirm or deny your request.  There are also cars that are available for “Instant Booking”, to help you avoid any chance of being denied by the car’s owner.
  • You make arrangements with the owner to pick up the car.
  • From HyreCar’s website you will upload the required documents, including your driver’s license – and that’s it.

HyreCar lets car owners set their own prices.  So, you’re more likely to find a good deal here than from one of the large rental companies that have fixed prices that are normally higher than what individuals are willing to rent their cars out for.

aGO

aGO is another fuel-free option offered only in Chicago.  They charge by the hour, starting at $5.50 with a minimum of 10 hours.  This would come to about $330 a week if you work six days.

You’ll get an all-electric Nissan Leaf so you won’t incur any fuel or charging costs – they take care of the charging.  They allow you to drive for any on-demand service you like.  They claim on their website that they’ll help you make more money and develop new skills, but they don’t say how.

One warning about aGO, though, is that they have very low ratings in the app store, and they have a lot of complaints.  You don’t get to keep the car 24 hours a day for a week at a time.  Once your shift of 10 hours is up you return the car to one of their locations.

You check-in for your shift at locations throughout Chicago to pick up (and drop off) your car.  You unlock the car with your smartphone, but a lot of users have complained that the smartphone unlocking process didn’t work and they ended up wasting a lot of time because they couldn’t get into the car.  So, proceed with caution on this one and check it out thoroughly before you try.

Wrapping Up

Overall, as you can clearly see, it’s hard to point you to which rideshare vehicle option you should choose. It really just depends on what point you’re at as a driver, how long you need the vehicle, which city you drive in, and other factors that don’t apply to everybody.

We did the best we could to outline everything for you, however, so hopefully you have a better idea of what you’re looking for when you need to make that decision.

What do you think of the leasing and purchase options available to drivers? Would you recommend a lease or outright purchase? Let us know in the comments below!

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