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 extra money on the side.
As the two companies became more well-known, more and more people started using Uber and Lyft as their sole source of income. Nowadays, of thousands of people around the world drive with Uber and Lyft full time.
Driving with Uber and Lyft appeals to those in-between jobs. Rideshare companies will take anybody with a driver’s license and a clean background check.
Today people use their own vehicles for rideshare driving. Sometimes though, Uber and Lyft drivers will buy, rent or lease a car for the sole purpose of rideshare driving.
Let’s take a look at the options that 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
- Leasing vs Purchasing
- Renting a vehicle
There are pros and cons to each. We’ll discuss these in the article below.
Purchasing a Vehicle for Uber and Lyft
Purchasing a vehicle for Uber or Lyft is obviously the best route if you can afford it.
However, there are a few factors you need to consider when purchasing a dedicated car for 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 another $1 for general vehicle maintenance, insurance, depreciation, wear and tear, and other expenses, and you’re down to about $8.50 an hour.
As you can see, you do not want to spend a lot of money on a car if rideshare is your primary purpose for purchasing it.
One of the largest and most overlooked expenses of car ownership is depreciation. Suppose that in 2014 you purchased a brand new Hyundai 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 to Kelly Blue Book and look up its value. 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.
Leasing the same car for rideshare would cost about $300 a week. If you add the $134 weekly depreciation cost to your $168 weekly car payment and insurance costs, it comes to $302 per week!
In other words, a large part of your monthly rental fee or lease payment goes towards covering the depreciation of the car.
The difference with vehicle ownership is even though you are constantly accumulating more and more depreciation costs, you don’t have to pay for it until you’re ready to get rid of the car. With leasing, you pay depreciation every week.
Some still find this deferred expense easier to swallow than high weekly payments.
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 $3,600 over two years—that’s far lower than $14,000 if you had bought the car new.
$3,600 comes to $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.
Leasing a Vehicle for Uber and Lyft
Leasing an Uber or Lyft car is still a great way for drivers to acquire an eligible vehicle without going all in from a cost perspective.
As discussed earlier, a lease typically covers depreciation and vehicle maintenance, allowing the driver to make one price every month (sans gas expenses).
There are two ways to lease a car, and both fall under similar categories and requirements.
Standard Dealership Car Lease
The first way is a standard car lease: in short, a lease 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.
For rideshare drivers, the problem with leasing a vehicle from a car dealership is that consumer leases usually prohibit using the leased car for commercial purposes.
Since your very first rideshare trip will put you in violation of the lease terms, standard leases are not the way to go. However, some leasing companies have sprung up that do nothing but lease cars to Uber, Lyft, and other rideshare drivers.
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Rideshare Program Lease
New York, for example, has a lot of these rideshare leasing companies. Mid-size cities usually have one or two. Search online to find rideshare leasing companies in your city.
If you do decide to lease from a commercial lessor in your local area, remember that leasing is an option which is the equivalent of purchasing a brand-new car at sticker price. But as discussed earlier, you pay all associated car expenses—including depreciation, insurance as well as the full purchase price of the car—up front as you pay off the lease.
Note: the former leasing arm of Uber, Uber Xchange, is now defunct.
Leasing vs Purchasing
So we’ve taken a look at leasing a car for rideshare, as well as purchasing a car for commercial purposes.
Before you make a final decision, how does purchasing stack up against purchasing?
It’s a complicated topic, so we’re going to turn to Sam Choi, one of our most experienced rideshare drivers, to break down the similarities and differences in this short video:
Renting a Vehicle for Uber and Lyft
The main benefit of renting is that all the maintenance is taken care of and all car expenses are paid. This includes registration, vehicle insurance, and depreciation.
As in leasing, the monthly price you pay is as high because it includes enough to cover all these expenses.
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 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.
Drivers will get a basic mid-size vehicle fit for UberX. Prices start at $214 a week, not including taxes, fees, fuel costs or other additional charges.
To rent from Hertz:
- 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.
- A 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:
- 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 any time after that. This is 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 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. Check the Lyft site for your city to get the details on renting a car for Lyft.
The cars have unlimited mileage and you can use the car for personal use too. 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. Further, 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, perform service on it if needed, and get you on your way.
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.
Note that if there’s are any damages to the car, you may be charged if they determine you were at fault.
HyreCar is an interesting option which is kind of like the Uber of car renting.
Regular people who own cars can put their car on HyreCar and offer it for rent. It’s a great way for drivers who can’t work for a while to still make money off their car.
If you own your own car and can’t drive, try offering your car for rent. 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 its website and:
- Enter your location and the dates you’d like to rent.
- Search for available cars.
- 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 is another fuel-free option offered only in Chicago. The company charges 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, meaning you won’t incur any fuel or charging costs. They even take care of the charging.
aGO lets you drive for any on-demand service you prefer. However, you don’t get to keep the car 24 hours a day. You must return the car to one of their locations once your shift of 10 hours is up.
Here’s how aGO works:
- Sign-in for your shift at locations throughout Chicago to pick up (and drop off) your car.
- Unlock the car with your smartphone.
One warning about aGO: they have very low ratings in the App Store. Users have complained that the smartphone unlocking process doesn’t work, so they ended up wasting a lot of time because they couldn’t get into the car. Proceed with caution on this one.
A Rideshare Option for Everyone
As you can see, it’s hard to say which rideshare vehicle option you should choose. It really depends on what point you’re at as a driver, how long you need the vehicle, the city you drive in, and other factors that don’t apply to everybody.
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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