Loans for Uber Drivers: Actionable Ways To Finance Your Rideshare Business
A decade ago, many people would have fought against the idea of entering a stranger’s car.
Today, Uber, the ridesharing company, is responsible for offering a decent income to many drivers.
Uber gives people with a driver’s license the opportunity to earn far above minimum wage.
It all sounds pretty straightforward.
But, it’s far from it.
In addition to a valid driver’s license, you’ll need a car and it will need to meet Uber’s vehicle requirements.
The sheer cost of buying and maintaining a vehicle is why loans for Uber drivers are a huge talking point.
By taking out a loan, you can get the extra money you need to finance buying a vehicle or upgrading one.
Personal loans can also help Uber drivers cover vehicle maintenance costs.
Here, we’ll discuss all you need to know about loans for Uber drivers.
Take the first step to developing a financial plan by reading the rest of this blog.
Do Uber Drivers Qualify for Loans?
Yes, Uber drivers qualify for loans.
The only puzzle that needs solving is whether a loan is the right move.
Unfortunately, it’s a puzzle you’ll have to solve yourself.
If you plan to supplement a stable income by driving with Uber, a loan is ideal.
It means you’ll always have your income for support with bank payments.
It’s unlikely you’ll have any problem keeping up with bank payments and still making ends meet.
If Uber is your primary source of income, you’ll need to consider your options.
Start by researching the income potential for Uber drivers in your area.
Your research will help you answer the question of whether you’ll be able to meet loan payments and still have enough to live decently.
It’s a decision that needs careful contemplation.
Loans for Uber drivers are fixed borrowing schemes.
And, the ridesharing business is fluid.
Car payments come with zero consideration for slow months.
Typical Loan Requirements for Uber Drivers
Here’s what you need to have before considering loans for Uber Drivers:
A Decent Credit Score
Your credit score is the primary determinant of how much of a car loan you can get.
Along with your credit report, your credit score indicates the size of monthly payments you can afford.
A decent credit score isn’t an absolute must-have.
It just makes it easier to get a personal car loan.
Although it’ll take some searching on your part, there are financial establishments that provide car loans to Uber drivers with a bad credit score.
Financing or Leasing
Before getting a car loan, you should decide on which payment method you’ll prefer.
Uber drivers looking to use newer models will prefer leasing.
It means the dealership will offer cheaper payments.
Depending on your situation, it may be better to go with the financing option.
Buying a car offers better interest rates.
Plus, it means you have the option of putting up the vehicle as equity.
Your Choice of Certified Pre-Owned Vehicles
It’s no news that Uber has preset standards every driver’s vehicle has to meet.
But, if you’re looking to buy a car by leveraging loans for Uber drivers, consider certified pre-owned vehicles.
In most cases, the vehicle will be under ten years old while offering low mileage.
It’ll also come with a valid assessment certificate.
Reasons Uber Drivers Might Need a Loan
Without a vehicle in excellent condition, you can’t work as an Uber driver.
Owning a car while working in the ridesharing business will come with several costs.
Here’s what we mean:
1. Upgrading a Vehicle
Uber’s first requirement for every driver is that the car must be less than ten years old.
In addition to age, the vehicle must be in “great condition.”
It should be devoid of any blemishes and appearance problems.
Suppose you can’t buy a new car.
The next best option is to upgrade a vehicle.
Uber drivers may need a loan to offset the cost of fixing damage to the vehicle.
You may also need to upgrade vehicle parts to meet Uber’s requirements.
2. Vehicle Maintenance
If you have a car in great condition, regular maintenance will be necessary to keep it so.
For example, you may need a loan to carry out costly repairs on your car.
3. Additional Working Capital
As a rideshare driver, there are certain mini-investments you’ll have to make, even before you start earning.
For instance, you’ll need to buy gas for your vehicle.
You may also need to pay toll fares while on a trip.
A loan is a great way for Uber drivers to get capital to keep the work going.
4. Stability for Cyclical Income Volatility
Your income will vary from month to month depending on how many working hours you put in, the area you work in, and other variables.
Income-wise, the ride-sharing business can be quite volatile.
A financial loan can help you ride out periods of downturn and ensure cyclical income stability.
Types of Loans for Uber Drivers
Now that you know why you need car loans for Uber drivers, below are the options available to you.
1. SBA Loans
Thanks to the CARES Act, the Small Business Administration (SBA) designed loan programs to support small business owners and entrepreneurs in the country.
The financial support extends to independent contractors, sole proprietors, and self-employed persons.
Using the criteria above, Uber drivers qualify for this loan.
The only snag is the SBA is currently without funding for this loan program.
While SBA loans are unavailable right now, they should be available soon.
2. Secured Car Loans
Secured car loans use the vehicle you’re looking to purchase as collateral.
They are also convenient and fast.
Since the car is collateral, you won’t necessarily need to have the best credit score to get approval for a secured car loan.
3. Personal Loans
Uber drivers can get personal loans for any reason.
If you have decent credit or collateral, you may get lower interest rates on your loans.
Whether you’re looking to finance expensive car repairs or need money to buy six months’ worth of fuel, personal loans can be pretty beneficial for Uber drivers.
4. Bad Credit Loans
As far as loans for Uber drivers go, lousy credit history isn’t the end of the world.
In any other industry, you’ll likely have to take a ton of rejections.
Because you have bad credit, financial institutions will deem you unreliable.
Bad credit loans are an option if banks are not willing to take a chance on you.
This loan category is not a function of your credit.
All lenders want to know is whether or not you can pay back.
The downside to bad credit loans is that they come with relatively high interest rates.
For first-time rideshare drivers looking to finance the purchase of a vehicle, it may not be the way to go.
5. Vehicle Financing (through Uber)
Uber doesn’t give its employees car loans.
A few years ago, they were running a vehicle leasing scheme.
It had many issues, including high rates, zero consideration of driver credit, and monthly income deductions — all these issues culminated in an FTC complaint.
The vehicle leasing scheme is defunct.
It allows drivers to rent vehicles by the hour.
This vehicle financing option is an excellent fit for first-timers or drivers looking to keep working while their car is getting repairs.
6. Payday Loans
Uber offers a cash advance program for drivers with a proven track record to cover urgent expenses.
Payday loans are the perfect buffer to keep your car in top condition.
The best part is that it doesn’t have to be from Uber.
There are financial institutions across the country that offer payday loans to Uber drivers.
The only talking point is that these loans come with high interest rates.
Taking Uber fares into account, you’ll have to work about 100 hours every week to pay them off comfortably.
Take Uber’s payday loan program as an example.
To pay off the loan, Uber will deduct about 15% of your monthly income.
Since they already take about 20% of driver earnings, payday loans may not be the best option.
7. Credit Cards
Credit cards are the best loan option for Uber drivers looking to offset small bills from time to time.
Credit cards are a straightforward route to a line of credit for making purchases, buying gas, and paying for pressing repairs.
Credit cards usually have a minimum payment limit.
To stay afloat, you need to pay the minimum amount before the designated due date.
Frequently Asked Questions
We understand that car loans for Uber drivers can be a foreign area for many people. Below are answers to common questions.
Do Uber Drivers Easily Get Loans and Credit Cards in the United States?
Yes, Uber drivers can quickly get credit cards and loans in the United States.
You do not need a minimum credit score, and if you have at least an average credit score, it’s doubly easier to get financial assistance.
Does Uber Do Cash Advances?
Uber pioneered its Advance Pay scheme in 2016.
It provides new drivers with cash advances to get started and thrive as active drivers.
Is Uber Rental Worth it?
Uber rental is worth it if you’re looking to try Uber with zero risks.
Different cities across the US have varying demands for ridesharing drivers.
Consequently, they have different income levels.
Uber’s rental program allows you to test the waters and determine if a long-term investment will pay dividends.
If you can’t afford to buy a vehicle that meets Uber’s standards, then rental is a good option.
Loans for Uber drivers are a significant investment.
You’ll also have to cover down payments, insurance, and related fees.
Uber drivers looking to avoid these fees can go the rental route.
Uber rental is worth it if you have issues meeting the qualifications for a financing or leasing option.
It’s a straightforward option to get a car that meets Uber’s minimum qualifications.
If you’re already an Uber driver, Uber rental is the ideal stop-gap for when your car is in the shop.
By renting a vehicle for a few days, you can keep the income rolling in while you repair your car.
What Apps Give Cash Advances?
Short-term loans, low-interest rates, and quick cash, these apps tick all the boxes.
With the availability of different loan vehicles, money shouldn’t stop you from becoming an Uber driver.
Above, we have highlighted loan options for Uber drivers looking to buy a car, carry out upgrades, or costly repairs.
Even if you’re looking for a line of credit to maintain daily working capital, there’s an option for you!