Financing Your Rideshare Vehicle

March 4, 2018

Who doesn’t love the idea of being your own boss? You can set your own hours and work when you’re in the mood, it’s totally up to you. A ridesharing gig is one of the easiest ways to start making money now and you don’t need years of traditional schooling or training. All you need is a car and some time and you’re good to go.

Companies like Uber, Lyft, DoorDash, and Amazon Flex make it super easy to get started. It’s even easier if you already have a car and you can do your own maintenance. But, if you have a high monthly payment on your car, it might make sense to refinance your current auto loan or just buy a new car specifically for ridesharing. Here are the few things you should take into consideration before jumping in:

How Much Money Can I Make?

This is the first question we all ask when looking at a new endeavor. Uber drivers have reported earning as much as $90,000 per year! Now, $90,000 is definitely on the high end, but on average drivers can earn between $35,000 and $55,000 annually. But there are a lot of variables that you need to ask yourself before jumping in. Which rideshare program are you using, what’s the drivers location, what time of the day are you driving, how many hours per day, what’s the price of gas, how many MPG’s does your car get, how’s your car insurance, do you do your own maintenance, what’s your car payment? These are just some of the questions you need to take into consideration. To make things a little simpler, we’ll break those annual salaries down to an hourly rate and combine data from several studies.

According to SherpaShare (rideshare analytics company), the average trip for Uber/Lyft drivers is 4.54 miles, 12.5 minutes, and the driver earns anywhere from ~$11 to $29 per trip. This again depends on location, type of ride, etc. But, drivers earned an average of $19/hour before expenses if you’re located in the top 20 highest paying cities (San Francisco, New York, Miami, Boston, etc.). We’ll assume expenses on average would be ~20% of your earnings (gas, insurance, maintenance, etc.). This brings us to an hourly after expenses pay of roughly $15.20/hour. Keep in mind there are a lot of variables we’re estimating, so you may need to make some adjustments to your own situation.

Which Car Should I Get?

If you are getting a car specifically for ridesharing purposes, you’ll probably want something reliable, economical, with good gas mileage, and a good warranty at the minimum. Here are some strong contenders to consider:

  • Hyundai Elantra
  • Chevy Cruze
  • Ford Fusion
  • Honda Accord
  • Honda Civic
  • Kia Forte
  • Toyota Corolla
  • Toyota Prius

These all have fuel economy in the ~28 to ~50 mpg range, they’re priced right, and all have excellent reliability ratings. For our use case, let’s look for a used Toyota Prius. In my area (Charlotte, NC), I can get a few year old Prius with less than 60k miles for an average price of $15,891.

If I were to get an auto loan at 4%, over 60 months, our monthly payment would be less than $300/month. Not too bad for putting $0 down.

Put it All Together

About 20 hours per month - that’s all it would take to pay off your car and your expenses for the vehicle ($293/ $15.20/hr = 19.27 hrs). Anything above that is just extra cash in your pocket. Now, let’s assume you worked 40 hours per week for 4 weeks. That would equate to ~$2432/month in earnings (after expenses, but before car payment, $15.20/hr * 40 hrs * 4 weeks = $2432/month).

Getting a new car loan or refinancing your current auto loan can help you become your own boss with a ridesharing program.