Drivers Live in Cars Due to Low Pay

"The downside of Lyft's car rental program

Unable to make enough income, some drivers live in their cars"

The headline accurately describes some of the article’s content:

“The downside of Lyft's car rental program”

The article provides valuable information about Lyft (and Uber’s) rental car programs.

The article’s subtitle is not false BUT it suggests an inaccurate picture of Lyft/Uber driver earnings as so low drivers may be forced to live in their cars.

Unable to make enough income, some drivers live in their cars

For three years I’ve read nearly every news article about the rideshare driving industry so I’m used to the negativity but it still bugs the crap out of me to see rideshare driving called out as if the same conversations don’t apply to other ways to earn income… specifically income from traditional hourly or salaried jobs.

The cost of living is high everywhere, millions of Americans are living paycheck to paycheck, not just rideshare drivers. 

I have sympathy for anyone who has to live in their personal vehicle (the article says at least 15,000 people in LA county are living in a personal vehicle) but a news article connecting rideshare driving to living in a vehicle is not accurate reporting IMO.

At best this article is sloppy reporting or maybe it is pushing an agenda connecting a sad topic (living in a personal vehicle) to good information about renting a vehicle to be a rideshare driver?

So first things first… let’s agree that how much an individual needs to cover their monthly expenses is different from one person to the next… now we can get past the article’s negativity and talk about the rental car programs. 

The best vehicle option for being a rideshare driver will always be a vehicle you own outright.  It also makes sense for the vehicle to be at least 5 years old because those first 5 years is when personal cars and trucks lose resale value the fastest.  Obviously good gas mileage and low average maintenance cost are important.

In order to figure out if renting a vehicle makes sense for your situation know that in most medium to large cities rideshare drivers earn around $20 per hour before expenses.

From the article:

“On average, Express Drivers renters earn over $20 per hour,” a Lyft spokesman said in a statement. 

I hope it is obvious to everyone that no one can guarantee how much you will earn. It could be more, it could be less.

Do some serious thinking before jumping into a rental agreement based on the marketing hype of the vehicle rental company (“…earn over $20 per hour …”), especially if the contract is long-term.

So assuming most drivers earn gross income of about $20 per hour, what will be very different from one rideshare driver to the next is the expense of the vehicle.  

Using a vehicle you own, expenses (total cost of ownership) for a car or truck range from around $0.15 a mile to over $0.40 cents per mile. 

In my book The Business of Rideshare Driving – Calculating (your) Profits I provide an easy to follow, step-by-step process to determine how much any vehicle costs to drive for rideshare driving or personal use.

Right now we’re talking about the rental car programs directly-sponsored by Uber and Lyft (and rental programs Uber/Lyft recommend.)

The referenced article provides some examples of the terms and conditions found in the rental car contracts BUT the only terms and conditions that matter will be on a contract you plan to sign… examples terms and conditions in this article are exactly that… examples.

What follows here are some ideas that I hope will help you decide if a rental is right for your situation.

> I’ve been driving for over 3 years and over the course of a week/month/etc. consistently average between 2-3 trips per hour.  This means if the rental contract requires you to drive a minimum of 20 trips per week figure about 10 hours of driving.

> The article has multiple examples of drivers in the rental car programs being paid mileage/time rates that are less per mile compared to drivers who aren’t renting a vehicle.  Read contracts carefully, ask questions, it doesn’t matter if paying rental program drivers less than other drivers is “right” or not… you get what you agree to when you sign.

> The article puts the range of rental car cost from $219 - $479 per week.  ($479 is in New York City so $1,916 per month… can’t imagine how that would make sense?)  Assuming earnings of around $20 per hour you’re going to be driving 10-15 hours or more just to cover the cost of the rental.  You haven’t earned anything until you cover the cost of the rental.

> The article also says $160 range for a rental/lease from a dealership.  Certainly better than over $200 but if Uber/Lyft lose money renting at $200+ per week… I’d ask “Why is yours so much cheaper?”  I’m guessing terms might include a longer commitment; no cash back bonus for completing a certain number of rides; additional cost for higher mileage; etc.

> Another possibility is that the rental cost from Uber/Lyft includes rideshare insurance while the rental from a dealership DOES NOT. I’m not sure if rideshare supplemental insurance can be purchased for a rental vehicle. I suspect that the terms of the rental agreement from a dealership specifically prohibit any commercial usage of the rental vehicle. If that is the case then the rideshare driver could find themselves fully liable for not only the physical injuries and property damage resulting from an accident, they could also find themselves on the hook for the full cost of replacing the rental vehicle. Again, do your research carefully before renting a vehicle for rideshare driving.

> Look carefully at the contract to understand the cost of returning the vehicle and exactly how long is the commitment?  Is the commitment a week or a month or longer?  Regardless of how hopeful and excited you are about rideshare driving, be very careful making a long-term financial commitment based on hope and excitement.

> The article quoted one driver spending $60 a day for gas.  That sounds really high and if I were going to rent a car I’d want to choose one that gets the best possible miles per gallon.  My Prius averages 43 mpg and in Denver, $60 of gas covers about 920 miles (May 2019.)  On a really big earning day I drive around 300 miles.  $60 per day for gas must mean 8-12 hours of driving in a full-sized SUV getting around 15 mpg?  If a Prius gets the job done then a full-sized SUV is not the best choice? [As an aside, this is one of the common mistakes that rideshare drivers make. They assume they will drive nothing but UberBlack and UberLX in their Cadillac Escalade (or 5 series BMW) but there isn’t enough demand for those services so they end up driving UberX passengers in a vehicle that is very expensive to own and operate.]

> If you’re looking at a rental I assume a salesperson will be helping you with the contract… probably explaining the “benefits” of the program.  When the salesperson talks about reducing the cost of the rental with bonuses for driving a certain number of rides… well, I’d want to know if the bonus terms are always the same or if the number of rides can change?

In another article I read about someone choosing to rideshare drive on a traditional vehicle lease.  That driver was worried about having the money to buy the vehicle out, a large balloon payment at the lease’s three-year mark because the mileage from rideshare driving will be way over the lease agreement limits.  

He is right to be concerned about the mileage and I’d be worried too!  Any rental/lease program that doesn’t provide unlimited miles probably does not make sense for rideshare driving?

This quote from the article echoes one of my thoughts about using a rental vehicle to be a rideshare driver:

“…Express Drive is designed for people who are able to work full time and put in the hours to qualify for the bonuses…”

Rideshare driving is a viable way to earn meaningful income. Having relatively high vehicle expenses doesn’t mean that rideshare driving no longer makes sense, but like any business venture, higher expenses means lower take-home pay.

Here’s the thing… it’s not my goal to talk anyone out of trying rideshare driving by saying renting a vehicle never makes sense… renting a vehicle short-term could make sense if you want to give rideshare driving a try… but if you decide that rideshare driving is right for you long-term I strongly suggest that your goal should be having the lowest possible vehicle expense – that lowest cost vehicle is NEVER going to be the rental.

"The downside of Lyft's car rental program

Unable to make enough income, some drivers live in their cars"

Drivers Live in Cars Due to Low Pay