My passengers thinking maybe they could earn income as a ridesharing driver ask me what I think about the rental car programs sponsored by the big Ridesharing companies (TNCs or transportation network companies).
Today we will focus on the Lyft Flexdrive and Lyft ExpressDrive programs.
Lyft Flexdrive and ExpressDrive Rental Cars - Does Renting a Ridesharing Vehicle Make Sense?
Until recently my initial answer cuts straight to the point:
“Expect to pay $200-$250 per week for the long-term rental… plus the cost of gas… so renting probably doesn’t make sense financially unless you are planning to drive at least full-time hours… meaning 40+ per week.”
If we have a longer conversation about ridesharing driving using a rented vehicle, I’ll explain the weekly rental payment is deducted from your rideshare driving earnings and if you don’t earn enough to cover the cost the remainder is billed to your credit card… get sick; take days off; or don’t drive for whatever reason the long-term TNC weekly rental car programs like Lyft ExpressDrive could result in being worse off financially instead of better.
Most of my passengers asking me about the rentals either have a vehicle that doesn’t qualify (too old or is a 2-door) or don’t have a vehicle of their own because they are comfortable using public transportation or other options to get where they need to go… owning a vehicle is expensive.
Lyft Flexdrive Review - Ridesharing Vehicle Short-term Rental Program
In recent years the big-name rental car companies and a few new players have created the short-term ridesharing vehicle rental market and the article referenced for this blog reports Lyft announcing their all new short-term vehicle rental business Flexdrive Services, LLC:
“The ride-hailing company announced Thursday that it’s launching a rental service available in its main smartphone app that will work pretty much just like traditional car rental companies, starting in the San Francisco Bay Area and Los Angeles, California. The company will also provide renters with two $20 ride credits to help cover the cost of taking a Lyft to and from the pickup and drop-off points.”
Only available in two cities at launch, I expect we will see the new Flexdrive Services, LLC program spread to other U.S. cities.
Providing two Lyft ride credits of up to $20 each is brilliant… when thinking about the logistics of using a rented vehicle for my rideshare driving business I’ve wondered how I would get to and from the vehicle pickup point… at least at launch this Lyft car rental program has that piece figured out.
There are other benefits likely to make it easy to choose Lyft Flexdrive over other short-term rental options (quoted from the referenced article):
“Lyft is trying a couple things at launch beyond those ride credits to lure renters away from incumbents. For one thing, Lyft will allow people as young as 22 to rent, provided they have a valid driver’s license. There are no mileage limits, and Lyft says it will only charge the “local market rate” for gas, meaning renters won’t have to worry about filling up their cars before they drop them off. Cars can be taken for as little as one day or as long as two weeks.”
Setting the minimum age for Lyft rental cars at 22 is a big deal too… most rental companies require the driver to be at least 25 years old.
Unlimited miles is important (Lyft ExpressDrive program)… I wouldn’t suggest using a rental program that didn’t come with unlimited miles. When I drive a full day (8-10 hours online) in Denver, Colorado I typically put 200-250 miles on my 2006 Toyota Prius.
I love the idea that the renter won’t have to fill up the vehicle with gas at the end of the day… when I traveled for business this was often a hassle… and knowing I will only be charged “market rate” for fuel then why bother? A very nice program perk.
“One day or as long as two weeks…” fits right in with the flexibility of being a ridesharing driver. I could see myself getting a vehicle for a weekend of rideshare driving returning it on Monday.
The Lyft Flexdrive program seems to be well thought out.
Lyft Strategic management - Playing the Long Game
As I said in my blog a few weeks ago Lyft Driver Discount Vehicle Service Centers – A New Trend? Lyft appears to be patiently building a business to be the best it can be now and long into the future.
Personally, I think Lyft’s “long game” approach will pay off with continued growth and perhaps someday Lyft will be the dominate Ridesharing company in the United States.
And just like Lyft’s goal to make dependable vehicle maintenance cheaper for rideshare drivers who own their vehicles… Lyft’s plan to provide short term vehicle rentals makes a lot of business sense… I’ve seen research suggesting that about 30% of rideshare drivers in the United States are currently using a rented/leased vehicle to earn income as a ridesharing driver.
I could see the percentage of rideshare drivers using short-term rentals increasing because of the new Lyft car rental program… in part because getting a vehicle directly from Lyft removes the requirement to go to a third-party option… simple processes are more attractive.
With a direct-from-Lyft program it’s a safe bet the rented vehicle will be pre-registered and have the appropriate insurance paperwork. This is important because we wouldn’t want to waste any time dealing with paperwork or having any issues signing on to the Lyft driver application and starting to complete passenger trips.
Lyft Flexdrive Rental Program – Crunching the Numbers
So, let’s look at the financials for using the Lyft Flexdrive program to get on the road and earn…
My regular blog readers and anyone who has reviewed my Rideshare Earnings Case Study knows I consistently earn on average around $24 gross income for every hour I am online completing passenger trips or waiting for my next trip request.
The price to rent a qualifying vehicle for 24 hours is reportedly about $35 per day which competes well with other available short-term vehicle rentals.
The make and model of the vehicle really doesn’t matter since we don’t own it… the options reported in the referenced article look good to me:
Lyft says:
“…the Volkswagen Passat sedan and the Volkswagen Atlas SUV available to rent in San Francisco. The Mazda 3 sedan and Mazda CX-5 SUV will be the launch cars in Los Angeles.”
All good! All four vehicles average over 25 miles per gallon…
For these example calculations I’m assuming a full day of driving (8-10 hours) let’s assume about 250 miles so at 25 mpg about 10 gallons of fuel.
At the time of this writing the average price for a gallon of gas in the U.S. is $2.61 per gallon… meaning $26.10 for fuel.
Good news… no need to think about any other costs… $35 for the rental… $26.10 for fuel… the ride to and from the vehicle pickup/drop off is covered by Lyft ride vouchers… $61.10 total expenses for a full day (24 available hours) of earnings.
For your thinking I recommend not assuming you’ll earn $24 per hour or more… sometimes my average gross earnings for a day of driving are only $18 per hour… for our example calculations let’s say $20 average for every hour you are online completing passenger trips or waiting for your next trip.
If I were paying $35 to rent a vehicle for 24 hours I’d want to maximize my net profit so I’d plan to put about 10 hours on the road… at $20 an hour that means around $200 gross income minus $61.10 expense for a profit of $138.90 or just under $14 dollars an hour.
Obviously, it’s up to you how many hours you work… I could imagine picking up the vehicle say 4 p.m. and working 8 hours that evening and another 4 or more hours the next day before returning the vehicle by 4 p.m. the second day. Since expenses are fixed more gross income means more “take home pay.”
Become a Lyft Driver - Realities of Rideshare Driving
In my book, How to Be a Lyft and Uber Driver – The Unofficial Driver’s Manual, I walk readers through the realities of being a ridesharing driver including the fact that thinking about a rideshare driving business the same way we would think about a traditional hourly job can lead to unnecessary frustrations.
$14 an hour might not seem like a lot… but as I write in my book people who run their own businesses don’t tend to think about an hourly wage… instead they think about net profits.
In our example earnings calculations, you would be walking away with about $140 more cash than you had when you started.
My second book Driving for Uber and Lyft - How Much Can Drivers Earn? covers filing taxes as an Independent contractor ridesharing driver. For tax filing purposes 1099 independent contractors use IRS form Schedule C - Profit or Loss from Business to report income and related expenses.
Since you don’t own the rental vehicle you can’t write off the mileage but you can write off 100% of the $61.10 expense. Independent contractors like ridesharing drivers pay about 15.3% social security and Medicare taxes… in our example calculations that means $21.25 taxes for the day leaving $117.65 profit for 10 hours online so about $12 per hour “take home pay.”
Our example calculations assumed only $20 per hour, on a Friday or Saturday night driving in a big city you could earn more, especially if you had the knowledge of a driver with thousands of lifetime completed passenger trips with the information found in my book How to Be a Lyft and Uber Driver – The Unofficial Driver’s Manual.
As a ridesharing driver you choose when to work… no schedule to follow… no boss to listen to or ask permission for, well anything… you are the boss and with a short-term rental you also control the expenses too. You don’t have to budget new tires, brakes, oil changes, etc.
Of course, these example numbers are just my educated guesses… and it’s important to note, where I drive, Denver, Colorado, there is a metro-area population around 2.8 million potential customers… if you choose to drive in a smaller population market you might not earn $20+ gross income per hour and renting a vehicle to drive might not make financial sense for you.
Also true as Lyft rolls out their short-term vehicle rental program it’s likely they will focus on city/markets where rideshare driving is most profitable… in other words… we’ll likely only see Lyft’s Flexdrive rental program in cities with populations greater than one million people.
The beauty of this Gig economy “gig” is you call all the shots including deciding if being a ridesharing driver is right for you. Rideshare drivers aren’t “hired” in a traditional way, they qualify by having a mostly clean driving and criminal background… and of course a qualifying vehicle with appropriate insurance coverage.
A short-term rental would be a great way to see if rideshare driving is right for you… in your city… in your market.
In my second book: Driving for Uber and Lyft - How Much Can Drivers Earn? I cover all the math you need to calculate potential profits using any vehicle… including renting or a vehicle you own or choose to purchase.
Armed with the information in my books you’ll have more information than a driver with thousands of trips.
According to a Stanford University study of one million Uber drivers, a driver with 2500 completed trips will earn up to 14% more than a brand-new driver.
In my experience as a brand-new Lyft and Uber driver I wasted a lot of time (and gas) doing things that made absolutely no sense once I figured out the best ways to earn. What’s funny is the things I was doing came directly from my research on the internet. The advice I was following was posted by people claiming to be rideshare drivers making lots of money.
What I eventually realized is that these “rideshare drivers” were mostly trying to sign up new drivers in order to get the referral money from Lyft and Uber. The “information” they were posting was questionable at best and often times simply wrong.
I’ve been a full-time hours ridesharing driver since April of 2016 and as of this writing have completed 12,158 Uber passenger trips and another 2,663 Lyft passenger trips.
Following the step-by-step practices I’ve documented in my books I consistently earn average $24 per hour and I think just as important I have zero stress when I’m out on the road earning the income I need to pay my bills.
Back to Lyft’s Flexdrive short-term rental program… remember that it’s important to read all the terms of any contract… for example the referenced article does not say if the Lyft rental car can be used to complete Uber passenger trips as well as Lyft trips?
Uber Technologies Inc still commands most of the rideshare passenger business in America but in the past few years Lyft has been closing the gap.
Recently Lyft is claiming about 40% of the rideshare transportation passenger market in the United States with Uber commanding most of the remaining 60%.
In my real-world experience I’d say these numbers make sense… in the past year or so I get almost as many Lyft trips as I do from the Uber driver platform.
My book, How to Be a Lyft and Uber Driver – The Unofficial Driver’s Manual covers driving for Uber and Lyft at the same time to maximize your potential for completing one trip after the next with little or no breaks between rides… as a ridesharing driver time is without question money… I don’t get on the road hoping to catch up on my reading waiting for my next trip… if I’m online I want to be taking people where they are going… and of course earning income.
Obviously, I can’t predict exactly how much I’ll earn per hour during my next day of driving… any more than I can predict how much you will earn.
New Year’s Eve 2019 I drove about 9 hours and earned over $37 per hour gross income.
I almost always earn more than $24 gross per hour when I drive during the busiest times for passenger trips – evenings and weekends.
I’m excited about the Lyft Flexdrive short-term rental program and hope it comes to Denver soon.
During a recent snowstorm I stayed home because my Prius is not all-wheel drive… sure I enjoyed an unscheduled day off… but if I had easy access to an appropriate vehicle like the Volkswagen Atlas or Mazda CX-5 SUV I could have gotten out driving and I’m certain earned more than my $24 an hour average.
At Rideshare Business Guide it’s always my goal to provide meaningful answers for rideshare driving questions… I hope the information in this blog helps you make rideshare driving decisions that are right for you. This new unlimited mileage rental program from Lyft may be just the ticket to get you on the road as a ridesharing driver.