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Is Driving for Uber and Lyft Right for you?

July 18, 2016

Manchester Pride Parade 2009

Driving for Uber or Lyft seems like a great gig, and it can be. But if you’re thinking of driving for a ride share service, there are a lot of things to consider before getting the Batmobile all gassed up and on the road. Here is a basic rundown on driving for a ride sharing service and a litmus test for deciding if it’s right for you.

The Basics: How Uber and Lyft work

Uber and Lyft are app based ride sharing services connecting people who need a ride with people providing rides. As a driver, you turn on the app on your phone and the system will send you pick up requests based on your current location. It’s your choice to decline or accept ride requests and riders (or passengers) pay with a credit card they have stored in the providers system.

The provider (Uber or Lyft) tracks your rides, and pays drivers via weekly electronic bank transfers. The driver’s share is typically 80% of each fare. Both riders and drivers are rated by each other on a 5 star system which helps to keep everyone using the service informed and in check.

Sound good so far? Ok, let’s see if you qualify to be a driver.

Qualifications for becoming an Uber or Lyft Driver

Driver qualifications will vary from state to state for both Uber and Lyft so be sure to check out their websites to get educated on your state, but qualifying is pretty simple. Essentially, this is what it takes:

  • You must be 21 years of age with at least 3 years driving experience
  • You must have a driver license, in-state car insurance, and a valid vehicle registration
  • You must pass a background check
  • You must have a clean driving record
  • Vehicle requirements vary from state to state but generally your vehicle must have 4 doors and be a 2001 or newer for Uber and a 2004 or newer for Lyft

Do you fit the bill? If so, let’s get down to the nitty gritty.

 How much can I make as a driver?

This is the million dollar question for most people exploring Uber or Lyft, and frankly there is no hard number for an answer. On average, drivers can make anywhere from $9-$19 per hour. I know, it’s a wide range. At the higher end you could make a living, and at the lower end you could make less than minimum wage.

So, what is it that determines where you’d fall in this range? It’s basically two things: Where you drive and when you drive.

Where you drive: Cities like Los Angeles, Boston, and New York have more people so therefore there are more people in need of rides (makes sense). Cities that are highly congested, have traffic or parking woes that deter casual driving (as in most major cities), or locations that attract a large tourist base are the most lucrative places to drive.

When you drive: There are definitely peak times for ride sharing when you land mores rides per hour, and both Uber and Lyft have a form of “surge pricing” during peak hours when drivers earn fractionally higher rates for their service. If you have flexibility and can be available during these peak times, you’ll get more rides that pay a higher rate and you’ll make more money.

*The most successful drivers will often drive to high volume areas close to tourist traps and airports, turn on their app and take fares from there.

Think you can make some money driving? That’s great. Let’s factor in your costs.

What does it cost to be a ride share driver?

Once you determine how much you can earn in fares and you think it’d be worth it, make some projections on what your costs will be to give you a true picture of what you’ll come out with at the end of the day.

Here are the primary costs associated with driving for a living:

  • Gas:  Calculate your vehicle’s actual gas mileage and then determine how much gas will cost per mile based on the price of gas in your area. If you own a hybrid, don’t bother, you’re good.
  • Vehicle maintenance and depreciation: Regular maintenance intervals will be accelerated as you rack up miles on your car. You’ll replace more tires, change more oil, and have more services done. Also, the value of your vehicle will depreciate with every mile you put on it so keep that in mind as well.
  • Insurance: You will need additional automobile insurance if you plan to drive for a ride share service. Both Uber and Lyft provide coverage for drivers while you are driving for the service but you’ll still need to report to your insurance carrier that you are driving for one of these services and ensure that you have appropriate gap coverage for the time that you spend in your car in between rides.
  • Taxes: Ride share drivers are independent contractors, meaning you do not have taxes deducted from your pay and you will have to calculate and pay taxes at the end of the year. This also means that you have to be great at record keeping. Here are some tax tips from Turbo Tax regarding driving for a ride share company. It’s also a good idea to consult with a tax professional to get an idea of what your specific tax situation will look like.

For many of you, driving for Uber or Lyft just won’t make fiscal sense, or it may be borderline, so do the research and crunch the numbers before you dive in.  For those of you who do have the right combination of time, place, and car, go ahead and take the plunge. Either Uber or Lyft could be a great money maker for you. Or you could really go for it and drive for both (it’s allowed). So…to the bat cave!

Patty Patrone-Onofrio

Patty Patrone-Onofrio                                                                                                                       Personal Lines Account Manager                                                                                               ppatrone-onofrio@foundersgrp.com

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