Becoming an Uber driver can be a great way to earn money in your spare time or earn a paycheck while you are looking for full-time work. You can set your hours and decide which fares to take and which to pass on. If you are going to be an Uber driver, should you rent your vehicle or finance it?
Why Finance Your Uber Vehicle?
Financing your vehicle may be best for those who are planning on using their vehicle for personal use as well as driving customers around. For those who have good credit, it may be possible to pay 0 percent interest on any loan that you get from a bank or a dealer.
This will lower your monthly payment, which may help you build equity faster on a depreciating asset. It also means that you get to keep more of each fare that you get instead of giving that money to your lender.
Why Rent an Uber Vehicle?
Renting an Uber vehicle is ideal for those who don’t have a car of their own or may not want to use their personal vehicle to transport passengers in.
By renting, you generally lock yourself into a flat fee to obtain a vehicle for anywhere from a single day to a single month. Once the rental period is over, you simply return the vehicle and use your Uber profits to either rent another car or buy one of your own.
How Often Do You Drive?
One question that you should ask yourself before choosing to rent or finance an Uber vehicle is how often you plan to drive. If you only take fares once a week or once a month to make a few extra bucks, it may make more sense to rent.
However, if you drive on a regular basis each day or each week, it may make sense to finance the car outright.
How Hard Are You on Your Cars?
When you rent a vehicle, you are generally responsible for any excess wear that you put on it. Therefore, if you like to drive fast, break hard or have a propensity to back into things, it may be best to acquire your own vehicle.
In many cases, drivers tend to go harder on a rental compared to their own vehicle because they don’t have to make the repairs, which could actually increase your odds of creating excess wear.
Do You Care About the Type of Car That You Drive?
If you choose to rent a vehicle, you may be limited by what Uber or other rental companies in your area have available. This means that you may be stuck with a small economy car as opposed to the Hummer or Lamborghini you have always dreamed of driving.
However, it should be noted that luxury vehicles get fewer miles per gallon compared to economy cars, which means that you stand to make less per ride by foregoing the sensible option.
Can You Afford a Potential Insurance Premium Increase?
Insurance companies don’t always like the thought that you are using your car as part of a business venture. This is because the extra driving puts extra miles on the car, which could reduce its useful life or increase the likelihood of repairs.
Therefore, it may be in your best interest to rent a car and let Uber take care of insuring the car when it is being used to transport a customer.
You Can Leverage a Vehicle That You Purchase
Purchasing a vehicle may be better than leasing or renting because you may be able to use it to secure a loan. For instance, you may use it as collateral to get a personal loan to pay your past due tax debt or to get an online title loan to make payroll or keep the lights on this month.
There are many variables that should be taken into account when you choose to rent or finance your Uber vehicle. It may be a good idea to use a calculator to compare the total cost of each option. Additionally, you should consider your driving style as well as how often you would use the vehicle when making your decision.