Overlooked Costs When Considering to Become a Ride Share Driver
Driving for ride share companies seems like an amazing side gig option, except no one thinks of the other associated costs that go with that type of work. It feels especially questionable when you think of all the other many drivers in your area, popping up in your app, who are also allegedly making the same amount (on average, the companies boast their drivers make between $17 an hour to $20 an hour).
Here are some of the overlooked costs that go into becoming a ride share driver.
The Unpredictable Future
One of the biggest costs come from the things you can’t foresee, such as needing repairs or the worth of your car when you decide to sell it. You won’t be able to know if your car is going to need a major repair or not, and often drivers only look at costs like gas, oil changes, and minor repairs.
Additionally, as you drive more and more on your shifts, you’ll continue rack up miles on your vehicle, which will lead to more issues and repairs needed on your car. Some drivers can get up to 30,000 or 40,000 miles per year on their cars from the driving they do, which will end up quickly affecting your car. The average trip is between two and three miles, so if you’re grabbing enough back to back rides in one night or weekend, it ends up adding up. Some drivers find themselves replacing their tires often, having to do bigger oil overhauls, and other annual repairs that they otherwise would not need to do.
Often drivers will need to upgrade their auto insurance to accommodate their driving schedules. Some companies offer commercial liability policies that cover up to $1 million plus crashes. Unfortunately, a personal auto insurance policy won’t cover you for what you need, so drivers will need to upgrade their policies or you can buy supplemental insurance to cover ride sharing services.
According to Credit Karma, “Auto insurance company Safeco explains that commercial insurance provided by Uber or Lyft doesn’t cover an on-duty driver who’s between passengers. … Your personal auto insurance isn’t in effect when your ride-hailing app is on, potentially leaving you with a gap in coverage.”
Like with a personal auto insurance policy, your costs will vary based on your location, age, vehicle type, past driving history, and other various factors.
Outside of large repairs needed for your car, you’ll have to consider the costs like the weekly things, such as gas costs, costs for tolls, permits, licenses, and other minor costs. Those things add up after a while. Even though the tolls will be added as an extra surcharge into the passenger’s bill, you’ll still have to pay for all the aspects of your day-to-day charges. If you drive a hybrid vehicle, you may in better shape for weekly costs.
You might also need to consider costs that go into leases or car payments, especially if you lease your car. If you are looking into driving full-time, leasing a specific car for your ride sharing service may be an option to consider. This way you could lease a luxury vehicle and make more money by offering the upgraded ride share service that most companies offer.
Through car rentals, you don’t need to worry about additional costs and there are certain rentals that work with ride sharing companies. You need to consider what is best for your driving situation.
The smartphone is pretty much your most integral part of being a ride share driver outside of your vehicle. To become a ride share driver, you’ll need to have a smartphone that’s capable of handling apps. To be a Lyft driver, you either need an iPhone or an Android while Uber requires drivers to have an iPhone 5 or newer and an Android 4.0 or newer.
You’ll also likely see your data use increase since you can’t connect to Wi-Fi in a moving car. For instance, if you have Verizon and go over your data plan, you’ll end up paying $15 for every GB of data that you go over in your plan, despite whatever limits you have in place. On average, a phone bill can be around $137 per month, and if you’re constantly going over your data limit then you’ll end up paying a whole lot more.
As far as paying your phone, these companies won’t upgrade your phone for you or pay for you to get a new phone. They do, however, offer discounts. Uber and Lyft provide discounts to any driver who has AT&T, Sprint, and Verizon of up to 15 to 18 percent on your monthly bill.
Since ride share drivers aren’t full time employees and are instead contract workers, they don’t receive benefits from their employers. They don’t get healthcare, any sort of retirement 401(k), or any other insurances like life insurance.
Uber offers a connection with Betterment to set its drivers up with an IRA retirement account. They also work with AutoZone, Firestone, Maaco, Meineke, Midas, Jiffy Lube, and Valvoline on oil changes, tires, and other products and services for cars. Lyft drivers receive a 20 percent discount on roadside assistance through Allstate. And additionally, Lyft drivers can receive a discount on gas from Shell gas stations through a rewards program.
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