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7 min read

    7 min read

    If you’re considering getting a car for rideshare, you may be wondering if you’re better off renting or buying a car. Senior RSG contributor Jay Cradeur breaks down how he made the decision to rent vs. buy, and how you can calculate your expenses too, below.

    The car I drove for the first three years of my rideshare career was a leased 2013 blue Toyota Prius.  I knew that I was going to be a full time driver and it made intuitive sense to me that putting that much wear and tear on somebody else’s car (not mine) would be financially advantageous.  I also created a spreadsheet to give me a financial snapshot to support my intuition.

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    If you’ve ever wondered if it’s more financially beneficial to use your own car vs. renting, this article is for you. Below, I will look at the pros and cons today of owning a vehicle versus renting a car through the Fair for Uber Car Program.

    What Are The Differences Between Owning and Renting a Car for Rideshare?

    When you buy a car, you own it.  Typically, you will need a fairly decent credit score, a bit of money for a down payment, and a reliable income stream to make the monthly payments until the car is paid off. If you’re thinking about buying a car for rideshare, take a look at our car buying guide for drivers here.

    In addition to the car payment, you will need to secure car insurance.  If you are a rideshare driver, you will need to purchase rideshare insurance.  If the car breaks down, it is on you to make all repairs and maintenance.  Renting, on the other hand, is much simpler since the term of the agreement is much shorter.

    The Fair for Uber Car Program allows you to rent a car for as little as one week.  You will need a small deposit of $195 and the first week’s payment of $195 plus tax and with that, you can get a car and begin driving for Uber.  The price of $195 plus tax (approximately $211 in California) also includes all your rideshare insurance, unlimited miles, and routine maintenance.

    Interested in signing up with Fair? You can get started using our affiliate links below:

    Pros of Owning Your Own Car

    You own the car.  You can select the exact car your you want.  You can select the make, model, color, interior, and specific features and drive it off the lot.  Once it is paid off, it is your asset.  You will also have a car loan on your credit report which over time will increase your credit score. You can also apply the full IRS mileage deduction of 58.5 cents per business mile.

    Cons of Owning Your Own Car

    If you are a rideshare driver, you will put a great number of miles on your car causing rapid value depreciation. You will also have to pay to maintain your car with regular oil changes, replacement of tires, and any other breakdowns that occur.

    Pros of Renting a Fair for Uber Car

    There is no credit check for renting a car.  As long as you have the security deposit and first week’s payment, you will be able to get a car and start driving for Uber.  You also will not need to spend time evaluating and purchasing rideshare insurance, nor will you need to pay for every oil change.  Routine maintenance is covered in the rental agreement.

    There are two more significant benefits to using the Fair for Uber Car Program.  First, Uber offers a very generous bonus program, currently paying $190 per week for 125 trips in San Francisco (other cities will vary).  This bonus essentially covers the cost of the car.

    The biggest benefit, however, of renting a car is the unlimited miles feature.  You can drive the car 1 or 1,000 or 2,000 miles in a week and the price for the rental vehicle remains the same.  This is a huge benefit if you are a hardcore full-time driver.

    Cons of Renting a Fair for Uber Car

    One drawback to renting a car is you do not get to choose your car.  You will take whatever is available.  Fortunately, Fair does have a nice selection of cars, mid range in quality and never with too many miles. I secured a Hyundai Elantra with 30K miles and it was an excellent ride.

    However, the biggest drawback will hit you at tax time.  Since the Fair for Uber Car Program, as well as the Lyft Express Drive program, are technically “rental” vehicle programs, you can not take the IRS mileage deduction of 58.5 cents per mile in 2019.  The mileage deduction only applies to leased cars and owned cars. Instead you will write off all of your actual expenses such as the lease payment and gas expense.

    I made a spreadsheet based on driving 60,000 business miles and earning $60,000 in rideshare revenue. In yellow, we see the difference in the amount of deduction one can take for a leased vehicle ($16,210) and a purchased vehicle using the mileage deduction ($35,100).

    When I take those figures and apply them to an annual revenue of $60,000, we can see the larger mileage deduction provides a tax savings of $3,712.  I used an online tax calculator to determine the tax figures based on the deductions.

    These numbers are based on a single individual with no dependents.  Your numbers may vary. However, this is a significant amount of tax savings for the owner of a car.

    My Analysis in 2016

    This analysis was much easier back in 2016.  I did not have to make a distinction for the tax savings. A leased vehicle is taxed the same as an owned vehicle.  The old Xchange Leasing program provided leases and not rentals.

    Also, back in the day, Uber did not provide a bonus that was unique to Xchange Leasing participants.  Now, with the Fair for Uber Car Program, Uber does provide substantial bonus benefits. Consequently, my analysis in 2016 looked like this:

    I was comfortable in my decision to lease a vehicle with the knowledge that I was saving $373 per month.  What does this analysis look like now?

    My Analysis in 2019

    For this analysis, I used a 2016 Honda Accord EX-L.

    At the top, we can see that when I purchase a car and then drive it for 60,000 miles in a year, I lose nearly $400 per month in value. On the other hand, I am saving over $300 in taxes each month. When everything is added up, I would be paying nearly $450 more for a purchased car per month.

    Over one year, that is a $5,000 savings by utilizing the Fair for Uber Car program.

    Key Takeaways

    Fair for Uber is the way to go for serious full time drivers. You will save money – the numbers don’t lie!

    The biggest factor in this savings is the bonus being offered to California drivers.  If you are not going to go out and hit that 125 trips per week, then the numbers will change depending on how many weeks you hit your goal and how many weeks you miss it.

    125 trips is not a big number.  It is five days at 25 trips per day.  You should be able to hit that number in 40 hours per week, depending on your market and how proficient you are with your driving skills.  Drive happy and be safe out there.

    Interested in signing up with Fair? You can get started using our affiliate links below:

    Drivers, do you rent or own your own vehicle for rideshare driving? Would you prefer to rent a vehicle, if you own, or do you prefer owning your own car?

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    -Jay @ RSG

    Jay Cradeur

    Jay Cradeur

    Jay Cradeur, a graduate of UC Berkeley, is a full-time driver with 24,000 rides. Jay’s mission is “Work. Travel. Joy.” Jay has a new podcast: Rideshare Dojo with Jay Cradeur. You may want to check it out and even be a guest. There are lots of Videos and Tips too. Visit www.ridesharedojo.com and see all that Jay is up to.

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