Leasing a car to use with Uber
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As long as you have another job to keep making the payments in case Uber randomly deactivates you or drops rates even lower, then those costs aren't bad.
You are essentially paying $0.12 per mile until you get bumped to $0.15 per mile. That's pretty typical, and really the only way to get that number lower is to buy a used high mileage car. Personally I wouldn't do Uber if I had to drive in a cheap high mileage car. I do Uber 'cause I like the driving car I drive. It's a 2013 Acura TL. But Uber is more profitable if you can get the cost of your car below $0.10 per mile.
But again, the most important thing is to not go into debt with Uber being the only source of income to pay off that debt.
You are essentially paying $0.12 per mile until you get bumped to $0.15 per mile. That's pretty typical, and really the only way to get that number lower is to buy a used high mileage car. Personally I wouldn't do Uber if I had to drive in a cheap high mileage car. I do Uber 'cause I like the driving car I drive. It's a 2013 Acura TL. But Uber is more profitable if you can get the cost of your car below $0.10 per mile.
But again, the most important thing is to not go into debt with Uber being the only source of income to pay off that debt.
You would have been better off buying a used car, as the mileage cost may come back to bite you. If you go over the 15k miles, the .15 a mile penalty can add up quickly.
Let's say you drive 100 miles a day x 20 days a month, you're looking at $300 a month!
Financially, the smart move is to get real a job and drive the car normally (under 15k a year).
Let's say you drive 100 miles a day x 20 days a month, you're looking at $300 a month!
Financially, the smart move is to get real a job and drive the car normally (under 15k a year).
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I would double check the deal, because I suspect it's $150 per WEEK, not per month. It still might be a good deal because I believe it has unlimited mileage, which is very helpful if you're going to be doing a lot of Uber driving -- you don't need to worry as much about wear-and-tear because it's not your car.
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If you plan on buying the car after your lease then it's fine. That's what I'm doing. I have a brand new 2016 Honda Civic as well. My payment is just under $200 a month. I pay no attention to the mileage since I plan on purchasing the car once my lease is up.
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To others who might read this, please don't ever do this. You are paying double interest on the purchase of the car. Leases are specifically designed for people who don't want to own a car - thus you are only financing the expected depreciation (CAP cost less residual value) of the car over the term of the lease. If you plan on keeping the car, buy it up front. When you go to buy this out, the residual value is going to be much lower than stated in the lease contract and there will be a HUGE penalty to pay for the buyout price.
She's talking about a standard lease, not the Uber Xchange deal. BTW: The Xchange lease is even worse, even with the unlimited miles. Imagine tacking $600 a month unto your expenses!
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Man oh man, do you not read this forum? Leasing/buying a car just to do Uber for your job has got to be the worst idea you could possibly have. Especially in Columbus. You'd be better off working at McDonald's and at least getting good benefits and retirement savings opportunties! Haha
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Most of the time. You have to look at the terms though, I have seen some leases where the upfront payment plus monthly payments and buyout actually total less than the msrp of the vehicle.
The buyout may be more than the current value of the vehicle, but if your lease allows you to ignore mileage overage if you opt to buyout then you have to subtract that amount from the buyout to determine your true extra cost to buyout.
Example you owe $5k in overage at the end of lease and the buyout is $12k. If the $5k is waived then you have to consider is the remaining value of the vehicle $7k, since your going to pay that $5k one way or another.
This gets into the problem of drivers going into the hole on what they owe. With a lease payment of only $150/month the driver is going to be pocketing a massive amount of extra cash that needs to be set aside to cover overage....Same as any driver on a normal car loan vs the depreciation on the vehicle.
The solution to such issues is simple, set aside all that extra money. The problem is that in practice that doesn't often get done...which means that at the end of the lease, using the same example numbers, that the driver can't cough up $5k for the overages and they are now forced to get a $12k loan to buy a $7k car, which leaves them $5k in the hole.
Remember that this isn't the dealer trying to screw the driver. The driver took that extra $5k beyond what they agreed to out of the car during their lease time, they definitely owe it.
Hilarious.
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In context dude, i.e. vs an xchange lease at $150/week or even a normal loan at $300/month.
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Exactly. janewalch stated "pay no attention to the mileage since I plan on purchasing the car once my lease is up". Very bad advice. Why would anyone want to pay 12K for a car at lease end that has a Fair Market Value of only 7K. You can pay them now, or pay them later; but you ARE going to have to pay. The financial institution that owns the lease needs to recoup the residual value declared in the lease.
People lease today because they cannot afford the traditional finance payments for purchasing the car they really want. Lease payments are less because only the depreciation of the car is financed. If someones intent is to own the car at the end of the finance period, it should be purchased at the onset, not leased.
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Well, as I said I have seen favorable lease deals that were on par with a loan, but those are rare.
Buyer beware as well. If you buy a car on a loan you'll be in a similar situation if you get too long of a loan. A 6 year loan on a car that you'll put 200k miles on in 5 years is a bad place to be. If you get a loan don't get anything over 4 years, 2 or 3 is better, even if the payments seem a little high.
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While you're correct in context, I'd like to add this caveat -
So long as you enter into a retail installment contract/simple interest loan w/ NO prepayment penalty, and can pay the loan off sooner than you're contractually obligated to, taking the smaller monthly payment on a 72 month contract isn't necessarily a bad move. The key with doing so, as an independent contractor (or just being fiscally responsible in general), is being proactive in seeing the bigger picture and always striving to pay more than the monthly payment when able to do so and never going delinquent. Interest is computed daily on the unpaid balance, so throwing extra money towards the loan after a good night/weekend of ridesharing is the best way to go about it.
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I wouldn't bank on most drivers making the extra payments, but if done so properly it could work out. It's the same issue with getting the $150/month lease and not putting aside that extra cash.
There is a second issue with getting a longer term loan though, interest will be higher. If you are definitely going to be paying it off faster then you might as well get the shorter loan which will come with a lower interest rate.
That being said I did get the longer loan on my truck. Interest was going to be under 3% either way, which meant a very small extra expense in the long run (a couple hundred dollars over the course of years), and I wanted wiggle room if I needed it. I've made 18 payments so far and every single one has been over the set payment amount. It is worth more than what I owe on it, and that gap widens monthly.
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Well you've hit the nail on the head, and that's also what I'd stated in my post as well; having the diligence to be proactive in setting aside additional funds to pay off the loan faster. Even w/ the higher interest percentage, the full finance charge wouldn't come into play if the loan isn't taken its full term.
The unfortunate reality though is that folks who are leasing/buying ANYTHING solely for ridesharing purposes, esp. in a metro such as Columbus, are ultimately setting themselves up for failure if they have any other financial responsibilities outside of a vehicle loan and insurance/maintenance for said vehicle.
The advice I've given to anyone is "supplement the supplemental" if they insist on putting themselves in debt for low, unstable pay like Uber/Lyft...meaning apply to be a GrubHub/Postmates/Flex/Shipt, etc. IC as well, in order to balance out slow periods. Combining multiple platforms daily CAN be profitable, even though you may not have much of a life during it...lol
Profoundly true. Well said.
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15k miles, that's scary. I started in July after I bought a used 2012 Chevy Cruze with 19k miles on it (not bad, eh)? On Aug 15 I had 24,361 miles. Today, I have 28,295 miles on it. I do have an older 2nd vehicle, but for the most part I use the Cruze for almost all my personal driving, too. So I'm at almost 10k miles in two months.
I know thats likely a bit higher than normal. I'm likely guilty of doing a lot of experiments with going to different parts of town, too at the beginning. But thats my story.
I know thats likely a bit higher than normal. I'm likely guilty of doing a lot of experiments with going to different parts of town, too at the beginning. But thats my story.
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Another way to look at it...
Let's say you go $5k over on mileage and the residual is $12k. You went over by 33k miles give or take. But you try selling the car with 78k miles on AutoTrader first and find someone willing to pay $9500. Now you only have to make up a $2500 difference instead of $5000 to close the lease.
Let's say you go $5k over on mileage and the residual is $12k. You went over by 33k miles give or take. But you try selling the car with 78k miles on AutoTrader first and find someone willing to pay $9500. Now you only have to make up a $2500 difference instead of $5000 to close the lease.
UPDATE- I leased a BMW 7 series to use on UBER BLACK and I'm waiting right now for the city of Columbus to approve my application for a chauffeur license. I'm doing Uber X/ Select right now and I get 15K miles per year and each additional mile is .20 cents so I gotta watch my miles but a Uber is only a part time weekend only job as long as I make $200 a day on Uber black that Would be great!
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