Should You Buy or Lease a car? Which Option Is Best for Uber Drivers?
What’s better for Uber Drivers? Buying or leasing a car? Should Uber Drivers Buy or Lease a Car? If you’re an Uber driver, you’ll want a car that will be as cost-effective as possible. One of the most common options is a Toyota Prius — an all-around solid vehicle with the in-built advantage of being all-electric (a feature which saves rideshare drivers an extensive amount of money in operating costs).
Many prospective rideshare drivers contemplate a common question — should they lease or buy a Prius? Which option makes the most sense financially? What’s better?
Drivers can generally purchase a used Toyota Prius for around $4500-$5500 (a new Prius can total over $20,000).
Purchasing a vehicle makes sense in some respects — no rental fees; keeping all your incoming revenue; no lease agreements or ‘predatory’ rental terms.
At the same time — there are some notable downsides to buying a pre-owned vehicle — for instance, a pre-owned Prius may have mechanical issues, high mileage, interior ‘wear-and-tear’, and lower resale value.
Leasing a Prius has some advantage — specifically, renting a car means not having to commit to buying a new or used vehicle (i.e., less cash-up-front).
Moreover, if rideshare drivers secure favorable rental terms on a leased Prius, it may mean less overall risk and an ability to terminate a lease quickly (whereas selling a private vehicle outright can sometimes take 1-4 months).
On the other hand — leasing has its obvious downsides. Most notably, rental terms can often be unfavorable or even ‘predatory’ — meaning, some rideshare operators often feel ‘trapped’ in fine-print lease agreements which are very difficult to escape.
Similarly, leasing can sometimes mean spending extra money in the long-run — if drivers decide not to purchase a vehicle, it means they must constantly meet their lease-payment requirements every month. And, if they ultimately decide to stop ridesharing, leasing a vehicle means there is no asset to liquidate — because they never owned a vehicle outright.
In order to start driving for Uber, you will need to:
- Use a car you already own
- or; Purchase a car
- or; Lease a car through Uber
- or; Lease a car through one of Uber’s partners/third-party operator.
The requirements for a car include:
- Must be a four-door vehicle
- In most cities, must be a 2006 year model or newer
- Be in good cosmetic shape and pass a mechanical inspection
Pros and Cons — Should You Buy or Lease a Prius?
There is a wide range of factors involved when trying to determine what’s best for you. Although you will eventually own the vehicle, buying isn’t always the best option — the same is true for leasing. At the end of the day, you need to ask yourself — what will a car cost me per mile?
Although it offers only be a rough estimate, this calculator will allow you to visualize some key metrics which might be useful to prospective (and active) Uber drivers.
If you’re planning on becoming an Uber driver (or if you’re planning to switch or upgrade to a new vehicle), it’s critically important to be aware of how your choices now affect your ridesharing ‘stats’ in the future.
So Should Uber Drivers Buy or Lease a Car? You need to take a variety of factors into account: specifically, new tires, insurance, maintenance, and vehicle value depreciation.
It’s important that drivers fully understand a leasing deal before agreeing to a lease program.
In the past, before rates were slashed, many Uber drivers signed up for a leasing program. If their income took a hit, they often found themselves struggling to afford monthly payments.
In many cases, you need to be careful. When financing is available to those with bad or no credit, this generally means that the terms are poor and interest rates are high. It can be a dangerous deal — leaving a driver in a potentially sticky situation. With that being said, Uber is now offering a much more attractive leasing program — Xchange Leasing.
After 30 days, drivers are able to opt out, as long as they provide two weeks notice. Also, basic maintenance is included — such as oil changes and cabin air filter replacements. Car payments can be taken out of your weekly earnings, ensuring that all payments are made on time.
Leasing is beneficial in that you know what your set cost is each month. For example, say you had to pay $300 each month — this may be ideal for a driver, instead of paying $500 towards a car loan. Once the terms are up, you can essentially trade up for the latest model once again.
Buying a car
In some cases, buying your own car can be more cost-effective. There are fewer terms and restrictions in comparison to leasing. Of course, the payments you make will be going towards an investment — you will own the vehicle at the end of your payment terms.
Drivers who purchase a vehicle may need to pay for a car longer when buying, but monthly payments can actually be much lower than leasing. Just be aware of Uber’s vehicle requirements before you make a purchase and if Uber isn’t very lucrative in your area, you may want to crunch some numbers before you commit to car payments of any kind.
Do Your Research & Calculate Some Basic Costs before asking yourself Should Uber Drivers Buy or Lease a Car?
At the end of the day, buying a car exclusively for Uber is a large investment — it may not pay off in the long run. Do your research before you begin driving, asking other drivers in your area for advice or checking out one of the online rideshare forums.
If you just want to try Uber out and see if it’s a profitable option for you, leasing is ideal — as long as you’re able to give back the car without any penalties. This is a great way to test the local market. If you find that you’re busy and receive enough ride requests, you can then look into the option of buying your own vehicle.