With services like Uber and Lyft becoming more and more popular, it’s no surprise that many people consider using their personal cars and their free time to make some extra cash as a driver. But, there’s more to it than simply downloading an app and driving strangers to their destinations.
Check out these facts you need to know if you want to drive for a ridesharing service.
Fact #1: You and Your Car Need to Pass the Test
In order to even be considered as a potential driver, you’ll have to pass a background check and have no major incidents on your driving record, including DUIs. Your car will also have to be up to snuff. Ridesharing companies typically require that your car be at least a 2000 model year, or in some cases at least 2011 model year.
Fact #2: It Might Not Be as Lucrative As You Think
While the different ridesharing services boast about drivers in certain cities making up to $35 an hour, this isn’t always the case. With so many people jumping on the bandwagon to become drivers, there can be fierce competition over picking up passengers. You also have to keep in mind the cost of expenses, such as gas and car maintenance, that cut into your earnings. Many experts advise potential drivers to do it part time and keep their day jobs.
Fact #3: You May Need to Change Your Insurance Policy
Before you sign up to be a driver, make sure to review your insurance policy. Many companies have stated that they consider this activity to be commercial, and any accidents that happen would not be covered by a personal policy. In certain states, insurance companies have embraced the ridesharing economy and offer policies to cater to drivers.
Fact #4: Don’t Forget About Taxes
Since you’ll be an independent contractor through the ridesharing service, you’ll have to make sure you pay the proper taxes on any money you make through them. For the most part, this will require you to pay estimated taxes on your income. This also makes you your own boss in a technical sense, so you’ll also need to pay the employer and employee portions of Social Security and Medicare. Be sure to check with your state to make sure you’re paying everything that you’re liable for.
Fact #5: Your Car Will Depreciate More in Value
If you have a seemingly unending stream of passengers getting in and out of your car, it’s going to be tough on your car’s interior. You’ll also have to take your car in for maintenance more often since you’ll be putting more miles on it, and wearing out your tires and brakes much more quickly. If you’re planning on trading in your vehicle to get a new one soon, this might end up costing you more money than you could make.
While being a driver for a ridesharing company could be a lucrative side venture, you’ll have to seriously consider all the pros and cons before signing up. If you do decide that it’s the right path for you, make sure to check in on your personal finances along the way, so you don’t end up losing more of your hard earned cash than you’re making.
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