How To Avoid The 5 Hidden Costs Of Rideshare Driving
RSG Contributor Jay Cradeur?reveals the secret hidden costs drivers need to look out for.
The emergence of rideshare platforms like Uber and Lyft has transformed the transportation industry, offering convenience and flexibility for both drivers and passengers.?
For many, becoming a rideshare driver seems like an attractive way to earn extra income or even make it a full-time gig.?
I tried it part-time in Sacramento in December 2015 before I went full-time in San Francisco.?
I loved almost everything about it.?
I had the freedom to work whenever I wanted. I could consistently make over $2,000 a week. Best of all, I did not have a boss.?
However, beneath the surface of this seemingly lucrative opportunity lie hidden costs that can take a toll on drivers' finances and well-being.?
This article will explore five hidden costs and provide insights into how rideshare drivers can avoid or mitigate them.
FEATURED YOUTUBE VIDEO
The Trust Cost Of Being An Uber & Lyft Driver
Watch the episode and subscribe so you don't miss the next drop!
Background
When you run a business, you need to know your numbers.?
In fact, that is the number one rule of business: Know Your Numbers.?
Initially, I understood that I was incurring some expenses. Gasoline for my Toyota Prius was my most significant and most obvious expense.?
I drank a Starbucks every day. I paid to get my car cleaned at least once a week.?
However, there were quite a few other expenses that I didn't consider until I took a hard look at my business numbers. Let's dive in.
1. Vehicle Depreciation
One of the most significant hidden costs for rideshare drivers is vehicle depreciation.?
Driving for long hours, navigating city streets, and dealing with various road conditions can significantly accelerate the wear and tear on your car.?
The more you drive, the faster your vehicle loses its value.
What Can You Do?
What Can You Do?
What Can You Do?
Choose The Right Car
When considering becoming a rideshare driver, selecting a fuel-efficient and durable vehicle is essential. Opt for a model with a good track record of reliability and low depreciation rates.?
A second option is to lease or rent a car with unlimited mileage.?
In 2016, I paid $147 per week for my Toyota Prius, which covered all my mileage and insurance. The best offers I see with Uber today are $260 per week.
Regular Maintenance
Regularly service your vehicle to ensure it stays in good condition. Routine oil changes, tire rotations, and other maintenance tasks can help extend your car's lifespan.
Ride Quality
Be mindful of how you drive.?
Avoid aggressive driving, which can strain your vehicle's engine and suspension unnecessarily. Taking hard turns will wear out your tires really fast. Take it easy out there, and your wallet will thank you.
2. Fuel Expenses
While not exactly hidden, the rate at which gas prices increase and eat into our profits is incredible.?
A few months ago, I was paying a low $4.00 a gallon. Now, I am close to $6.00 a gallon here in Sacramento, CA.?
Fuel costs can eat into a significant portion of a rideshare driver's earnings. This expense can add up quickly with the constant need to refuel, especially in congested urban areas.
What Can You Do?
Choose Fuel-Efficient Vehicles
Opt for a fuel-efficient model when selecting a ride-sharing car.?
Smaller, hybrid, or electric vehicles can save you substantial fuel expenses. My Toyota Prius achieved over 50 miles per gallon. My current Honda Accord Hybrid gets 40 miles per gallon.?
Anything that gets less than 30 MPG can significantly dig into your profits.
Drive Efficiently
Practice fuel-efficient driving habits, such as smooth acceleration and deceleration, and maintaining a steady speed whenever possible.?
Avoid idling for extended periods. I recommend pulling over and waiting when you don't have a passenger to pick up. There is rarely any need to drive to a different location unless you are out in the boonies.?
Use Apps
Use navigation apps that offer real-time traffic data to help you find the most efficient routes, reducing fuel consumption and time spent on the road.?
I like to use Waze, although you can use Google Maps or the driver apps GPS systems.?
I also recommend using an app like Gas Buddy to find the least expensive gas in your area. Often, Costco or Safeway will offer the lowest prices. With the prices being so high, it makes sense to shop around.
领英推荐
3. Insurance Expenses
Rideshare drivers are required to have specialized insurance policies that cover both personal and commercial use of their vehicles.?
I don't think most drivers actually get "Rideshare" insurance.?
This is a rule that neither Uber nor Lyft enforce. I know that I did not for the first few years I drove. I assumed the rideshare insurance policies would be at least twice as expensive, adding another layer of hidden costs.
What Can You Do?
Shop Around
Compare different insurance providers to find the most cost-effective policy that meets your needs.?
Some rideshare companies offer insurance options, so explore these as well. I got a good rideshare policy with my insurance company, which was cheaper than my regular personal policy.?
I was amazed and very pleased. This also gave me peace of mind, for I knew I was doing everything above board. Shop around.??
Deductibles And Coverage
Carefully review your insurance policy's deductibles and coverage limits.?
Opt for deductibles that you can comfortably afford in case of an accident.?
Or, you can do it the way I do it. I assume I will not be in an accident since I have not been in one in several decades and consider myself a very safe driver.?
Therefore, I get the minimum required insurance policy to limit my premium as much as possible.
RECENT PODCAST EPISODE
RSG246?- Discover Daytrip: Rideshare Meets Tour Guides & Tourism
4. Maintenance and Repairs
As a rideshare driver, your vehicle will undergo more wear and tear than the average commuter's car.?
This means you'll need to budget for maintenance and repairs more frequently, which can be a hidden financial burden.?
This past New Year's Eve, a large fallen tree branch destroyed the underside of my car. That cost me over $800. You really can save money by driving carefully and avoiding significant damage.
What Can You Do?
Set Aside A Maintenance Fund
Create a separate fund for vehicle maintenance and repairs. Allocate a portion of your earnings to this fund regularly to cover unexpected expenses.
Follow Recommended Maintenance Schedules
Stick to your vehicle manufacturer's recommended maintenance schedules.?
Preventive maintenance can help you catch problems early, saving you from more costly repairs later.?
I get an oil change every three months. I want my car to run forever, and giving it fresh, clean oil regularly will make for a happy car.
Learn Basic Maintenance
Familiarize yourself with basic vehicle maintenance tasks like changing the oil, replacing air filters, and rotating tires.?
Performing these tasks yourself can save money on labor costs. I used to change my oil, which can save you money. However, you can get a good oil change for $35, so having a professional do it for you quickly and expertly may make more sense.
5. Time And Opportunity Cost
Being a rideshare driver often requires long hours on the road, leading to burnout and an opportunity cost in terms of missed personal and professional opportunities.?
In other words, what could you be doing instead of driving? What are you missing out on that may be of more significant benefit to you?
What Can You Do?
Set A Schedule
Establish a precise schedule that balances your rideshare driving with personal time, family commitments, and other interests.?
Avoid overworking yourself. I found that limiting my driving to weekends helps keep my life balanced.
Plan Your Rides
Use data from your rideshare platform to identify high-demand periods and areas.?
Plan your driving schedule accordingly to maximize earnings during peak times. I am an advocate for early morning driving.?
I enjoy seeing the sunrise and taking folks to the airport. Most drivers are asleep in bed, so demand is high.
Diversify Your Income
Consider diversifying your income sources.?
Explore other gig economy opportunities or part-time work that allows you to earn money while maintaining a healthy work-life balance.?
In my case, I have embraced day trading as my primary gig. It was my Plan B, and now it is my Plan A, while rideshare driving is my weekend-only gig.?
Key Takeaways
Becoming a rideshare driver offers the allure of flexible working hours and the potential to earn extra income.?
Still, it also comes with hidden costs that can impact your financial well-being and quality of life.?
To avoid these hidden costs, choosing the right vehicle, managing expenses wisely, maintaining your car diligently, and balancing your time is crucial.?
By taking these steps, we can ensure that the benefits of our chosen gig outweigh the hidden costs and pave the way for a more sustainable and rewarding experience.?
I suggest you break out an Excel spreadsheet, detail your earnings for a month, and then subtract all of your expenses.?
This is the best way to see how much you make from rideshare driving. There is money to be made, but you have to manage your business correctly to maximize your take-home revenue.?
Take care and be safe out there.