If you own your car, you may have considered driving for a service like Uber or Lyft. But that takes a lot of time, and I don’t know about you, but even with a map app running, I’m not always the best with directions and when I’m not sure of the neighborhood I’m in, I’m highly likely to make a wrong turn. Not the best way to get five stars. But what if rather than driving yourself, you could rent out your car and earn extra cash? There are a couple of options, so let’s walk through them.
How renting your car works
There are two main services right now where you can rent out your car – HyreCar and Turo. HyreCar rents your car only to Lyft and Uber drivers, where Turo works more like a regular car rental service. Let’s walk through how they work.
With HyreCar, you list your car on the platform and a driver can rent it out for a chunk of time. HyreCar offers rideshare insurance, so you’re a bit more protected, plus there is additional insurance through Lyft and Uber. When you list (after taking a bunch of pictures, typing up some detailed info, and hopefully getting your car inspected), a driver can rent out your car for a specific amount of time. The drivers all undergo background checks, and HyreCar points out that these drivers are driving for Uber or Lyft, so they have additional incentive to keep the car nice and clean. Typical rental prices are $35-$45 a day.
Turo feels a bit like Airbnb for your car. You list your car, make it known when it’s available, and if someone rents, you meet up with them to exchange the car and the keys. You set the prices and the requirements. Turo also claims to have great insurance.
In addition to getting the rental fee, you also will be getting a tax break. Right now, the IRS allows a deduction of $0.58 per business mile driven, so that adds up pretty quickly. You could very easily bring in some extra cash for now and get a deduction on your taxes later by simply letting someone else use your car.
There are definitely a number of drawbacks here. It’s a lot of wear and tear on your car, and things are going to wear out faster than they would with normal driving (which is a major part of the reason for the tax deduction). The risks are high, and it’s possible this sort of use doesn’t fall under your normal insurance coverage. HyreCar and Turo do have their own insurance, but that could lead to some complications if the driver is in an accident.
If your car is leased or financed, this probably breaks the terms in your contract, so definitely look into that before you decide to list your car.
Should You Do It?
This is a tough call. Personally, after looking into it, I’ve decided renting out my car to earn extra money just isn’t for me. I’m not comfortable with the level of risk involved. That said, I heavily rely on my car, so it’s less convenient for me to be renting it out. If you have a car that just sits parked near your home, this might be a great idea for you. It all depends on the level of risk you’re comfortable with.
But if you do decide to rent out your car to earn extra cash, be sure to keep copious records so that you have a solid idea of what you’re making and know the proper information for your tax return next year.
Megan is a 40-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.
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