Financial Resource Center


Is Rideshare Driving Right for You?

by Tracy Curtis / January 29th, 2020

Have you been considering driving for Uber or Lyft to make extra money? Here are a few facts to help you make your decision.

Rideshare companies basically hire you as a subcontractor and use smartphone apps to match drivers with passengers. Although Uber and Lyft are the most popular rideshare companies, they coexist with other many other peer-to-peer rideshare services.

Folks who drive for these services enjoy completely flexible scheduling. Indicate your availability through the app and wait to be matched with passengers. Customers generally pay through the app, but some cities allow customers to pay cash. Drivers are paid through a direct deposit from the parent company. Rideshare services require you to be over 21, with a license in good standing, and a clean criminal record.

For drivers, there aren't too many differences between driving for Uber and Lyft. In 2020, the both operate in about 300 U.S. cities. Lyft’s vehicle requirements are more stringent than Uber’s. If you don’t have a car, or yours doesn’t meet the requirements, you can rent a car through both businesses using their partnerships with well-known car rental agencies. Lyft drivers are paid about $2 more per hour, although they’re not as in demand as Uber drivers. Many people have worked with both companies or work for them simultaneously. These drivers generally prefer Lyft, saying the company appears to be more concerned about drivers’ wellbeing than Uber.

There are other factors to consider before signing on with a rideshare company. These services pay according to a combination of trip, distance, rider, and time. Since you’re driving your own car, you must pay for your gas and maintenance expenses. You’ll need to keep detailed records for tax purposes. If you want to make this a full-time gig, you’ll also have to pay for your own healthcare and structure your retirement saving.

How do people maximize their earnings? One way is to minimize costs by driving an efficient, reliable vehicle. Another way is to be available when demand is high. Many rideshare companies charge more per hour during those periods. You can also make more per ride if you drive a luxury vehicle, but be aware that the demand for luxury rides is low in most markets -- you’ll drive fewer hours, but make a higher hourly yield.

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