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The dealer comes back and offers you $16,000 since your Tahoe has 109,000 miles on it. You still owe $25,000. You now are stuck with $9,000 in negative equity. Plus the maintenance you had to invest to keep your vehicle running. Assuming 15 oil changes at $30 each, 2 major services at $400 each, 1 set of brakes at $300, and one set of tires at $800. That equals about $2,000 in extra maintenance due to the excessive miles. Also consider, with the cost of major repairs averaging about $800 per visit, if you had to have any of these repairs done on your vehicle, it could mean you had over $2,800 total in vehicle maintenance.
You did make pretty good money driving though, you made $3,000 the first month, $4,000 a month for the next 4 months, $5,000 a month for the next 4 months, and $6,000 the last month. A whopping $45,000 in revenue, minus the negative equity of $9,000, leaving you with $36,000. Let's not forget the maintenance at $2,000. Then finally, the gas. On a Tahoe, this is a big one. Figure 3 fill ups per week, at $90 a fill. That is $270 per week. Multiplied by 4, then multiplied again by 10 (months), that is about $11,000 in gas charges. That leaves you about $23,000 after everything, and just short of $2,000 a month spendable money, minus any premium for food since you were running around town, and were more apt to visit fast food places, instead of enjoying cheaper meals while being at home. Not to mention if you did need any major repairs along the way, at an average of $800 for each repair.
This does not seem like the right choice either. rideshare college using your own vehicle for ridesharing using your own vehicle for ridesharing in los angeles
Scenario 2 ‒ Let's assume you own your vehicle currently, and you want to make some extra cash. Your vehicle is a 2010 Tahoe with 59,000 miles. Your payment is $550 per month. You owe $28,000 when you begin your business. You sign up through Uber, Lyft, Sidecar, etc., get your vehicle inspected, and get approved.
You venture out on your first evening, and start picking up fares. You love it! You do it for 10 months, and suddenly get offered a promotion at work that will take a ton more hours, but a lot more pay. You decide the promotion is worth more than the extra money doing rideshare. Along with the new promotion, you decide it is time to upgrade your vehicle to an "Executive" type vehicle. The whole process is going well until you get to the trade in evaluation.
Scenario 1 ‒ Doug & Debbie the Drivers see all of the information swirling around the internet on how they can make millions doing rideshare (mostly circulated by the billion-dollar companies that cannot supply enough drivers). They go to the sites, do all of their research and decide that a Toyota Prius is the perfect vehicle to start their new company. They then begin to peruse the internet for the best deals on a new Toyota Prius. They find that the Prius they want has an MSRP of $23,000, that they can buy for $20,500 after all rebates, incentives, etc. On top of that, they have to add the taxes and fees, usually about 10%. Now the bottom line is about $22,500. Doug and Debbie are looking to make extra money since they are a single-income household, so down payment is a difficult hurdle. They have good credit so let's
There will always be two schools of thought on this topic. This page is set up to go over all of the pros and cons of utilizing your own vehicle for ridesharing. A few things to consider before you make the decision:
Does your vehicle's year qualify for the rideshare services (Uber, Lyft, Sidecar, etc.)?
Does your vehicle's make qualify for the rideshare services (Uber, Lyft, Sidecar, etc.)?
Does your vehicle's model qualify for the rideshare services (Uber, Lyft, Sidecar, etc.)?
Does the title status (salvage, rebuilt, flood, frame, etc.) on your vehicle qualify for rideshare services (Uber, Lyft, Sidecar, etc.)?
If the answer is "NO" to any of the above, then you should seek information on the Leasing VS Buying page, click here!
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If the answer is "YES" to all of the above conditions, then there are more calculations to consider in your determination of whether it makes more sense for you to utilize your own vehicle, or seek one through a third party. This section will guide you through all of the options.
One of the items that most sites will forget to tell you about is the negative equity in your calculations, because they are more focused on getting you into a vehicle to drive and add to their billion-dollar valuations, than what really happens financially to "Doug & Debbie the Drivers".
Let's first define the term "Negative Equity". Almost everyone knows that as soon as you purchase a vehicle from a dealership, the value drops immediately. Not so much due to having another owner branded on the title, but that dealerships will never sell you a vehicle for what it is worth at their replacement cost. This is a huge factor. Another additive to the negative equity formula is sales tax. Most states charge 7% ‒ 9% sales tax. The hurdle here is the exact same as if your stock broker, or buddy came up and said, "Hey, I have this great stock opportunity, it is going to make you a ton of money, but you will lose 7% ‒ 9% right away!", I am sure you would be quite skeptical, as you should be. The next problem in purchasing a vehicle is the registration, and license plate fees. These usually range from $100 ‒ $500. Not nearly as detrimental as the sales tax, but it all adds up. If you have already purchased a vehicle that you plan to use for ridesharing, these charges still exist, you have either paid some of them already, or are currently paying them each month when you make a payment.
Let's walk through a couple of different scenarios with the above information:
assume they needed no money down to get financed. So they agree to a long-term lease (72 months), at a very competitive interest rate (1.9%), and the monthly payment comes out to about $330 per month. They drive away, and they are happy. They begin their rideshare adventure, and at the 4 month mark, they realize that the hours they actually have to work, to make the most amount of money, do not align with their domestic schedules. They have put 13,000 miles on the vehicle, and now have no use for it. They decide to go back to the friendly dealer they bought it from, and try and sell it back to them. The dealer is not so friendly when explaining to Doug and Debbie that the vehicle is now only worth $15,000 (since there are now used ones in the marketplace that dealers are asking $18,000 for), and the loan balance is $21,600 approximately.
In this scenario, it costs Doug & Debbie $6,600 in negative equity (assuming they can pay that amount and alleviate their financial obligation), PLUS the payments they made ($1,320), AND the insurance for the 4 months ($400 assuming they had good driving records). The grand total of costs for this "business" was $8,320, divided by the 4 months they drove, equals about $2,100 per month.
Now let's look at the income stream. Doug & Debbie went into this adventure blindly, only making $2,000 the first month, $3,000 the second, and $4,000 for months 3 and 4, for a total of $13,000. After deducting the $8,320 in costs, they are left with approximately $4,700. Let's not forget about the gas, car washes, mints, and water for your passengers. Figuring $120 per week for gas, that is about $2,100, and a couple hundred for the incidentals. That leaves a whopping $2,300 for 4 months of work, or $600 a month net. This does not seem like the right choice.