Ubering is a Bad Idea

How does anyone make money using their car as a taxi?

Well, we’re not supposed to use that word, for openers. It’s ride-sharing. That’s just a dodge, of course. And there’s nothing wrong with dodging laws outlawing the free exchange of goods of services between consenting adults. If I have a car and am willing to use it to drive you where you want to go in return for a fee mutually agreeable to the both of us, where is the crime?

The taxi cartel objects to ride-sharing, of course — because they have legal monopoly on such services. They do not want you cutting in on their overpriced action. Which is why Uber and the others deny they are taxi services.

And in a way, it’s true. But this is precisely why being an Uber (or Lyft) ride-share driver is probably not good for you.

Here’s why — and it has nothing to do with the free exchange aspect. It has everything to do with the wear and tear aspect.

And the depreciation and insurance and warranty aspects.

When you drive for a taxi company, as a rule you use their car. This means that wear and tear — and depreciation — are not your problem.

The taxi company owns the car, so its reduced value over time — depreciation — isn’t money out of your pocket. If it’s your car, it is. And the bite is harder if you owe on the car because you could very easily end up owing on a car worth less than what you still owe — because depreciation is greatly affected by the miles you rack up. If you use your car as a taxi — er, ride share — you will rack up miles faster, sooner. And your car will be worth less and sooner, accordingly. To not factor this into your decision to Uber or not is like not considering the cost of interest on a loan. Money out of your pocket affects how much money you have left in your pocket.

Tires — and brakes and fluids and filters — cost money, too.

If it’s not your car, you won’t be paying for all that — the taxi company will. They usually have their own in-house maintenance facilities — in order to lower these costs. And if something big breaks — the transmission, for instance — they deal with it.

But if it’s your car, you’ll be footing the bill for all of these things — and not just in terms of the parts and labor at full mark-up but also the downtime. When the vehicle is in the garage — whether yours or someone else’s — you can’t use it to make money.

Which is costing you money.

Keep in mind as well that maintenance costs go up the more you drive. Instead of a $60 oil change once a year, you may be doing it three times a year — depending on the mileage you rack up. Same goes for brakes and tires — and belts and hoses and wiper blades all the rest of it.

And you must keep up with all this maintenance — and not just to be conscientious. Your warranty coverage depends on maintaining the car as specified. If you use it as a taxi — umm, ride share — it will almost certainly have to be maintained according to the “heavy duty” or “severe” service schedule for the coverage to remain in effect and even then, it may not. Read the terms and conditions. It may well be that warranty coverage is automatically void if the car is used for “commercial” purposes — no matter how conscientiously maintained.

This is not unreasonable.

Most cars — especially most modern cars — are not designed for taxi (whoops! ride-sharing) duty. The majority are front-wheel-drive, which is not as sturdy as rear-wheel-drive. Most don’t come with heavy-duty cooling/brake packages. Your typical Camry/Accord/Malibu are cars designed for ordinary passenger car duty, not the Clydesdale duty of being a taxi, idling for hours on end, enduring pothole strikes and curb scrubs and all the rest.

And if the car you’re using this way isn’t paid for — if it’s a loaner or a leaser — you might also be violating the terms and conditions of that contract, too.

Which brings up another contract — your insurance contract.

Most policies issued to private owners assume — specifically state — that the car must not be used for commercial purposes.

You therefore have two options. The first is to be straight with the insurance company and tell them what you’re doing with the car — and accept the rate hike that will almost certainly come next; this will eat into your profit margin — if there’s any left after you factor in depreciation, wear and tear and double/triple maintenance.

The second option is to not tell the insurance company — and “ride dirty.” This will avoid the premium hike, but if you ever have to file a claim — or have one filed against you — and the insurance company finds out you were ride-sharing, there is a good chance they won’t pay out.

Which means, you will.

Bottom line on this business: It’s not that people haven’t got every right to use their own car as a taxi — whether it’s called that or not. The question is whether it makes economic sense to do so.

For most people, the answer to that question is almost certainly . . . nope.


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