Rideshare services like Uber have provided Canadians with a convenient and unique way to earn money, whether as a side job or a full-time gig. Thanks to rising demand for the service, more and more drivers are joining Uber’s workforce to earn an income.
If you’re interested in working with Uber, your first task is to get yourself a vehicle. But besides buying a car outright or taking out a car loan to finance it, can you lease a car to be an Uber driver? In this article, we will explore how car leasing works with Uber, the advantages and disadvantages, and other requirements for working with Uber.
Key Points
- You can use a leased vehicle as an Uber driver, but you’ll need to make sure your lease contract allows for it.
- Alternatives to leasing a car include taking out a car loan or renting through Uber’s partnership program with Hertz.
- Whether you choose to lease your car or take another route, make sure the vehicle meets all of Uber’s requirements before you start driving.
Understanding Uber’s Vehicle Requirements
Uber has a set of criteria for the vehicles that Uber drivers use to service their customers:
- Vehicle Age: In the Greater Toronto Area (GTA), your vehicle must be no older than 8 to 10 years. If you’re driving in specific cities, like the City of Toronto, Mississauga, Oakville, and Brampton, the vehicle cannot be any more than 7 years old.
- Vehicle Type: Acceptable vehicles that can be used for ridesharing purposes include the following:
- Four-door cars
- Trucks
- Minivans
- Condition: The vehicle must be in good condition with no cosmetic damage and no commercial branding. The vehicle cannot be salvaged or rebuilt, and must pass a safety inspection by a certified mechanic each year.
- Insurance: You must have your own personal insurance policy with your full name listed on it. In Ontario, a policy from Intact Insurance has been approved, which is designed specifically for ridesharing purposes.
What Does It Mean To Lease A Car?
Leasing is the process of “borrowing” a car for a specific period of time, usually two to four years. The lessee agrees to only drive a certain amount of kilometres and keep the car in the same condition.
In exchange for the leased car, you pay a monthly fee, which is typically lower than a car loan payment. At the end of the lease term, you have the choice to either return the car to the dealer, or buy it at an agreed-upon price.
| Why are lease payments lower than car loan payments? Lease payments are lower than financing payments because you’re only paying for the vehicle’s depreciation. With a car loan, you’re financing the total cost of the car, but with a lease, you’re only paying for the portion of the value of the vehicle that you use. |
Can You Lease A Car If You’re An Uber Driver?
Yes, you use a leased vehicle as an Uber driver. However, there are key considerations to make before entering a lease agreement:
| Lease Agreement | Check the fine print of your contract, as not all leasing companies allow rideshare use. |
| Uber Vehicle Requirements | Uber has specific standards that your car must meet, such as age, condition, and insurance. |
| Mileage Limits | Leasing agreements typically have annual mileage limits, which may be easy to exceed as an Uber driver. |
| Insurance | You’ll need to ensure that your insurance provider is aware of how you’re using your vehicle and cover it accordingly. |
| Overall Cost | Your earnings as an Uber driver should outweigh the total cost to operate your vehicle, including lease payments, insurance, and maintenance. |
Pros Of Leasing A Car For Uber
If you don’t own a car or don’t want to use your car with Uber, you have the option to lease, which offers a variety of perks:
- Lower Monthly Cost. Monthly lease payments are typically less expensive than car loan payments.
- Car Turnover. You can drive a new car every few years after your lease expires.
- Warranty Protection. You’ll always be protected by a warranty with a leased car.
- No Need To Sell Or Trade In. When you own a car, you’ll have to worry about selling or trading in your car down the road. This isn’t an issue when you lease a car.
Cons Of Leasing A Car For Uber
While leasing a car to use for your Uber driving gig may have some benefits, there are a handful of drawbacks to consider as well:
- Costs More Over Time. Putting money into a lease doesn’t allow you to build equity. You’re simply paying to drive without getting any value out of it. When you own a car, you’ll build equity and the cost to operate will decrease over time.
- Mileage Limitations. Leases only allow you to drive a certain amount of miles during the term. This could be an issue if you put a lot of mileage on the car and exceed these limitations.
- Maintenance Responsibility. You’re required to properly and regularly maintain your car as a condition of the lease.
Alternatives To Leasing A Car
If you decide that leasing a car with Uber is not right for you, you have other options.
Car Financing
The traditional way to obtain a vehicle to start your venture driving for Uber is to buy your vehicle, either outright or through a car loan. Financing is a popular option, especially if you don’t have the funds needed to cover the full ticket price of the vehicle.
Purchasing a car to use for Uber can be done through a dealership or alternative lender. Alternatively, you can take out a personal loan to get enough money to cover the full price of the car. In this way, you’d essentially be a cash buyer, which can be particularly helpful if you’re buying a gently used car from a private seller.
Renting Through Uber’s Vehicle Marketplace Program
Uber drivers can rent their Uber car through the ridesharing company’s Vehicle Marketplace Program, which works as follows:
- Rental Partner: Currently, Uber drivers can rent a vehicle through Hertz.
- Fixed Pricing: Weekly rental rates start at $285, plus a refundable $265 security deposit. The exact rental cost depends on the type of vehicle you choose.
- Quick Enrollment: Apply through Uber’s partner dashboard or with Hertz.
- Basic Maintenance: Rates include basic maintenance costs.
- Unlimited Mileage: Drive as much as you want with no limits on mileage.
- Road-Ready: Each vehicle is fully insured and comes with 24/7 roadside assistance, so it’s ready for the road right away.
- Availability: This program is only available in Montreal, Vancouver, and Toronto.
Leasing Vs Financing Vs Renting Through Uber: How Do They Compare?
To help you decide the best route to take to get a vehicle needed to become an Uber driver, consider the following side-by-side comparison between all available options:
| Leasing | Financing | Renting Through Uber | |
| Ownership | No | Yes | No |
| Upfront Costs | May require a down payment | High costs, including down payment, sales tax, & fees | Only a low, refundable security deposit required |
| Payments | Lower than financing | Higher than leasing | May be relatively high as they include maintenance and insurance costs |
| Mileage Limits | Yes | No | No |
| Terms | Typically 2 – 4 years | Typically 3 – 8 years | Flexible weekly rental |
Final Thoughts
Driving with Uber on a part-time or full-time basis is a great way to make some extra cash or even earn a full-time living. Leasing a car is one way you can work with Uber, but there are other options too, including financing and renting through Uber’s vehicle partners. Be sure to weigh the pros and cons of each option, paying particular attention to the overall costs to ensure you’re still netting a decent amount.
