Uber is one of the world’s fastest growing taxi companies – even though they don’t own a single car. Uber facilitates people with cars to make money from their vehicle by shuttling them where they want to go through a central app. You may have wondered if you can be approved for a car loan as a current or prospective Uber driver. The short answer is - yes! You can get approval for a car loan as driving for Uber even as your sole source of income is a type of employment. That is the first hurdle. The next hurdle is satisfying Uber’s guidelines on financed vehicles.
What does Uber allows you to drive under finance?
Uber itself places restrictions on what drivers may use under finance. Drivers must also be over the age of 21, have a spotless traffic infringement record and pass a criminal background check. Your financed vehicle must:
- Be a four door vehicle with at least 4 seats
- Be fewer than ten years old
- Not be a van or modified vehicle such as a Taxi
- Must not be a salvage or rebuilt vehicle
- Be fully registered with CTP, comprehensively insured and pass an Uber inspection
This is fine – but what happens if you don’t have a car to begin with?
The double bind of needing a car but not being able to drive for Uber
It’s the old bind of needing the car to make income, but not having the income to afford the car. Uber is a relatively new phenomenon; this classic “catch-22” is not. Many lenders will be reluctant to lend to unemployed people. However, some lenders will recognise your predicament and be more lenient on their restrictions. This may attract higher interest rates and require you to make a deposit. However, most lenders will allow you to refinance your car loan at a more attractive rate if you can prove a steady income.
Alternate options: hiring a car or using someone else’s car
Uber does allow you to use a car that you do not own in your own name, such as a hire car or a friend’s or family member’s car. However, they must give you express consent to use the car for Uber and add your name to their current insurance policy. This is a helpful step towards saving for a deposit on your own vehicle, provided you can recoup the costs of hiring. It’s recommended you use this only as a stop-gap measure before purchasing your own vehicle.
Can I get business finance for an Uber car?
It is possible, but unlikely. Business finance is only available to customers who are registered businesses and use the car for business purposes 50% or over. If you satisfy these criteria, you may be able to gain approval for a hire purchase or chattel mortgage. In most cases, you will have the option of a:
- Secured loan: in which your loan is tied to the value of your vehicle, granting you lower interest rates as a result;
- Unsecured car loan: in which the loan is not tied to the value of your vehicle, but attracts higher interest rates;
- Bad Credit Car loan: for people who have experienced financial difficulties in the past, which attracts even higher interest rates.
Do I need special insurance?
No – a standard comprehensive insurance premium is sufficient for Uber drivers. The minimum is having current compulsory third party insurance, third party property damage insurance and all policies being in your name. It may be wise to look at loan protection insurance, which makes sure you still make loan repayments in the event of illness or injury and cannot drive.
What about financing from Uber?
Uber may offer drivers car finance from partner organisations from time to time. It’s not recommended you take these offers, as the terms and conditions are generally unfavourable to drivers. They may also force you to select from a small pool of vehicles. You should do your homework, shop around and make your own decision based on your own needs.
Buying new vs. used for Uber
Buying a used car due to the lower initial costs can be tempting, but it is not a good strategy for the long term. If you buy a five-year-old car, you can only use it for a further five years under Uber rules. Older cars may need additional servicing and repairs compared to new cars. New cars are expensive and take a considerable 20% depreciation hit once you drive it off the lot, but they do have better safety and comfort features your passengers will appreciate. Better still, you can use the car for Uber for the full 10 year lifespan.