High turn-over creates demand for an endless supply of drivers, even those with no access to their own car. Don’t be one of them.
Let’s face it. The recession of a few years ago opened a huge can of whoop-ass on millions of hard-working people. If you watched your family go through the recession or if you went through it yourself, the changes in the job market and the overall economy were hard to miss.
Some of those changes involved the emergence of the gig economy, or “sharing economy.” The latter just means that some rich kids in Silicon Valley or Silicon Beach developed a service-based app and hired a bunch of independent contractors to do their bidding, usually for less than stellar pay and no rights or benefits.
Uber is by far one of the most successful service-based apps, with a worldwide presence.So successful that you no longer need to have your own car to drive for Uber. You don’t even have to have decent credit to get a car to drive for Uber. How did that happen?
Enter Uber’s Xchange short-term leasing program.
A sweet deal…at first glance
Unlike a conventional lease whereby you pay the first month’s payment, a security deposit, plus tax and license, Xchange only requires a $250.00 payment up front.
Hell, even I can scrounge $250.00, but I’m not so sure I’d want to spend it on this.
Here’s where the program gets you in the shorts: lease payments range from the mid-$100s to $200.00 weekly.
Unlike a traditional lease where you’re bound to the car for the term of the lease, Uber’s Xchange lease allows you to turn in the car within 30 days, pay a $250.00 disposition plus any remaining balance, and walk away.
They make it sound so…easy.
After all, it’s no skin off their back if for any reason the car is repo’ed.
Time for a little math. Let’s assume that you want to lease a 2016 Toyota Corolla or Honda Civic through the Xchange program and use it for Ubering your ass off. Let’s also assume you have a bad week and don’t pick up a lot of fares. Instead of the $200 week you were hoping for, you only clear $100 after Uber takes their cut.
Weekly lease payment: $150.00
Your total Uber haul for that week: $100.00
Remaining balance: $ 50.00
The remaining balance of $50.00 gets rolled over into the following week’s lease payment, leaving you $50.00 in the hole right out of the gate. Uber has also cut their fares, making it harder for drivers to make a profit over and above Uber’s deductions and any lease payments.
In plain English, if you have a couple of bad weeks, you’re screwed. Fall far enough behind or have your Uber account randomly deactivated, and you can be on the hook for hundreds of dollars that you didn’t have in the first place.
Just like payday lenders and buy here/pay here dealerships, Uber’s leasing program targets financially vulnerable people who have few other options and very limited access to decent cars.
Don’t let the easy-peasy friendly language on Uber Xchange’s website fool you. There are other side-gigs out there that actually let you keep the money you earn and not piss it away on weekly lease payments.
You got your hours cut and need a side gig to feed your family or to pay for tuition. You want some holiday money. You need to pay down a medical bill.
I get it. I really do.
However, Uber’s Xchange leasing program isn’t the way to go about it. Honest.
(For the economic nuts and bolts of the program, check out Bloomberg’s post).