Have you ever thought about driving for Uber? In this article, we examine the side hustle of driving with the most popular ride share, Uber. We share the pros, the cons, the ins, the outs of driving for Uber and is driving for Uber profitable enough so that you can decide if this is the right fit for you!
Driving for Uber can give you the chance to pay off debt, make money on the side for a financial goal, make ends meet, save for a vacation – pretty much help you with any of your family’s financial goals.
What is Uber and how does it work?
Uber is an alternative to a taxi that ends up generally being much cheaper for the rider, plus allows everyday people to use their own car to move you around. It is all done through an app and is a very safe, recognized and effective alternative to taxi cab transportation.
A driver that applies to be a driver has to meet the Uber requirements, including a background check. Then, when the driver wants to work (aka, no set schedule), he/she turns on the Uber app, and waits for someone to virtually “hail a ride.” Then they pickup the passenger at the location that the app directs them too and drives them to their destination, leaving the app open the whole time to get credit for the drive and so the drive can be tracked. Once the driver reaches the destination, he logs the trip and he gets paid 75% of the fare, while Uber keeps 25% for their operating costs. Uber drivers are paid weekly via direct deposit, or can be paid immediately by a rapid pay option.
A rider that wants a cheaper ride than a taxi can open the app and request a pickup through the app. They wait for the driver and can watch their progress of pickup arrival on the app. The app will tell you the driver’s name, star rating, the car and license plate, so you can’t miss him/her. Then they also keep their app open during the drive and can watch the tracking real time on their app. This is not only to log the cost, but to also keep everyone accountable and safe. The nice thing for the rider is that Uber shows you how much the ride will cost before you make the official request, so you are not left in the dark, or watching a taxi meter rack up the fees while you are in the cab. I love being able to know exactly how much it will cost. As a rider, you will also rate the quality of your experience and this goes on the driver’s record for others to view.
In the end, it’s a great way for a driver to earn extra income on the side and a cheaper way for travelers to get cheaper transportation. Yes – that’s a win for both the driver and the rider!
UPDATE: we just recently traveled to Dallas to attend a financial conference. We took an Uber to get where we needed. This driver was a college student and he said that he is averaging $30 per hour driving Uber in Dallas. He said that any college student should drive for Uber because there will not be anything else they can do on their own schedule to make $30 per hour out the gate.
What are the requirements to drive for Uber?
Uber does have requirements for their drivers, which riders love because it ensures safety and a pleasant ride.
- You must have a 4-door vehicle.
- You must pass the background check (this is a $20 fee, but it is the only fee needed to apply).
- Your vehicle must pass inspection (cleanliness, etc.).
- Your vehicle must be no older than a certain age. For most states, this will be a vehicle newer than 2011. It will vary slightly with some states allowing older vehicles and others newer than this. But that is the current average as of the writing of this post.
- You also have to be at least 21 (a couple of states require a minimum age of 23).
- You have to have been driving for at least 3 years.
- You also have to have a clean driving record.
Do note that although I say “hire,” Uber is not employing you; rather you would be an independent contractor. This is actually in your favor because you get some amazing tax deductions in this case, as opposed to being an actual employee.
How much can you get paid?
The major question is driving for Uber profitable? This is somewhat of a mysterious question merely because there are so many factors that go into the answer of this question: all rides are a different price, some drivers are busy for an entire hour while others are waiting around for a call. Obviously part of this depends even on the location you are driving (e.g., a larger city will result in higher use of Uber than a small town). So to give a set amount of pay is impossible. In fact, some cities, the fares are higher while in other cities, the fares are much lower. Additionally, if there are a lot of drivers and not many riders at any given moment, the cost of a ride drops in price whereas if there are not many drivers but many riders at any given time, the cost of the rider is higher following the supply and demand concept we all learned in high school.
But from talking to a number of Uber drivers and from research, it looks like the average Uber driver makes about $15 an hour.
Let us break this down to understand a little more. We are going to base our estimates on UberX, which is the basic 4-door sedan ride.
If someone wanted to be picked up from the Long Beach Airport and driven to a hotel near Disneyland, it would be $23-$31 ride. This is about a 35 minute drive, spanning an 18-mile distance.
So for half of an hour, you will get paid $17.25 – $23.25 after Uber takes their 25% cut. In addition, now that the app prompts and allows riders to give a tip via the app (this was a huge limitation in the past), the average Uber tip being $2.50, this is calculated into your pay. So you might profit around $20 for this 18-mile, 35-minute trip. But it will likely be around an hour total in that once they “hail” a ride through the app, depending on how close you are to their pickup location, it might take you on average about 5-10 minutes to get to them to pick them up. This is driving time you are not earning anything. Then once you arrive in the Anaheim area, you can hang around and wait for someone in the vicinity to “hail another ride” so that you can take 5-10 minutes to get to them, plus any waiting time, for about an hour total between rides. This is more of a long-distance ride. But for that average $20 or so profit, you also have to calculate the cost of gas for that 18 mile ride and the in between drives to picking passengers up. That ends up making your profit about $15 per hour.
There are many factors that play into an Uber drive as the rates vary from one city/area to another.
For example, in our big city downtown, I estimated a trip from a downtown hotel to the city zoo, which is 5.3 miles away. Uber estimated my ride would be between $8-$12 and an 18 minute ride. A driver would receive between $6 and $9 plus a tip of about $2-$3. It will probably take an uber driver 30 minutes total, calculating the before pickup driving time and the waiting for the next ride. So shorter routes can often mean more per hour, if there are lots of pickups available. If not, a longer ride might be more profitable.
The way that Uber charges for drives is first a flat fee, which varies from $1-$3 based on the city and location, plus a fee for time and a fee for distance (like $0.25 each minute and mile as an example, but varies by location). So at the time a rider requests a ride, the rider gets the estimated cost before hand, and the driver can choose to pickup a rider based on the amount they will get paid for that ride.
We watched a video on YouTube of an Uber driver who drives more than full-time (79 hours) and made an average of $13.83 per hour after all of his expenses. BUT….he chose to rent a car each week at $240 a week, instead of using his own. This seems very silly to us, because you can use your own car (if it meets the requirements) and make an extra $1,000 a month! Then his average pay would have been $18.89 per hour average after expenses. I don’t know why he chooses to rent a car, but we know many good reasons to use your own car. He is calculating insurance as part of his expenses, but you should have insurance on your car regardless, so this really isn’t an extra expense. Uber provides insurance for their drivers for the added risks.
For example, Uber provides insurance coverage from the time you accept a request, even before you pick them up (that time when it takes you 5-10 minutes to reach the rider) until the rider exits your vehicle. They also provide cleaning services for your vehicle if a rider soils your vehicle (like throwing up). They also provide coverage to fix any damage to your vehicle from a rider. If a rider does sustain an injury, Uber carries a $1 million bodily harm insurance for you. You are required to have the normal insurance that you should have whether you are driving or not, but you don’t need extra insurance as they are all provided by Uber.
The tax deductions are a big plus too. As stated above, you will be an independent contractor and will receive a 1099 from Uber if you make over $600 per year. This means that you get more tax deductions than if you were an actual employee. You will be able to ride off things like:
- Vehicle depreciation
- Maintenance and Gas (or miles if you choose that instead)
- Your smart phone used for Uber
- And more!
In the end, you could do well, probably plan on at least $15 per hour. But this is really going to be more of a side hustle for most people as it would be difficult to maintain a full 8+ hours a day of steady driving.
If you worked 4 hours per week at $15 per hour (very attainable for students or even full time employees on nights and weekends), this is $60 per week more or $240 extra per month! Not a bad side hustle at all! We believe that $15 per hour is quite a conservative amount, but we like to play it safe. 🙂
Why drive for Uber?
This is where the idea behind driving for Uber can be a great decision for some. Rarely is one making a full-time living from Uber, but we have met a few that do make full-time income from driving for Uber and a few other side hustles using their car. However, 80% of the drivers for Uber do it whenever they want to make a little money on the side. This sounds like a brilliant side job for the 2% rule as you can gradually drive a bit more each month to where it is not an overwhelming side job, but one that brings in a steady increase. It is a smart thing to earn on the side with your car. If you don’t have a vehicle, then you could always try the car rental option and just make around $13 per hour instead.
So why would YOU want to drive for Uber?
- To get out of debt – plain and simple. In fact, when we started our debt-free journey, we needed something to get us out of a terrible rut we were in and help us start paying off debt. This would have been perfect, but it wasn’t available then, so we turned to delivery newspapers, starting at 4:30 in the morning. We averages $3.50 each per hour, but it was enough to help us avoid bankruptcy. Something like this would have been a huge blessing for a couple of hours a day instead – and not at 4:30 in the morning either!
- To pay for your car – One of our readers told us her story of how she bought a new car and wanted to pay it off fast and own it out right. She became an Uber driver just to pay for her car. She was able to pay off her car entirely in just over a year with driving for Uber after her regular day job. A MUCH better option than the 6-year loan and the interest, she owned her brand new car in just a year! In her circumstance she found a smart solution to pay off her car loan.
- To get out of a financial rut – We mentioned how we delivered newspapers and donated plasma to get out of a rut, well this is a far more profitable and less painful way to do so. Uber would be the company to do this with because they have an immediate pay option, which means you don’t have to wait for the “payday” to get paid, the helping you much sooner than more traditional job options.
- To save for a big purchase – We love “side hustles” like this because they can help you reach a short-term goal and be just a temporary solution to that. For example – a big purchase! If you want to install solar in your home, if you want to go on a big vacation, if you want to buy a car with cash, if you want to pay for a new boat (more more!) do this for a temporary time until you achieve your goal! If you can make about $15 per hour, just decide how much you need and how long you have to get there. If you want to take a $10k European vacation, work 13 hours a week for a year and make about $10k after your expenses. Most of us take a year or two at least to plan a trip of a lifetime! This is just one example, but gives you an idea.
- To earn on the side because you just need it – If you just need more income to live a little better and with a little less financial stress, then there will not be many more things you can do to earn around $15 per hour.
- To pay for college – This is one of the smartest uses of the money! Besides paying off a new car, paying for college is such a smart way to do this. Imagine driving in the evenings in your college town, especially on the weekend nights? If you were able to drive six hours during the week, you can make around $360 per month, which is enough to cover most living expenses during college or even save to pay for tuition. Then in the summer, drive more frequently to save faster in the summer. Really, if planned correctly, most academic calendars for colleges run in 15 week segments – meaning that you are in school about 6-7 months out of the year. So if you worked off and on to pay for living expenses during the actual school year, you can spend the other 5-6 months earning at a faster rate, enough to pay for tuition in many cases.
Pros of Driving for Uber
- You are an independent contractor. Tax benefits are a big benefit to this.
- You set your own hours and schedule. Completely.
- It can be temporary to reach a goal or fill a need, or permanent!
- You can get paid immediately after a drive.
- Pay is higher now that Uber has implemented tips on the app. We talked to many drivers who are making about $2.50 more per hour than they use to, when they could only accept cash tips. So it is better today than it was.
- You meet a lot of really cool people and maybe even some famous people. For example, Alex’s cousin picked up the band members of All American Rejects and even snapped a picture with them.
- Uber has insurance to cover for damage and or incidents.
- If you don’t have a car, you can still drive. Uber has an open to lend cars to you. It is not quite as profitable, but a good way to start.
- The pay is pretty decent for a flexible side gig!
Cons of Driving for Uber
- There are some expenses to consider – the additional wear and tear on your car. This cannot be measured or quantified, but there will be additional expenses in the long run because of this.
- The cost of gas will determine your true profits. The pay stays the same with Uber, but if the cost of gas goes up, your pay goes down. We are in a good place with gas prices right now, but that may not always be the case.
- If someone gets sick in your car. Uber pays to have it professionally cleaned, it’s part of that insurance benefit. But we personally talked to a driver that had this happen on their first drive! They said the smell and effects never fully went away.
- The opposite as above, you might meet some weird people. But the system is quite safe regardless. Just maybe some odd ducks. One of our readers shared a story about a woman that rode in her car with two stuffed rabbits. The rider whispered to them continually and treated them like her kids but ended up giving our reader a larger tip because “the rabbits told her to”. The moral of the story is you just never know who you might pick up. 🙂
- The requirements for the vehicle and for the person. They are stricter, but for absolutely good reason. But this makes it a side gig that will only apply to some people, not available to everyone.
What we recommend you do now
Just sign-up and apply to be a driver. The process is simple. We reached out to Uber and asked if there were limits, territories, minimum hours or drives required. No, none of this is an issue! You can drive wherever, whenever you want for as long or as little as you want. We even met a driver who picked us up once. We asked him how often he drove. He said that he just turns it on (the app that waits for a pickup) whenever he has a couple of hours to kill and it has worked well for him to redeem his time and make some good money on the side.
We also asked Uber if there would be anything that disqualified a person from driving. The answer was, “as long as they meet the requirements for car and personal record, there are no other restrictions or requirements and they can start immediately after approval and set-up!”
In the end, it never hurts to have an opportunity to earn extra literally knocking at your “car” door. Apply to drive and use it when you want and when you need it!
It really is one of the easiest, less committed ways to make money on the side.
We want to hear from you. We had talked to and interviewed many people for this article, but we know there are so many thoughts and experiences out there. We would love to hear from you either as a driver or as a rider.
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