Driving for a ride sharing app provides a convenient way to earn some extra cash, but how do you get started? What are the risks? How much can you make as an Uber driver and/or Lyft driver? Here is what you should know before using Lyft or Uber as a side hustle.
How Do Ride Sharing Apps Work?
Ride sharing apps allow drivers to earn money by transporting people from one destination to another, basically as a freelance taxi driver. The app sends a notification to available drivers when a rider submits a request for a ride. The request notification includes the rider’s rating and a price estimate based on the length of the trip and the time of the day.
If a driver accepts the ride request, the app provides directions to the rider’s current location and intended destination. The payments are handled through the app, eliminating the need to exchange money in person. However, riders are free to provide tips to drivers, either in cash or through the app.
How to Start Driving for Lyft
To become a Lyft driver, you need to create an account through the Lyft website or mobile app. The application form also requires you to provide various documents and meet Lyft’s requirements.
Lyft drivers need to provide proof of the following:
- Valid US driver’s license
- Current plates
- Vehicle insurance
- Compatible mobile device
You also need a four-door vehicle. If you do not own a vehicle, Lyft allows drivers to rent a vehicle through Express Drive. In most states, you also need at least one year of experience driving a car.
After submitting your information, Lyft performs a DMV check and a background check. The DMV check includes a thorough look at your driving record. If you have more than three moving violations in the past three years or a single major moving violation, you may not qualify to drive for Lyft.
If you do not have a criminal history or negative driving record, you will likely pass the background checks. The process typically takes two to four days. When you receive notification that you have passed the background checks, you can start getting ride requests through the Lyft app.
How to Start Driving for Uber
As with Lyft, Uber requires drivers to meet specific requirements. Some of the main requirements for Uber drivers include:
- Valid US driver’s license
- At least one year of driving experience (three years for those under 23)
- Eligible four-door vehicle
- Proof of residency and vehicle insurance
If you meet the requirements, you can create an Uber account through the website. You then need to upload the required documents, including a photo of your driver’s license and a photo for your profile.
After you finish uploading documents, Uber completes an online screening process. The company reviews your driving record and criminal history. If you pass the screening process, you can log in to the mobile app and start accepting rides.
Advantages of Driving for a Ride-Sharing App
Uber and Lyft allow you to make money by driving people around your city. It is a simple concept that comes with a variety of advantages and disadvantages. Some of the main benefits of becoming a Lyft or Uber driver include:
1. It Is an Easy Way to Earn Extra Money
The main advantage of driving for Lyft or Uber is that it is easy to get started and does not require any special skills. Anyone with a valid driver’s license who can pass the background checks and meet any additional requirements can start driving for a ride-sharing app.
If you enjoy driving and feel comfortable letting strangers into your car, becoming a freelance driver should be a simple side job. You just leave the app open and accept rides when you have the time available.
2. The Hours Are Flexible
Driving for Lyft or Uber provides greater flexibility compared to most side hustles. You can drive when you want.
If you are feeling sick, dealing with an emergency, or simply do not want to drive, you do not need to accept rides. There are not many jobs where you can take time off whenever you choose.
While the hours are flexible, Uber and Lyft encourage drivers to work during specific times of the day. 7 am to 11 am and 3 pm to 8 pm are typically the busiest hours for ride-sharing apps. Outside of these time windows, you are less likely to find fares.
3. You Do Not Need Work Experience
Uber and Lyft have requirements for new drivers but the requirements do not include previous work experience. If you have never worked before, you can still make money driving for ride-sharing apps. However, drivers under the age of 23 need at least three years of driving experience to drive for Uber.
4. You Can Choose to Get Paid Instantly
Uber and Lyft drivers can get paid instantly instead of waiting for a weekly direct deposit. Both ride-sharing apps allow drivers to receive an instant payment to a verified debit card. Each transaction comes with a $0.50 service charge.
Uber allows any driver in the US with a debit card to request up to five instant payments per day. Lyft allows instant payments when you reach $50 in total earnings.
5. The Application Process Only Takes a Few Days
Most applicants start driving for Uber or Lyft within a few days of submitting their applications. The longest part of the application process is the background checks.
At one point, drivers needed to complete an in-person interview. However, both apps now provide online-only application processes. Unlike many other jobs, you do not need to dress up and go in for an interview. The application process only takes a little bit of time out of your day, making it an easy side hustle to jump into.
Potential Drawbacks of Becoming an Uber or Lyft Driver
Before applying to become a driver for Uber or Lyft, you should consider the disadvantages of ride-sharing apps. A few of the main concerns include:
Allowing strangers into your car may create safety concerns. To help keep drivers safe, Uber and Lyft use rating systems. Drivers can rate passengers and passengers can rate drivers. The rating system provides a way to verify that the passenger has not violated the app’s policies and has a history of using the service.
Uber has also announced that it may start banning riders with consistently low ratings from drivers. Both companies also have policies against certain behaviors. A rider who smokes, drinks, uses abusive language, or damages the vehicle may get banned. Excessive cancellations, having sex, contacting the driver after the end of the ride, or breaking local laws may also result in a ban. By checking the ratings of passengers and using common sense, Uber and Lyft drivers may gain a better sense of safety.
Another potential disadvantage is the amount of income. As a side hustle, you should not expect to replace your day job by driving for Uber or Lyft.
You earn money every time that you complete a fare. The average fare is between $12.50 and $13.25 per trip. However, Uber and Lyft take a cut of the fare. You also pay for expenses such as gas, insurance, and taxes.
Drivers are technically freelance contractors. Instead of having Uber or Lyft take money out of your earnings to cover Federal and state taxes, you are responsible for setting aside money. If you earn more than $400 after Uber or Lyft get their cut, you need to pay the self-employment tax. The self-employment tax rate for 2020 is 15.3%.
The next issue is the coverage of the app. Uber and Lyft operate in every US state but not every city and town. Before applying, you need to check the coverage area of the app to ensure that it operates in your region. If Uber or Lyft is not available, you may need to find a different side hustle.
Despite a few drawbacks, driving for a ride-sharing app is still an effective side job for many people. Over three million people currently drive for Uber in the United States and about 700,000 people drive for Lyft.
How Much Can You Make Driving for Uber or Lyft?
Uber claims that drivers can earn up to $25 per hour while Lyft claims that drivers earn up to $35 per hour. However, Uber and Lyft receive a cut of the earnings.
Uber receives 25% of each fare. Lyft receives 20% of each fare. Drivers also need to cover operating expenses, including gas. After accounting for fees and expenses, the average driver earns about $8.55 to $11.77 per hour.
Keep in mind that every driver has different expenses. Your earnings depend largely on how much you drive and how much you spend on the following:
- Car upkeep and maintenance
- Car insurance
- Self-employment taxes
The final earnings are often close to the minimum wage in most states. However, becoming a Lyft or Uber driver still offers a simple way to make money on the side.
Driving just one hour per day may earn a driver close to $70 per week. With several hours of driving per day, a driver may make a decent side income.
Are Uber and Lyft Available in Every City?
As of 2020, Uber is available in 263 cities across the United States. It operates in all 50 states of the US along with Washington DC and Puerto Rico. Lyft has greater coverage with 644 US cities and 12 Canadian cities. About 95% of the US population has access to Lyft services.
When driving for Lyft or Uber, drivers need to be within the coverage area of the app. If you are traveling outside of the coverage area, you cannot accept rides. Lyft and Uber also approve drivers for specific regions, such as the state of the driver’s current residence. You can typically drive in different cities within the same state but need to contact Lyft or Uber when moving to another state.
Alternatives to Uber and Lyft
Uber and Lyft are not the only apps that provide side hustles for those with vehicles. Other ride-sharing apps include:
- Easy Taxi
- Dumpling Drive
While there are many alternatives to Uber and Lyft, most other ride-sharing apps do not offer the same coverage. Alternative options are mostly available in the biggest metro areas on the East and West coasts.
If you live in Los Angeles or New York City, you can choose from a variety of ride-sharing apps. Drivers in other cities may need to stick with Uber and Lyft.
Can You Drive for Both Uber and Lyft at the Same Time?
Many drivers use both Uber and Lyft to earn extra money. Uber and Lyft do not have policies that directly prohibit driving for the rival ride-sharing app. However, both apps need to continue running for drivers to receive ride requests. Uber also needs to remain open in the foreground. If you are away from the app for more than a couple of minutes, it signs you out.
When driving for both ride-sharing apps, drivers typically keep Uber open on the main screen and Lyft in the background. After receiving a ride request from one app, close the other app. When the ride is over, reopen the closed app and continue receiving ride requests from Lyft and Uber.
Last Thoughts on Driving for a Ride-Sharing App
Uber and Lyft are simple side hustles that can easily provide a steady source of income. To sign up, you need to have a clean driving record and no major criminal history.
So, which one should you use? Both apps offer nearly identical interfaces, fees, and policies. Lyft has greater coverage but more people drive for Uber. In the end, you may choose to drive for both.
If you meet the requirements, you can start earning money. The next step is to determine if Uber or Lyft is available in your city or town.