Would you rent your car out to total strangers?
Given the rise of car renting apps, would you really be happy letting strangers drive your pride and joy?
Car renting apps have been on the rise this year, and given how much money manufacturers such as Daimler are ploughing into car sharing projects, the idea of letting a stranger drive your car in exchange for money is pretty much here to stay.
Wait… what? I can make money by letting strangers drive my 1,000bhp Mustang?
Erm, I probably wouldn't advise putting a bona fide modded nuttercar on one of these market places, but yes – the likes of Turo, Hiyacar and Easycar are all designed just like AirBnB. You advertise your car for rental, and other users of the app can turn up and drive it around, fully insured, while you get paid for it. The app company takes a cut (in Turo's case it's 25%), but in many cases it's possible to make a decent sum of extra cash off it.
Is it as easy as that?
Like any marketplace, you need to keep an eye on your costs vs the income to make sure it's worthwhile. I found this interesting breakdown of costs from a Turo user called Jerry who makes more than $5,000 per month from his fleet of cars.
Jerry leases his cars, so has a fixed monthly cost for 'owning' the car. This breaks down to $133 for the lease payment on the car (in his case, he leases the cars over a fixed term of 24 months and then returns them), $80 for insurance and $60 for car washing between customer leases.
That gives him a total monthly cost of $273.
Turo's daily rate is $45, which, after their 25% cut leaves Jerry $33.75. At what he calls a "conservative" utilisation rate of 70%, that gives him a monthly revenue of $708.75 – meaning he clears $435.75 monthly profit on just one vehicle.
Easy money, right? Where do I sign?
As you might expect, there are a couple of caveats. First off, you have to clean and deliver the vehicle to the customer for each lease (unless they opt to pick up from you), although Jerry insists this doesn't take as much time as you would expect.
Also, his model involves owning (or at least long-term leasing) a full fleet of cars top generate the $5000 a month he is pulling in. And he cautions that buying them at the right price is crucial to achieving his impressive profit levels.
I only have one car, can I still do it?
Of course. And this is probably going to be the case for the vast majority of users, ie, people who own a car but perhaps don't use it a great deal and want to make an extra buck out of it – just like people who make some extra cash by putting their spare room on AirBnB.
But would you hand over your pride and joy to a stranger?
Jerry's model is purely a transactional one and he has no emotional attachment to the vehicles he leases, but would you be willing to hand over the keys to your beloved car to a total stranger?