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Car Loans for Uber Drivers
●January 13, 2021●5 minute read
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Becoming an Uber driver is a great way to pick up some extra money in Australia. You also enjoy the luxury of flexibility since your pay is directly proportional to how much you work, so driving an uber can either be a pass time or your main hustle. You get to call the shots on how many hours to operate, and how many sick days you’re allowed. But there’s one essential thing you need to have before carrying down this route, and that’s a car. So in this post, we’ll be walking you through how to get a car loan for the specific purpose of uber.
Uber has strict policies when it comes to the type of cars they deem fit for their services. So before you look into getting a loan as a driver, you must be armed with information about the kind of vehicle that is acceptable. Here are their requirements:
- The vehicle must have four doors.
- The vehicle must have at least four seats.
- The car must be no more than ten years.
- The car must be registered.
- The car must pass an Uber inspection.
- The car cannot have a brand logo.
As a driver, there are also requirements you have to meet before becoming an Uber driver.
- The driver must be at least 21 years old.
- The driver must have at least three years of driving experience.
- The driver must have a flawless record.
- The driver must submit to a background check.
What options do I have?
Like with regular car loans, there are several kinds of auto loans you may choose from as an Uber driver. Each of these options has their implications, and the right alternative for you might differ from the next person’s. So weigh your circumstance uniquely. Here are the kinds of finance available:
Secured car loans: Secured loans are low-gamble to the moneylenders since they can recoup their money by auctioning the vehicle. Should you not have enough loose funds, it’s a good idea because financiers are more likely to reduce their APR. Still, it would help if you had diligence with your repayments, or you could lose the vehicle.
Unsecured car loans: Unsecured loans are a contrast to the one listed above. Financers cannot legally seize the automobile if you defect on a repayment. It might appear to be a better alternative if your earnings are unstable, but prepare to bear the burden of a more excellent APR.
Bad credit car loans: People with a lousy credit history tend to have fewer options in terms of seeking a vehicle advance. Lenders have less inclination to trust you, the worse off your rating is. But specialist loans exist for individuals in such a tough spot. They often come at a more excellent APR, but they’re worth looking into, especially if your credit file is pretty rough.
If you’re applying for a loan for the specific purpose of Uber driving, you might not have the option of a novated lease or hire purchase. It’s essential you also abstain from subleasing a car from another driver. In most instances, your name will not appear on the insurance, and that’s a direct violation of Uber policies and can get you in trouble. Not only do you risk being banned from the service, but in the event of an accident, you could be held liable without any insurance.
New vs Used car for Uber
As we mentioned earlier, according to Australian Uber policies, all vehicles must be less than ten years of age. So you can’t get a loan for a car that’s been operational for more than a decade. In light of that rule, you might think that you have to opt for a brand new car, but that’s not necessary either. As long as the vehicle is roadworthy, and without faults, you can still use a second-hand car.
It’s essential to keep that in mind when applying for a loan because the price tag of new cars tends to be higher. On the other hand, a more recent model is more likely to utilize the latest technology, and that can reduce its running cost in terms of fuel consumption and more. Plus if you see yourself making a living from Uber for the long haul, buying a new car means you can use it for at least ten years. If you get a second-hand car, you have to upgrade it once its ten years old should you want to continue driving. Also, if you’re not thorough with the inspection and you miss something, you could end up with a compromised car that doesn’t serve its intended purpose.
What if I can’t afford the car loan now?
All isn’t lost if you can’t afford to make the necessary car loan deposit. Some people, especially those who’ve been unemployed for a while, it can be challenging to meet the required qualifications. One of your options is to get started with a car rental, so you can save enough money to get a good vehicle advance. Most of the time, you’ll only have to pay a rental fee upfront. The running cost of maintaining a car, you can get when you start working. So if getting a hired car is that easy, why bothering opting for a car loan? You might be asking. Well, it’s pretty simple. When you rent, the car isn’t yours, and that can limit your control.
Another option you have while you save up for a deposit is to borrow a friend’s car. You only have to make sure the insurance policy is in your name, and you’re good to go. Either method is a better option than making multiple applications. It also helps build your credibility as a competent driver, while you put money aside for your vehicle. Remember that if you’re in an accident, the real owner of the car may be held liable, so you shouldn’t get too comfortable.
As a final note, being an Uber driver can be an exciting adventure; you get to meet different characters and explore parts of the city you usually wouldn’t go. You can also list Uber driver as your profession when applying for a loan, and get approval. As an Uber driver, you will be using the vehicle for business purposes. You may wish to consider a chattel mortgage. For more information on the differences between chattel mortgages and consumer car loans, and whether a chattel mortgage is right for you, read our blog post ‘consumer car loan vs chattel mortgage‘.
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Written by Jacaranda Team