Best Financing Options for Uber and Lyft Drivers
Key Takeaways
Uber and Lyft drivers may qualify for financing depending on the size of their qualifications, such as their credit rating, the number of years the business has been operating, and the type of rideshare loan they are applying for.
The absence of a financial statement may be a hindrance for many Lyft and Uber drivers because lenders will need proof that they are worth the investment.
Drivers may choose to use collateral to reduce the lender’s risk of loan defaults. However, the value of the collateral should be at least equal to the amount of money they are applying for.
Uber and Lyft drivers may use their cars as collateral when applying for a line of credit. In some cases, they may need to hire an appraiser to verify the true value of the asset.
Becoming an Uber or Lyft driver is a great way to pay recurring monthly bills. You can set your own schedule, working full-time to maximize earnings or squeezing in rides part-time to supplement your income. However, this freedom comes with the responsibility of maintaining your own vehicle, which can be a significant expense. Unexpected repairs or the need for a new car altogether can quickly eat into your profits. This is where financing options for Uber and Lyft drivers can come in handy, providing a way to manage these costs and keep you on the road. Let's explore the different financing options available to help you navigate these situations.
Ready to apply for an Uber and Lyft Financing?
How Financing Can Help Rideshare Drivers and Gig Workers
Applying for Uber and Lyft financing solutions comes with tremendous benefits—from covering expenses incurred to owning additional vehicles. Here are the most important reasons why you might need more funds as a rideshare driver.
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Keep Up Car Expenses
While being an Uber and Lyft driver offers great financial benefits, the job doesn’t come without expenses. Owning or renting a car to use for these ridesharing apps can be expensive, especially when you factor in the cost of basic maintenance, upgrades, accessories, tolls and gas, parking fees, and more.
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Purchase Your Own Car or Get a New One
Getting loans and other alternative funding solutions can help Lyft and Uber drivers own the car they want, not as a liability but as an asset. This allows them to generate more income streams without sacrificing the money in their bank accounts. They can also avoid the hefty costs of upfront payments while generating more money.
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Have Funds for Emergencies
Uber and Lyft drivers can use outside financing to create an emergency fund, keeping the money in their bank account to use as needed – i.e. if their car malfunctions or an expensive part needs to be replaced.
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Refinance or Consolidate Debts
A common strategy for paying off outstanding loans is to consolidate them and pay them off through one financing solution. Debt refinancing is an ideal solution for helping borrowers pay the full amount of the loans they’ve accumulated in the past and pay one loan monthly. This is beneficial to ridesharing drivers who have balances with interest rates. Plus, it can help improve their credit score by letting them avoid missing a payment.
Loan Options for Uber and Lyft Drivers
Instead of resorting to quick cash loans or payday loans, which have higher rates and fees, we’ve listed the different alternative funds drivers can apply for.
Independent contractors and self-employed individuals are considered small business owners as long as they report their self-employment income to the Internal Revenue Service. Since that’s the case, borrowers will need to provide documents that make the lender feel comfortable about lending them money.
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Term Loans
Term loans are typically available to businesses with solid financial statements, and they offer a fantastic financing option for Uber and Lyft drivers who have established themselves as small business owners.
When you take out a term loan, you make a down payment that is subtracted from the total loan cost. In exchange, you receive a lump sum of cash upfront, which you agree to repay according to a set schedule. The repayment period for a business term loan can vary from a few months to up to ten years, depending on your business's structure, your credit rating, how long you've been in business, your business trade history, and the reason for the loan.
Term loans generally come with fixed interest rates, meaning your monthly payments will remain consistent. To access longer terms and lower rates, you can offer collateral. Collateral provides the lender with security, ensuring they have something of value should the loan go into default.
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Business Lines of Credit
Being an Uber or Lyft driver means keeping your car on the road. But unexpected repairs, insurance renewals, or even an accident can throw a wrench in your earnings. A business line of credit can be your financial safety net in these situations.
A business line of credit gives you a pool of funds to tap into whenever you need cash for car repairs, insurance payments, more commercial vehicles, or routine maintenance. With this type of financing, you only pay interest on the amount you actually use. Need $500 for a repair? Just withdraw that amount from your line of credit. As you repay it with interest, the available funds in your line go back up. No interest charges accrue if you don’t use any funds.
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Equipment Financing
Equipment financing is a loan specifically designed to help businesses acquire essential equipment. Instead of getting a lump sum of cash, the borrower makes fixed payments over a set term, with the financed equipment itself acting as collateral. If the borrower defaults on the loan, the lender can repossess the equipment to recoup their losses.
Equipment financing is a good option for Uber and Lyft drivers because their car is essentially their business equipment, and they can use it as collateral. It allows them to spread out the cost of purchasing a new vehicle, switching to an electric vehicle, or repairing an existing one over time, so it's more manageable on their income. Additionally, qualifying for equipment financing can be easier than getting a traditional auto loan, especially for drivers with limited credit history.
However, it's important to remember that the car itself becomes collateral for the loan. This means that if the Uber or Lyft driver fails to make their payments, the lender can take possession of the vehicle, leaving them unable to work and earn income.
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Cash Advance
If a borrower's credit rating is a roadblock, they can opt for cash advances. A business cash advance is not a business or personal loan but a calculated amount based on the borrower’s future earnings.
You may wonder why a business cash advance would be a good option for drivers with poor credit ratings. The answer is that alternative business loan lenders do not require them to submit their credit history. That means that regardless of their credit rating, they may get cash approved for a business cash advance as early as 24 hours. Plus, a cash advance offers flexible payment terms that drivers can afford.
Ready to apply for an Uber and Lyft Financing?
How to Get a Loan for Your Rideshare Gig
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1. Fill Out Our Quick Online Application
Fill out our secure online application from anywhere—even while you wait between rides. We’ll ask some basic questions about your business and some personal details to assess your eligibility. The entire process takes about 5 minutes and won’t affect your credit score.
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2. Discuss Your Options
Once you submit your application, a dedicated SMB Compass representative will reach out to you within 24 hours. On the call, we’ll take the time to understand your goals and needs and discuss various financing options tailored to your unique situation. Whether you need a quick fix for a minor repair or funding for a major upgrade, we’ll work with you to find the best fit to keep your business moving.
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3. Get Funded
SMB Compass will streamline the approval process to minimize delays. Our goal is to get you the funds ASAP so you can get back to what you do best – earning income and providing exceptional service to your riders. Upon approval, you’ll receive the funds directly deposited into your designated account, ready to use for approved expenses.
Ready to apply for an Uber and Lyft Financing?
Why Uber and Lyft Drivers Trust SMB Compass
Uber and Lyft drivers trust SMB Compass to keep them on the road. We understand the freedom and flexibility of being an Uber or Lyft driver. We also know the challenges you face, like unexpected car repairs or the need for an upgrade to serve your passengers better. That's why we offer financing solutions specifically designed for rideshare drivers like you.
Our loans are built with you in mind. Even with fluctuating income, they're easier to qualify for than traditional loans. We go beyond just giving you money – we want to see you succeed. We'll work with you to understand your goals and develop strategies to help your rideshare business thrive in the long run.
Don't let car troubles slow you down. With our streamlined approval process, you can get back on the road to earning income quickly. Our competitive rates and affordable payments ensure your rideshare earnings comfortably cover your loan.
At SMB Compass, we're your partner in your rideshare journey. We're here to help you cruise with confidence!
Ready to apply for an Uber and Lyft Financing?
Common Questions. Straight Answers.
Getting a business loan as a Lyft driver can be challenging because traditional lenders usually want to see a steady income, which isn't always the case for rideshare drivers. But there are other options available. For instance, equipment financing can help you pay for a new or better car, making it easier to meet Lyft’s standards and please your passengers. There are also special financing programs just for rideshare drivers that understand how your earnings might change weekly, making it easier to get the financial support you need.