Being an independent driver can mean a good income, but it also comes with some planned and sometimes unexpected costs. Over 1,419,427 individuals currently work as delivery drivers in the United States.1 If you are an independent driver and need some extra funds from time to time, there are several options, including cash advances.
Cash advances can mean the money you need right away to take care of your small expenses. Continue reading about the different expenses that can come up for Uber and Lyft drivers and cash advance options when you need money to pay for them.
Who Qualifies as an Independent Driver?
An independent driver is anyone who uses their vehicle for contract driving work for one or more companies. For example, an Uber driver. This type of work is great for people that want independent jobs. The average hourly rate for Uber and Lyft drivers in the U.S. is roughly $18.78, but the amount you can actually earn varies by location.2
An independent driver can be a truck driver with a commercial driver’s license (CDL), a rideshare driver (Uber driver, Lyft driver, etc.), or a delivery driver with a standard driver’s license. Along with the proper license, an independent driver must have insurance and be either a United States citizen or a permanent resident.
This kind of work can be great for those who want to work for themselves, set their own hours, and want a steady source of income for long-term or short-term financial needs. And when things are set up to benefit the gig economy, business can be great! However, working for yourself as a Lyft or Uber driver also means taking care of several expenses on your own.
What Expenses Do Uber/Lyft Drivers Have?
If you don’t have experience yet as an Uber/Lyft driver, then you may be curious about the various expenses that come with it. Below are some expected and hidden fees and costs you should budget for.
Different Vehicle Expenses
Cars and trucks come with their own sets of expenses, and as an independent driver, you will have to take care of them on your own. Here are some examples:
The Purchase of the Vehicle
If you don’t have your car or truck because you are just getting started, you will need to pay for it. Some people may be able to pay out of pocket, while others will have to look into financing or getting an auto lease.
Gas or Diesel
Depending on how far you drive, gas or diesel can be one of your most significant expenses as a contractor.
Regular or Unexpected Maintenance or Repairs
Regular maintenance is another essential part of keeping your Uber/Lyft vehicle in working condition. Sometimes unexpected expenses for repairs can come up for a variety of reasons. For example, if you are in a car accident or a car part has reached its natural life cycle, you will need to pay for those costs.
In most states, you need some kind of car insurance coverage to be driving. Some companies may ask that their drivers have more coverage than the minimum required amount. And so, you will need to take care of that cost independently. Car insurance can go up to a few hundred dollars a month.
Highway Toll Expenses
Each state works a little differently with its highway tolls. Essentially you pay to use the road before you get onto it. Tolls don’t cost much on their own, usually a few dollars, but if you often use highways for your Uber/Lyft job, those tolls can add up. Depending on your driving, you may need a few hundred monthly to cover toll costs.
Personal Products for the Job
Personal product costs usually only apply to truck drivers who live and sleep in their vehicles. Factor in small appliances and furniture, bathroom supplies, hygiene products, and sometimes pet costs depending on your travel companion!
As a truck driver, all your food will be from the road. Depending on your appetite, food costs can range anywhere from $200-$400, so make sure you factor that in!
Standard car insurance will work for your driving and working needs if you are driving a car. However, you must have commercial truck driver’s insurance as a truck driver. It includes liability insurance, medical coverage, physical truck protection, and even cargo reimbursement if something goes wrong. Commercial truck insurance can cost anywhere from $60 to a few hundred dollars a month.
Necessary Tools and Equipment
Although a rideshare or delivery driver may not necessarily need all these things, a truck driver definitely will. Here are some things you should have with you to keep you safe at work in case of an emergency:
- Jumper cables
- A car emergency survival kit
- A first aid kit
- A small tool box
- An air pressure gauge
- Safety glasses
- Sets of wrenches
- A High visibility vest
- Road cones
Cell Phone and Technology Costs
Those who rideshare or work as gig workers will likely not be able to work without having a cell phone. Everything from their pick-up directions to their paycheck deposited into their bank account will require a smartphone.
Delivery, truck, and rideshare drivers will have to pay taxes. Drivers can expect to pay self-employment taxes along with state and federal taxes. For self-employment taxes, you will need to keep some money aside from your income, as it is not automatically deducted from your paycheck.
Adding The Right Tax Deductions Can Help
Self-employed workers can get a lot of money back during tax season if they include all the correct deductions. For all of the above expenses and any others you incur during the year, you should be able to deduct them from your taxes. This could mean a significant reduction in the taxes you owe for the year.
Pros and Cons of Common Cash Advances
|Type of Loan||Pros||Cons|
|Credit Card Advances||– Immediate access to cash– No application process if you already have a credit card||– Higher interest rates than regular credit card purchases– Fees may apply– Can lead to increased debt if not managed properly|
|Employer Advances||– Typically no interest rates– Simple application process||– Reduces future paycheck– Not all employers offer this option– Can create tension with employer|
|Pawn Shop Loans||– No credit check required– Immediate cash||– Risk of losing the pawned item if you can’t repay– Typically only small loan amounts– High interest rates and fees|
|Payday Loans||– Fast access to cash– Often available even with poor credit||– Extremely high interest rates and fees– Short repayment period can lead to a cycle of debt– Not legal in all states|
|Personal Loans||– Can be used for almost any purpose– Potentially lower interest rates than credit card advances or payday loans– Available from a variety of lenders||– Requires a credit check– Some lenders may require collateral|
|SBA Loans||– Designed for small businesses– Potentially lower interest rates– Long repayment terms||– Requires a detailed business plan– Longer application process– Not all businesses qualify|
*Please remember that these are general pros and cons, and the specifics can vary based on individual circumstances and the specific terms of the loan or cash advance. Always read and understand all terms and conditions before taking out any form of loan or cash advance.
Cash Advance Options for Drivers You Can Look Into
Whether you are an Uber driver who doesn’t need the money right away or needs cash quickly, knowing what your options are will help you. Here are some cash advances to consider:
A Credit Card Cash Advance
If you already have a credit card, you can skip the application process and hard credit inquiry with a credit card cash advance. Many credit cards offer the possibility to take out cash advances. There is often a cash limit that may be different from your credit limit, and you may only be able to borrow a few hundred dollars. One thing to pay attention to is the interest rate and fees, as the rate for cash will be higher than credit card transactions.
A Cash Advance on Your Paycheck
Depending on the company or companies you work for, you may be able to get a cash advance on your paycheck. Talk to your employer about the different options that they may have. The great thing about this is that you will not have to go through a lengthy process or pay interest. However, the last thing you want to do is not have money when you need it because you took your funds early.
A Pawn Shop Loan
A pawn shop loan lets you provide an item to secure some funds. Pawn shop loans usually only provide a few hundred dollars, but that can depend on the item. Pawn shop loans also come with the risk of losing your asset if you cannot repay.
Payday loans provide fast cash, sometimes on the same business day you apply, for a few hundred dollars. Although payday loans are painted as convenient and affordable, they should be avoided. They come with extremely high-interest rates and hidden costs that can lead to a cycle of debt. So all those future earnings you may be thinking about could be at risk.
A personal loan is one of the most versatile loan options available. You can have a low credit score and still get approved for a personal loan that can come with competitive interest rates and manageable monthly payments, but that will vary depending on your lender. You can look at online loans for the most flexibility.
Small business loans from the federal government can help Uber drivers, Lyft drivers, delivery drivers, truck drivers, and other contracting drivers. You can use these loans for any business-related expense, and they can come with flexible repayment plans. Whether you are just starting or have been trucking for years, an SBA loan can help.
Loan Options if You Need to Purchase a Large Expense
You may require a large loan if you need money for a more considerable expense, such as purchasing a car or truck. If you need a large amount of money for truck driving, ridesharing, or delivery driving, you can look into:
Car loans can help you finance a vehicle that can cost a small or large amount. Approval will be based on your income, credit history, and ability to repay your loan. You may need a cosigner or a co-borrower for approval if you don’t have good credit.
Commercial Truck Loans or Leases
Some lenders only focus on providing truck financing and leases. As a contract truck driver, your most significant expense will be purchasing your vehicle. These companies may be able to help you get bad credit loans as a truck driver.
Large Personal Loans
Although personal loans can be small, they can also come in large amounts. With a large personal loan, you can buy your vehicle or use it to cover unexpected expenses.
FAQs about Cash Advance Loans
We understand that you’re looking for a quick and convenient way to access funds. There are several cash advance apps available that cater to the needs of delivery drivers. We recommend doing some research to find the one that best suits your needs.
Most cash advance apps offer instant or near-instant access to funds. However, the exact time can vary depending on the cash advance app and your bank account’s processing times.
Yes, many cash advance apps are designed to cater to the needs of gig economy workers, including Uber and Lyft drivers. These apps could provide a convenient way to cover unexpected expenses or bridge the gap between paychecks.
Most cash advance apps do require you to have a bank account. They use your account to transfer funds and to debit repayments when they’re due.
The best cash advance apps depend on your specific needs and circumstances. Some apps offer larger advances, while others might offer lower fees or more flexible repayment terms. It’s important to compare different apps and read user reviews to find the best fit for you.
Fees can vary widely between different cash advance apps. Some apps charge a flat fee, while others might ask for a voluntary tip. Be sure to understand all potential hidden fees before you take out cash advances.
Most cash advance apps don’t require a credit check, and using them won’t typically affect your FICO score. However, if you fail to repay the advance, the app could report your account to credit bureaus, which could negatively impact your FICO score. Always make sure you understand the terms and conditions before using a cash advance app.
Key Takeaways From CreditNinja
If you are a delivery driver that works for Uber/Lyft, know that there are loans that can help you get cash quickly. A lot of Lyft and Uber drivers settle for freelance cash advance loans because a credit check is not necessary and payment can be deducted from future sales. However, borrowers typically end up stuck with high interest rates and fees.
Independent contractors could use personal loans instead of cash advances. A personal loan may provide extra cash despite poor credit. Check out our blog for additional information on various loan products and tips on building a good FICO score.