# Financed car for ride share



## AceManShow (Sep 24, 2015)




----------



## Goduckies (Mar 23, 2017)

Yup


----------



## oldfart (Dec 22, 2017)

The money you bring in using a car for business is not all profit. The depreciation of the car is an expense. Its an expense whether you pay a bank or own the car outright. 


I own my car, and set money aside each week to buy another car when the one I own, and use for rideshare, using finally craps out. I set aside $200 a week, so that at the end of a year I can replace the engine, if needed, or buy a $20000 used car after 2 years. You can look at that $200 as a payment to me for the car Im putting into service, or as savings to replace that car when it craps out... but either way its an expense 

To say the same thing in a different way; It dosent make much difference whether I finance a car and pay the bank $800 a month until its paid off and then do it again. or put $800 a month in the bank to buy another car in 2 years... either way I have an $800 monthly expense. In the first case I pay interest, and in the second case I "invest" my owned car in my business.

i think the mistake the guy in the video makes, is that he dosent consider the investment of an "owned" car as an expense.


----------



## bsliv (Mar 1, 2016)

Whether you pay cash or finance the car makes no difference. I may 100% finance my 2018 Bugatti. Some old fart may pay cash. If we both drive exactly the same, we'll both have the exact same cost to drive (other than finance costs which may be 0% anyway). The only difference is the cash buyer will prepay the depreciation. The monthly payer will have that continuing cost. But it totals to the same amount.


----------



## thatridesharegirl (Jul 7, 2016)

bsliv said:


> Whether you pay cash or finance the car makes no difference. I may 100% finance my 2018 Bugatti. Some old fart may pay cash. If we both drive exactly the same, we'll both have the exact same cost to drive (other than finance costs which may be 0% anyway). The only difference is the cash buyer will prepay the depreciation. The monthly payer will have that continuing cost. But it totals to the same amount.


Not necessarily true. When buying a used car, paying in cash can help you negotiate a lower purchase price.


----------



## bsliv (Mar 1, 2016)

thatridesharegirl said:


> Not necessarily true. When buying a used car, paying in cash can help you negotiate a lower purchase price.


Maybe, maybe not. *Some *used car dealers make money on the financing. They don't want you to pay cash.


----------



## thatridesharegirl (Jul 7, 2016)

0% financing is usually only on NEW cars (not a smart decision for uber, see: depreciation). Uber is generally for people without an abundance of other options, and many uber drivers choose predatory lease agreements because they don't have the credit to buy a car. The likelihood of an Uber driver getting 0% APR on an appropriate used car is very low.

If you finance your car, the bank owns it. If they find out you're using it for rideshare, they can and will confiscate it.

If you pay for a car in cash, you own it.


----------



## bsliv (Mar 1, 2016)

thatridesharegirl said:


> can and will confiscate it


Only if the contract prohibits it. Many finance or lease cars for business use, not necessarily ride for hire though. I should probably look at my contract.


----------



## Asificarewhatyoudontthink (Jul 6, 2017)

oldfart said:


> The money you bring in using a car for business is not all profit. The depreciation of the car is an expense. Its an expense whether you pay a bank or own the car outright.
> 
> I own my car, and set money aside each week to buy another car when the one I own, and use for rideshare, using finally craps out. I set aside $200 a week, so that at the end of a year I can replace the engine, if needed, or buy a $20000 used car after 2 years. You can look at that $200 as a payment to me for the car Im putting into service, or as savings to replace that car when it craps out... but either way its an expense
> 
> ...


If you are paying 800 a month in a vehicle for Uber you are already doing it wrong.
Used, cheap, easy to repair, low cost of parts.

Anything else is plain old fashioned ignorance.


----------



## Older Chauffeur (Oct 16, 2014)

bsliv said:


> Maybe, maybe not. *Some *used car dealers make money on the financing. They don't want you to pay cash.


Even new car dealers get a kickback from some lenders for steering business their way. If you're good at negotiations, grind them down to get their lowest price, letting them believe you are going with their lender. When the contract is complete with signatures it should have in the boilerplate wording allowing you to pay the financed amount in full with no prepayment penalty. I've done that here in CA, but I believe it is a part of federal law.


----------



## oldfart (Dec 22, 2017)

Asificarewhatyoudontthink said:


> If you are paying 800 a month in a vehicle for Uber you are already doing it wrong.
> Used, cheap, easy to repair, low cost of parts.
> 
> Anything else is plain old fashioned ignorance.


We are comparing financing a car to paying cash, not discussing the best car for rideshare. It dosent matter what car you use for this exercise. I already owned a $25000 used car with 70000 miles on it. That I put into rideshare. And I plan to get 2 years out of it. So that's the example I used in my post

If you prefer to drive a beater and you can make the money you want with it; then by all means do so. The point is that whether you finance it or paid cash , you have an expense each month. And whether it's a payment to a bank or to a "buy here - pay here" used car lot or depreciation, the expense is about the same


----------



## bsliv (Mar 1, 2016)

The title of the video is misleading. The video guy seems to think a new car is financed and a used car is bought with cash. That isn't necessarily true. In fact, it could be the direct opposite. He should have title the video 'better to use a junker than a new car if profit is the motive'. 

He droned on about repairs. He didn't mention new cars come with warranties, some very long. If one has $20,000 in the bank they could pay cash and have no funds remaining for repairs. Or they could finance the $20k car and have a reserve fund. 

He made some good points, too. But I'd take what he says with a grain of salt. 

He failed to mention that buying an old car for rideshare when you already own a car can be a bad idea. 100% of the cost of getting that old car on the road and keep it running is an expense to the business. Whereas using a car that is already in your garage saves the base insurance costs, saves the registration cost, etc., because those costs would have been incurred without rideshare. They are sunk costs and not a cost to the business. 

The bottom line is that it is not free to drive a car. There are expenses (depreciation, maintenance, repairs, licensing, insurance, etc). The expenses can and should be calculated or estimated.


----------

