A rapid increase in the use of ride-sharing apps like Lyft and Uber has provided many job opportunities for people who want to generate income on their own schedule.
The best part? These people only need a valid driver’s license and a car to start making money!
Unfortunately, there are a few expenses associated with the role, and maintaining a vehicle to company standards and policies can be a bit costly. This is when Lyft and Uber drivers can consider outside sources of income to supplement their work, such as a Lyft driver payday loan.
Here are some other financing options to consider.
Why Rideshare Drivers Need Funding
Here are three of the most common reasons a Lift or Uber driver may need additional financial assistance:
For emergency funds
Being a driver for Lyft or Uber usually comes with a good financial package, but the job doesn’t come without its own set of significant expenses. For example, owning a car that can then be used for commuting can be quite expensive.
If you consider the cost of car upgrades and maintenance, gas, parking fees and accessories, money can quickly add up and become an unmanageable sum!
Debt Consolidation
This is a common strategy for paying off debt with a single financing solution. It is an ideal solution that helps borrowers to repay a loan amount in full. For a rideshare driver who may have balances with interest rates, debt consolidation may be a good idea.
Buy a new car
Using a loan to buy a new car can be a good way to solve a pretty big problem. After all, having a quality car is an asset as a Lyft or Uber driver. Taking out a loan allows drivers to have a solid source of income without having to dip into their savings or shell out hefty up-front payments.
Are they eligible for loans?
The simple answer is yes, Lyft and Uber drivers are eligible for certain loans.
Unfortunately, unlike contractors, Lyft and Uber drivers may have a harder time qualifying for any type of loan. This is largely due to the unpredictability of the ridesharing industry, stringent documentation requirements, poor credit history, and even employment status.
Types of loans available
There are different types of loans available for Lyft and Uber drivers to choose from and apply for, depending on specific circumstances. We have described some of the most suitable options below.
Payday loans
One of the main buffers to ensure that a car stays in pristine condition is a payday loan. Although this can be a practical solution if they are in a difficult situation, it often comes with higher interest rates which can make repayments much more expensive than they should be.
Secured loans
These have lower interest rates in exchange for collateral types of items. It’s one of the best types of loan a Lyft or Uber driver can get, and it’s good for improving credit scores. Yet, if a loan is not repaid on time, the car may be lost as collateral.
Unsecured Loans
It’s another good option for Lyft and Uber drivers to consider, but it’s much harder to qualify than other types of loans. If they don’t want to put their car under warranty, this is a great alternative.
Loans for bad credit
If rideshare drivers have a bad credit history and are not eligible for secured loans, this is a good alternative. However, it has stricter repayment terms and much higher interest charges as they pose more risk to lenders.
Credit card
It’s the best option for Lyft and Uber drivers looking to fund some bills from time to time. It’s a pretty straightforward route to a line of credit that can be used to make purchases for the car, buy gas, and even pay for needed repairs. However, they must repay the minimum amount before the delegated due date.
Personal loans
Lyft and Uber drivers can apply for personal loans in any situation. If they have collateral or decent credit, they can receive much lower rates on whatever loan they get. Whether they want to finance car repairs or buy months worth of fuel for the car, a personal loan can be a very useful tool!
Other financing options to consider
Instead of resorting to quick cash loans or payday loans with high interest rates and fees, here we have listed the various alternative funds that drivers can apply for.
Credit line
Sometimes a borrower does not need to take out a loan but still does not have enough money should an emergency arise. This is where a strong line of credit will come in handy. It provides Lift and Uber drivers with a comfortable cushion of funds to cover maintenance costs and other relevant purchases.
Cash advance
If a Lyft or Uber driver has bad credit, a cash advance may be the answer. It is not a loan, but rather a calculated cash amount that is given to the driver based on all of their future earnings.
Alternative Small Business Lending Platforms
There are many companies that might be willing to offer more suitable loans for small businesses operating in the economy, such as Lift and Uber drivers.
Depending on which lender they choose to go with, drivers could receive a loan of $10,000 and an additional $15,000 in the form of a line of credit.
These lenders usually charge higher interest rates, which can put anyone in a more difficult financial situation.
Summary
There is no doubt that being a Lyft or Uber driver can sometimes be quite an expensive task. Fortunately, drivers no longer have to shell out money out of pocket to cover work-related expenses. This is because there are many suitable financial alternatives.
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