You have a vehicle. You need to supplement your income. Driving for Uber or Lyft may seem like a no-brainer. Since Uber’s 2009 launch (and Lyft in 2012) rideshare driving has become almost synonymous with side hustles and the...

You have a vehicle. You need to supplement your income. Driving for Uber or Lyft may seem like a no-brainer.

Since Uber’s 2009 launch (and Lyft in 2012) rideshare driving has become almost synonymous with side hustles and the gig economy. Lyft self-reports 1.5 million drivers in the U.S. Uber doesn’t share its numbers, but many drivers work for both apps, which tout flexible work and quick money. 

But is ridesharing all it’s cracked up to be? Before you sign up, take some time to answer these sobering questions.

1. How Much Will I Really Be Making?

Uber and Lyft drivers are considered independent contractors, not employees. So earnings can get a little tricky. First of all, the companies don’t pay by the hour. They pay per fare.

Even trickier, the pay is broken down into several parts: base pay (a guaranteed amount), plus bonuses, promotions and tips. Every part of that equation may fluctuate per ride — making hourly earnings nearly impossible to project.

Still, on average, drivers can rake in decent dough. The Penny Hoarder analyzed self-reported wage data from Glassdoor and found that Uber drivers earned between $12 and $16 per hour, based on 461 wages. Lyft drivers took home $15 to $16 an hour, according to 394 drivers.

But technically, as an independent contractor, you’re only getting paid if you’re en-route or already chauffeuring a passenger. The time you spend waiting for a fare or returning to a populated area after you’ve dropped off a passenger doesn’t count.

All the while, you’re racking up mileage and burning gas, another expense that should be subtracted from your earnings.

Jerry Brown, a library tech and former rideshare driver from Louisiana, started picking up on these “invisible expenses” when his bank account balance wasn’t what he expected.

“I did a cost-benefit analysis,” he said. “The profit only ended up being $10 an hour when we broke down all the other expenses… I didn’t really think of that going in.”

2. Can My Vehicle Handle It?

The first thing you need to determine is if you’re vehicle is eligible for ridesharing. In our Uber vs. Lyft guide, we break down the basic requirements. The biggest one being: Your car, truck or SUV needs to be a 2002 model or newer to drive for Uber and a 2006 model or newer to drive for Lyft. 

Your vehicle must be able to fit at least four passengers for both services. It needs to be in good working condition, too. But just because it’s in good condition at first doesn’t mean it’s going to stay that way. Besides gas, Brown said his maintenance costs piled up quickly.

“I put almost 30,000 miles on my car,” Brown said.

Those miles cost more than just gas and oil changes. They depreciate your car’s value, too.

“I eventually decided to pivot away from Uber as a side hustle because it was too much wear and tear on my car,” he said.

3. What Are the Risks?

The most dangerous part of driving for a rideshare company … is the driving part. Driving is one of the most dangerous things we as Americans do on any given day.

According to the National Highway Traffic Safety Administration, law enforcement recorded 6.5 million automobile accidents in 2018. Those accidents resulted in 36,560 deaths and 2.7 million injuries.

In addition to the nature of the job, rideshare drivers and gig workers in general have a few other factors to keep in mind. While drivers have to go through background checks and submit government-issued IDs to the gig companies, passengers are often anonymous and untraceable.

“The risks workers encountered are pretty extensive,” said Dr. Alexandrea Ravenelle, a gig economy researcher and professor of sociology at the University of North Carolina. “Workers don’t always know what they’re getting involved in” when they take a fare.

In December, Uber released the extent of those risks in its first ever “US Safety Report.” The study analyzed fatal accidents, physical assaults and sexual assaults across 2.3 billion trips in 2017 and 2018. The company reported 5,981 incidents of sexual assault. An analysis of Uber’s data indicates that in almost 2,700 of those incidents, the driver was the victim. Twenty two drivers died in car accidents, and seven died from physical assaults.

Lyft has not released similar statistics.

4. Are Dash Cams a Good Idea?

If you are prepared to invite strangers into your car, a dash cam may be a good investment. Because of your independent contractor status, neither Uber nor Lyft will cover the cost of the camera, but it could be a lifeline should something go wrong during a trip.

Dash cameras are relatively inexpensive and easy to set up. On Amazon, a standard HD camera costs between $30 and $100.

Both Uber and Lyft offer complimentary insurance for drivers, but the policies are nuanced. Uber insurance coverage varies depending on if you are merely online, en route to a passenger, or have a passenger in your car. Lyft’s insurance policy works similarly. The biggest difference between the two is deductibles: $1,000 for Uber and $2,500 for Lyft.

A dash cam provides legal backup in case an accident happens while you’re logged on. It may also strengthen your claim to receive reimbursement if a passenger damages your car.

For example, if a passenger spills a box of greasy take-out all over your back seat, you’re going to have to stop taking fares and deep clean your upholstery. You can make an inconvenience claim to receive up to $250, but the hard part is proving who caused the damage. That’s where a camera comes in handy.

Perhaps the biggest perk is the Hawthorne effect: When you have a camera clearly visible to passengers, they’re likely going to be on their best behavior.

5. What’s My Exit Plan?

The gig economy offers easy entry compared to the traditional job market. It’s the leaving part where most people get stuck.

It’s easy to start depending on the extra money from driving. But once that cash starts going toward rent or groceries, quitting puts your finances at risk. And that situation can easily snowball into never-ending work.

To avoid that scenario, create a side hustle exit plan before you take on additional work. Compared to some side gigs, the startup costs to rideshare driving are relatively low. So your plan doesn’t have to be bound and laminated. 

It can be something as simple as: I want to pay down my remaining $1,500 in credit card debt by driving for Uber on the weekends.

When Brown started driving for Uber, he had a clear financial goal in mind to pay off his car loan in six months. Even with that goal, he said the work sucked him in.

“It was kind of addictive,” he said, telling himself “just one more ride, just one more ride.”

Brown was indeed able to pay off his car, but his hustling wasn’t sustainable. He wanted to take better care of himself. 

He realized, “I need to spend less time working so I can enjoy life.”

Adam Hardy is a staff writer at The Penny Hoarder. He covers the gig economy, entrepreneurship and unique ways to make money. Read his ?latest articles here, or say hi on Twitter @hardyjournalism.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

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