Frequently Asked Questions About Driving for Uber and Driving for Lyft
SmartFinancial Offers Unbiased, Fact-based Information. Our fact-checked articles are intended to educate insurance shoppers so they can make the right buying decisions. Learn More
Uber and Lyft are the two largest on-demand ride-hailing services, with many other smaller companies following in their shadows (Hailo, The Twist, Sidecar, BlackJet, Swifto).
Many people drive for these services as part-time jobs, and some are even making it a full-time career. Surprisingly, more than half of Uber and Lyft drivers are 51 years or older, although most of us think of it as a service run by young people under 30.
Uber started a partnership with AARP in 2015 to give drivers 50 years and older a signing bonus of $35! The Life Reimagined incentive was to get more senior workers to join the company. After all, they have more driving experience and are safer on the road than their counterparts, statistically speaking.
No matter what age you are, driving for a rideshare company is a great way to make extra money every week. Here are some frequently asked questions about what it takes to work for Uber and Lyft.
Should I Become an Uber or Lyft Driver?
Uber and Lyft are alternatives to traditional taxi driver jobs. Driving for Uber or Lyft is not a bad idea if you're looking to make extra money to supplement your bank account. If you enjoy canvassing the town and meeting new people, you'll love this work. It's a great job for students or seniors who need a part-time job.
Unless you're working peak hours every day (very early or late), it'll be hard to make a full-time income driving customers. As a part-time gig, it's an excellent way to supplement your income, especially if you can squeeze in a few peak hours during the week.
Here are a few things to consider when applying to work as a Uber or Lyft driver.
- Find out if you meet Uber or Lyft's requirements to become a driver.
- Decide which service you want to perform. The available services are listed below.
- Decide which hours you want to work, then estimate how much money you're getting paid during these hours.
How Much Do these Ridesharing Companies Pay Drivers?
It is a tricky question because every driver will get paid a different amount, but their actual earnings may not be as advertised. Here is how workers make money with the company.
1.) Lyft's Payment Formula
Lyft pays its rideshare drivers based on the following formula:
Ride Time (the length of each trip) + Distance (how far you drive during a ride) + Tip Money (Drivers keep 100 percent tips) + Bonuses=Your Pay
The company provides bonuses if they need additional drivers on the road during the busiest hours.
2.) Uber's Payment Formula
Do you plan to become an Uber driver? Here is how drivers make money with the business. The company pays its gig workers according to the following formula:
Base fare (pay for pickup, dropoff, time and distance) + Trip supplement (Added help to make the trip worthwhile) + Promotions (Boost, Surge) + Tips (100 percent of tips belong to you and are an addition to your earnings)=Your Pay
Uber's Payment Summaries tab shows how much workers will get paid. It displays your weekly payment summaries for the previous two weeks. The amount shown in your driver app matches the amount shown on your dashboard. Uber displays estimate your net earnings after the Uber service fee and applicable fees have been deducted. The net fare displayed in your app may not match the final payment statement.
In 2015, Uber did an internal study, which claimed that its drivers were getting paid more than $19 per hour. A less-biased, independent study found that they get paid between $13 - $20 per hour, depending on your city and state.
To earn 50K, you'll need to complete 60 rides a week for Uber or 84 for Lyft. If you drive fewer than 35 hours a week, you won't make much money.
What Type of Vehicle Service Will You Offer?
Before you start working for Uber or Lyft, you must decide which types of service you will provide to your passengers.
Uber has five types of services:
UberX – This is the most affordable Uber ride service, so there are only minimum requirements that individuals must meet. UberX requires your vehicle to be a 2002 or newer four-door sedan in excellent condition.
UberXL – It is a low-cost service that provides passengers with more room than they would get in UberX. To qualify, you should own an SUV or minivan made in 2002 or earlier. Your vehicle shouldn't have any cosmetic damage. It should be able to seat six passengers and the driver.
UberSELECT (also known as UberPlus) – It is a higher-priced option for upscale riders. In order to serve customers, you must own a 2009 model year or newer luxury automobile. Your auto should have a leather interior and no visible cosmetic damages. It should be able to seat four passengers plus the driver.
UberBLACK – It is the company's UberX luxury option. Individuals must own a 2012 car or a newer one to qualify for this program. It has to be in excellent condition with a black interior and exterior.
UberSUV – This service is the luxury version of UberXL. Your car should be a 2012 model or newer luxury SUV. It should have a black interior and exterior and seat up to six passengers and the driver.
UberLUX – This service features the best luxury models. Workers must have a 2012 or newer luxury vehicle in optimal condition.
Here are some services available through Lyft's app for workers. They include:
Lyft – A direct ride for customers can help them get to destinations like work or the airport.
Priority Pickup – This option ensures customers have a shorter wait to get to a destination quicker.
Preferred Mode – This selection enables riders to enjoy increased legroom in a newer or top-rated vehicle. They can use in-app tools to customize their preferences for cooler temperatures or a quiet ride.
Lyft XL – This option offers cars with extra room, like SUVs. You'll get extra trunk space and over four seats so the entire family can ride.
Lyft Lux– These are private luxury vehicles with top-rated drivers. Riders can enjoy services like extra legroom and other high-quality services. This service is better for business riders who need to make a grand impression.
Customers can also lock in a price through Lyft's "Wait and Save" choice. Other non-driver options for customers include rentals, transit, bikes & scooters.
Does Uber or Lyft Take a Cut of Each Fare You Earn?
Yes, ridesharing companies take a cut of every ride you make. These are called service fees or take rates. They refer to fees and commissions that gig workers pay companies like Uber or Lyft.
Uber defines it as the difference between what a rider pays and what a driver pays on a trip, excluding tips, tolls, fees, driver promotions, surcharges and taxes.
Uber and Lyft collect the following fees and expenses:
- 20 Percent on Uber X (the cheapest service)
- 25 Percent on UberBlack (black car service)
- 28 percent on UberSUV
- Lyft charges 20 percent of each fare
These companies charge a variable rate. Their upfront pricing for customers is based on a trip's estimated time and distance. Drivers earn money depending on the trip's actual time and distance. The service fee is lower if trips take longer than predicted.
Additionally, your city may also charge a sale tax on your fare (usually between five and 8.85 percent). The Black Car Fund, a not-for-profit workers' compensation insurance provider for Black Car and Luxury Limousine drivers, will take a fee of 2.5 percent, depending on the service and location.
Service Fees May Be Higher than Suggested
Although these ridesharing companies claim to charge between 20 and 28 percent, their take rates might be higher, according to Jalopnik, an automotive industry publication.
Jalopnik conducted a study on Uber and Lyft's take rate fees. Researchers asked ridesharing drivers to provide their fare receipts. They received responses from 14,756 gig workers.
The news agency learned Uber keeps 35 percent of its gig workers' revenues, and Lyft pockets 38 percent. A Business Insider study found that Lyft collected an average of 26 percent of its drivers' fees.
Fees may also change at the company's whim. They may raise or lower fee rates for drivers or drop them for customers. For instance, Uber instituted a price cut for its workers that became permanent.
What Are Other Hidden Expenses of Driving for Uber and Lyft?
If you plan to become an Uber driver or Lyft driver, you will not only have to worry about service fees and sales taxes. There are additional expenses for rides that you must consider. These include:
- Gas or other fuel
- Oil Changes and Routine Vehicle Maintenance
- Auto Repairs
- Car Washes and Interior Detailing
- Self Employment Taxes
- Rideshare Insurance
Other miscellaneous expenses you'll have to worry about are unruly or ill passengers during rides. Some individuals may be drunk when they enter and get sick in the back seat of your car. You may have additional costs for repairs since you drive more.
After all fees, an Uber driver or Lyft driver can get paid an average wage between $8.55 and $11.77 per hour, according to The Street, a personal finance site. They estimated the median earnings for most drivers was $155 per month and an average of $364. The average earnings for full-time drivers are $36,525 per year.
What Are the Requirements to Become an Uber Driver?
To drive with Uber, drivers must meet its qualifications before they can work with the company.
You'll need a clean driving record to work for the service. Additionally, you must own a car that is less than ten years old. The vehicle must be a four-door automobile, truck or minivan with seat belts for four riders, plus the driver.
Your automobile must pass your state's inspection, and the driver must be on the vehicle's insurance policy. You should always keep your car clean, inside and out, to make a good impression on passengers.
When you're an Uber driver, count on regular car washes and possibly even some detailing.
There are several qualifications you must meet to drive with Uber. You must:
- Meet the minimum age to drive in your city
- Have at least one year of driving experience in the U.S. (three years if you are under 23 years old).
- Have a valid driver's license
- Own an eligible four-door vehicle
- Proof of vehicle insurance if you plan to drive your own car
- Documented proof of residency in your city and state
- No more than three minor moving violations in the past three years
- A driver profile photo (It must be a forward-facing, centered photo. The picture should include the driver's full face and shoulders. They shouldn't wear any sunglasses).
- No major traffic violations within the last seven years (DUI, reckless driving)
- No criminal record
Besides the company's qualifications, drivers must meet your state's licensing requirements to drive with Uber. In New York City, you must get a Taxi and Limousine Commission (TLC) driver's license.
To qualify for this license, you must finish a 34-hour For-Hire Vehicle (FHV) course and undergo a criminal background check. The state will also check your driving record and drug history. You must purchase TLC plates for your vehicle.
Oh, and you should enjoy working with people and not be too skittish about strangers getting in your car.
Uber will also require you to undergo a driver background screening before you can work at their company. To get the best but cheapest ridesharing insurance for Uber and Lyft drivers, visit SmartFinancial.com.
What Are Lyft's Driving Qualifications?
You'll need to meet Lyft's qualifications if you'd like to drive for their ridesharing service. The company has the following requirements for drivers:
- Meet the minimum age to drive in your city and other requirements
- Have at least one year of driving experience (more if you're under 23 years old)
- Have a valid driver's license
- Pass a criminal background check
- Have current insurance and registration
- Own a four-door car or rental vehicle
- Complete a vehicle inspection in your city
As mentioned earlier, New York City requires rideshare drivers to get a Taxi and Limousine Commission (TLC) driver license.
To drive for the company, workers must finish a 34-hour For-Hire Vehicle (FHV) course and undergo a background check to ensure they have no previous criminal history, drug usage or traffic violations. You must use TLC plates on your vehicle. You can learn more by visiting this page.
What Are the Best Hours to Work for Uber or Lyft?
Most individuals drive during peak hours. This period refers to the hours when riders use Uber or Lyft's apps the most to get rides to their destinations.
Here are the typical peak periods during a typical week.
- Morning Rush Hour: 7 a.m. – 9 a.m.
- Evening Rush Hour: 4 p.m. – 7 p.m.
- Friday Night: 8 p.m. Friday – 3 a.m. Saturday
- Saturday Night: 8 p.m. Saturday – 3 a.m. Sunday
The peak hours will drive up the average price per ride. It is a dynamic pricing model, which helps drivers to earn more money each week. Peak hours can vary depending on your location.
Do I Need Special Insurance to Drive for Uber or Lyft?
Yes. Your personal auto coverage won't cover damages if you have an accident while working for Uber or Lyft. Why? Many auto insurance policies don't cover commercial work. If you have an accident while on the clock, you could end up paying for another driver's damages and injuries out of your pocket.
Additionally, Uber and Lyft's coverage only kicks in when you're on the clock. Their commercial insurance policies only apply while workers carry customers in their vehicles or after they accept fares. Your personal auto coverage covers you after the rideshare app is off.
The following list explains how this coverage works:
Phase 0: The rideshare app is off and there are no riders in your car. Your personal auto coverage will cover you.
Phase 1: The app is on, but you're waiting for a passenger request. The personal policy doesn't cover you because you're about to work. The rideshare company's insurance offers little or no coverage now.
Phase 2: You accept the request and are en route to pick up an order or passenger. The policy covers you.
Phase 3: You have passengers (or a food order) in your vehicle. The rideshare company's policy covers you.
There is a gap in coverage between waiting for a passenger request and turning off the app. If another car hits you while you're idling, you're not covered by either policy. You'll have to pay for these costs out of your own pocket.
That's where rideshare insurance comes in. It's not very expensive, but it is an essential form of protection if you're working as an Uber or Lyft driver.
What Is Rideshare Insurance?
Rideshare insurance is a type of auto policy developed for drivers who work for app-oriented livery services, such as Uber or Lyft.
It's a less expensive alternative to purchasing commercial auto coverage. These policies fill the gaps that your insurance policies may not cover. They can protect both part-time and full-time drivers. Insurers typically sell two rideshare coverage options. They include:
- Add-On Options – It is an optional coverage that you can add to your existing auto policy.
- Stand-Alone Policy – It is a policy that you can purchase from a carrier.
Both choices cover car damages and passenger injuries. Uber and Lyft require all their drivers to have private auto coverage. Many personal auto policies don't cover commercial work. If your carrier catches you working without enough coverage, they could cancel your policy.
Get the best and cheapest car policies with a rideshare endorsement.
Companies that Provide Ridesharing Insurance
Every state except Fla., Mich., NY
Available in IL, IN, KY, MD, OH, PA, TN, VA, WI, DC
Available in AL, AR, AZ, CA, CO, GA, IA, ID, IL, IN, KS, MD, MI, MN, MO, MT, ND, NE, NM, NV, OH, OK, PA, SD, TN, TX, UT, VA, WA, WI, WY
Available in AZ, CA, GA, FL, NV, OK, TX
Available in AZ, CO, IL, IN, KS, MN, MS, OK, OR, TN, UT, WA, WI
Every state except AK, HI, IL, MA, NY, RI, SD
Only available in CO, IL
Available in AL, AR, AZ, CA, CO, GA, DC, DE, IA, ID, IL, IN, KS, KY, MA, MD, ME, MN, MO, MS, ND, NE, NE, NH, NJ, NV, OH, OK, OR, TN, TX, UT, VT, WA, WV, WY
Does Driving for Uber or Lyft Increase Your Insurance?
Standard insurance policies will protect drivers who use a vehicle for personal use. For instance, it will kick in if you have an accident while running errands. It won't protect you if you have an accident while driving for a ridesharing company.
You must report it to your carrier if you start driving for Lyft or Uber, even if it's a part-time job. While you won't need a commercial insurance policy, there are gaps in insurance, which an agent can help you fill for a minimal amount with an endorsement (rideshare insurance).
What happens if you have an accident and your app was on during the accident? If your insurer insurance carrier learns this, they won't pay you for the claim because you used your car for commercial purposes. You can't lie about this scenario either, because witnesses may recount your work in a police report. If you are not upfront with your insurer, they can and may cancel your policy and refuse you coverage in the future.
Add-on policies will slightly raise your insurance costs by $10. A stand-alone policy will cost slightly more.
Which Is Better? Driving for Lyft vs Uber
It's wise to drive for both Lyft and Uber to maximize your wages. Each has its own reputation within different circles.
Also, rates vary, so it's best to try out both to see where you're earning the most. Learn quickly what the peak hours are (Uber calls these "price surges"; Lyft calls them "prime time") because that's when you're making the most money.
These peak hours for trips are generally very late at night or early in the morning. Events that draw many rides include sports events, concerts, trade shows, conventions and the good old visit to the local bar.
One nifty feature that Lyft offers that Uber does not is the built-in tips on its app. Uber drivers can only take cash if the customer has money readily available.
What Is Uber Eats?
Uber Eats is a service that delivers food from local restaurants. This program differs from traditional food delivery jobs. It allows drivers to be their own bosses by delivering food whenever it's convenient for them.
Customers choose their menu items and pay for them. Drivers pick up the meals and make the deliveries.
To become a delivery person, you'll need to consent to a background screening. You'll have to upload the company's required documents and a photo. After you become active, you can start receiving delivery requests. The app will offer additional resources to help you learn.
Current Uber drivers can also start accepting delivery requests by using the Driver app menu platform. You can select Account > WorkHub > Deliver Food with the company to get started. After you accept the terms you can start making deliveries.
Should I Become an Uber Eats Driver?
Drivers with this service job can deliver food whenever they want without a fixed schedule. You just log into the app each week whenever you want to make food delivery trips and then log out when you're done.
Can You Drive for Both Uber and Lyft?
Yes, you may. Both are Transportation Network Companies (TNC) without any exclusivity clauses for drivers. You can even drive for both businesses at the same time to maximize your earnings.
You only need an iPhone or Android. Open the companies' rider apps and go online with both, with Uber on the main screen while the Lyft one runs in the background (otherwise, Uber will disconnect if you are away from the app for a few minutes. Don't use other apps while using to prevent crashes and glitches.
Can You Drive for Uber with a DUI? How about Lyft?
Not if you've had the DUI within the past seven years. Uber or Lyft will not hire you.
Should You Rent a Car to Use Uber or Lyft?
It's not advisable for drivers to rent a car to work for Uber or Lyft. You'll spend a large percentage of your earnings on the rental when driving around passengers. Some people, however, have used this method to earn money as a part-time job.
Tips to Earn More Money on Lyft and Uber
Joining Uber's Facebook page or Lyft's Facebook page will help you make more money because they are full of great information about where to go. With that said, if you live in a small city, there won't be much business at all except for festivals, big concerts, and the usual bar crawlers.
Here are some tips that Uber driver Clarke Bowman shared in a Business Insider story.
- Avoid traffic to make the most money.
- It is not lucrative to wait in the airport queue for customers.
- Let the Uber app or Lyft app find your next customer instead of driving around to find a ride.
- The Uber or Lyft driver whose closest gets the next customer, so position yourself correctly.
- Take breaks from rides each hour. It will help protect your mental and physical health.
- To earn a high rating, keep your car clean, have a good charger, and drive safely during each trip.
These tips can ensure your Uber or Lyft ridesharing job can earn you the most money to meet your goals.
If you're trying to save money, this website uses the latest technology to find the lowest rates for your profile. SmartFinancial can help you save up to 40 percent on your car insurance premiums. Just enter your zip code below and we will provide you with quotes from local insurers within your area.