How to make money with a car? Forget moonlighting as a minicab driver; if you don't use your car very often, you may be able to earn extra income - passively - by renting it out. And since large-scale car sharing promises to reduce the number of vehicles on our roads, you would be doing your bit for the environment, too.
'Car sharing' can take several forms, but all involve using a vehicle that others also use.
The three main ways to car share are:
- Peer-to-peer car sharing
- Renting a car for a few hours or a day, from a network of cars
- Organising shared trips - e.g. a group of colleagues travelling to and from the same office on a daily basis - where fuel costs are shared
In this article, we'll focus on peer-to-peer car sharing and whether or not you can make money from it.
What is peer-to-peer car sharing?
Peer-to-peer car sharing is where you rent out your own car to approved drivers using an app. The app lists your car and its location, and offers it to nearby motorists who need a car for a certain period.
How long is the normal rental period?
Most peer-to-peer car sharing apps work on a per-day basis. The car is rented for a full day, or multiple days, and you get paid via the app.
How much can you make from car sharing?
You can earn £35-£50 per day for renting out your car, after any commission or fees, and depending on things like make, model and age of your vehicle. Many car sharing apps claim you could make between £650 and £800 per month.
Apps take a commission of 30-40%. So on a 30% commission basis, if your car was available to rent for £50 per day and you rented it out for 2 days, you would receive £70, and the app company would get £30.
Some apps take a lower commission if you do certain things - such as sign up for a specific car insurance policy.
5 reasons to hire out your car:
- Car sharing could be a great way to earn extra income for those who don't drive frequently or only drive on the weekends. It's estimated that most cars sit idle for 96% of the time.
- For those struggling in the current cost-of-living crisis, it could be an effective way to capitalise on an asset they already own - i.e. their car.
- Renting your car out is also a great way to protect the environment, since it may help reduce the number of cars on our roads. After all, someone who only needs a car a few times a month will be less likely to buy their own if they choose to car share.
- Renting out your car could be a great option if you live in a big city, where there will be a greater pool of potential renters.
- Some apps bundle breakdown cover or discounted repairs as part of their offering.
Rent my car: What are the downsides?
Owning a car does offer peace of mind that if you need transport, it's sitting outside your home - so you might feel your sense of freedom has been reduced. However, for those who live near public transport routes, this may not be a big issue.
There is also the worry that something could happen to your vehicle, although apps include comprehensive insurance, so any repair costs should be recouped.
And for those who live in rural or less populated areas, there may not be enough potential renters nearby to make the process worthwhile.
Another drawback is that your vehicle will be used more frequently than it otherwise would, which will accelerate wear and tear in the long term - ultimately meaning repairs could be needed more often.
How can I get started car sharing? (peer-to-peer)
Determining how to rent out your car or van may sound challenging, but car sharing apps streamline the process. Your first step is to choose one of these services (which can be accessed on regular desktop websites as well as the applicable phone apps). Popular peer-to-peer car sharing apps in the UK include Hiyacar, Getaround, Karshare, and Turo.
Renting out your vehicle
Each app works slightly differently, but all share a common process: sign up for the service, list your vehicle, accept bookings, and start earning. It will be easier to find customers if you live in a built-up area.
Renting someone else’s vehicle
After signing up for one of the peer-to-peer vehicle sharing apps, you simply search for a suitable vehicle in your area. You begin the process by entering your postcode, and your desired pick up and drop off dates. You’ll then be shown a list of available cars. These listings will show information such as whether or not you can unlock the car with your phone (see the keyless car sharing section below), or have to take receipt of the keys from the owner.
What are the benefits for renters?
Car sharing could be a great solution for people who don't want (or cannot afford) to buy their own vehicle or who only need a vehicle occasionally. As well as saving them the outright cost of buying a vehicle, it eliminates the need to buy insurance every year, and pay for MOT, repairs etc. It might also be a good option for those who are staying in an area on a temporary basis.
How does car sharing insurance work?
As mentioned, your chosen peer-to-peer car sharing app will likely bundle comprehensive insurance with the service. In the example of Karshare, cars are covered up to a value of £50,000. For Hiyacar, the limit is £40,000.
You may only be able to rent out your car if it is classified in one of certain insurance groups, e.g. 1 to 45. Cars in insurance groups 46-50 tend to be very expensive to repair or replace, which is why they are often not permitted on car sharing apps.
Car sharing insurance will usually cover:
- Accident, theft, attempted theft, or fire
- Permanent audio and communications equipment
- Your legal liability to others resulting from an accident
Be aware of limitations to insurance
Make sure you read the insurance document for limitations/requirements, such as:
- Policy excess
- Theft if keys are left in the vehicle
- Maximum payment for the loss or damage to the vehicle
Can I trust the people who rent my car?
Car sharing apps have minimum requirements for renters. They must have a current driving license and meet the applicable insurance requirements.
Are there any fees for using car sharing apps?
Yes, most apps charge a monthly fee of around £6.
Can I rent out my van?
Yes, many apps allow you to rent out your van. People often need a van on a short-term basis in order to move house or transport large items. Rental fees for vans are higher, too.
What's 'keyless' car sharing?
Some car sharing apps offer 'keyless' technology as part of the deal. Technicians will install a system whereby your car can be unlocked by the renter via an app - so you won't need to physically hand over the key to each renter. This saves time and hassle - and means you could be earning money effortlessly, whether you're away from home or sitting in your living room.
Most apps charge a one-off installation fee for having keyless tech installed on a vehicle. The installation process should take around 30 minutes.
Some providers only offer keyless tech installation to car owners who live in larger cities such as London, Birmingham, or Bristol.
Note that you may earn less if you have keyless technology installed - but it does make the whole process much easier. Before you decide to rent your own car, check the app terms and conditions so you know exactly how much you could earn.
Conclusion: How to make money with my car
If you don’t use your car very often, or have a second car that is seldom used, choosing to hire your car via a car sharing app is a great way to earn an extra income without having to do much work. And as the cost-of-living crisis bites, it could be an effective stopgap to help get your finances in order.
