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Auto Loans for Uber Drivers

Car Loan for Uber Driver
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Are you an Uber driver, or considering the idea of becoming one?  Uber drivers earn, on average, about $19 per hour, but to qualify for UberX–the most common service–your vehicle must meet the following requirements:

  • Four-door sedan, with room for four passengers in addition to the driver
  • Year 2000 or newer, but this varies from city to city.
  • In-state car insurance and plates
  • Current car registration
  • No marked, taxi, or salvaged vehicles
  • Pass the Uber vehicle inspection

For requirements of other services such as Uber XL and Uber PLUS, go here. Having a qualifying vehicle is one of the biggest obstacles for potential drivers, and few of us have the funds to go purchase a vehicle that meets these requirements.  This is where financing comes in.

Uber/Santander Driver Financing Program

Fortunately, there are financing options for Uber drivers.  In November 2013, Uber Technologies partnered with Santander Consumer, a lender that process nearly one million applications per month, in order to provide auto loans for Uber drivers. However, this partnership was terminated in July of 2015.

Xchange Leasing

Around the same time, Uber launched their Xchange Leasing program, which differs from traditional leasing in a number of aspects:

  • No mileage penalties.
  • New or used vehicles available.
  • Oil changes and air filter replacements covered.
  • Average upfront deposit of $250
  • Weekly payments of roughly $100 deducted from driver’s earnings.
  • 30 vehicles from eight different manufacturers are available qualified applicants.

Actual payment amount will still be influenced by driver’s credit score and type of vehicle.  Interested parties can apply here.

Auto Loan Options

Many consumers, however, prefer to avoid leases for a number of reasons, foremost being that they would like to have ownership of their vehicle. This requires an auto loan. Fortunately, as an Uber driver, financing may be  fairly easy to obtain, even if you have bad credit. Why? Because Uber drivers are buying a car that has an income stream attached to it, so getting a loan can be easier for them. As Uber themselves have stated in their blog post, Financing 100,000 Entrepreneurs:

“Uber partner-drivers have a robust, reliable cash flow through the Uber platform – every fully utilized car on the Uber system grosses over $100,000/year.  That kind of cash flow lowers the risk of financing drivers and means better access to cheaper credit than otherwise available on the open market.”

Let’s have a quick look at potential challenges you may face during the loan process.

Potential Challenges

Auto loan application for Uber drivers face the same challenges that any borrower’s application would. The main issues could be credit history, monthly income, and debt-to-income (DTI) ratio, so we will look at those areas.

Credit history:  while this seems pretty self-explanatory, there is a twist with auto loans. Lenders are going to look at a specially built credit score. FICO calls its version an auto-enhanced score. It looks at all of the traditional aspects of your credit history, but adds weight for how you have used car loans in the past. If you have a history of paying your car loans on time and in full, then your auto-enhanced score will be higher than your base score. If not, then it will be significantly lower.

Monthly income:  lenders look at an applicants gross monthly income. In many cases, it must be higher than $1,450 per month. The one wiggle that works in an Uber driver’s favor is that potential income may be considered.

DTI:  this is a sticky one. Lenders want to see that your recurring monthly payments are less than 36 percent of your gross monthly income. That includes the payment of the loan you are applying for. You may find a regional bank that will consider a DTI as high as 40 percent. Additionally, some finance companies and specialty lenders will consider a DTI as high as 50 percent.

All of these challenges can be overcome by shopping your loan around to several lenders at the same time. Applying for a loan will lower your credit score for each time your credit report is pulled by a lender, but grouping your loan applications will minimize the impact.

Getting Approved

If you would like to finance your vehicle instead of leasing it, we may be able to help.  Apply online, and we will work to match you with a local finance expert who can walk you through the process, helping you find the right lender, dealer, vehicle, and finance option.

They can often help applicants with credit scores as low as 500, and/or with issues like recent bankruptcy, repossessions, and/or a high DTI. These loans do have strings attached. The interest rate will be higher than a loan for a consumer with good credit, and you may be restricted to buying a car from a partner dealership. On the brighter side, these loans will all be reported to the major credit agencies, boosting your credit for your next loan application. Go here to submit your application.