Home > Auto Loans > How to Make Your Car Pay for Itself

Comments 0 Comments

Every week it seems we hear from people who are driving a car they can’t afford and are trying to find a way out. It’s no surprise: the average car payment now has reached $483 for a new car and $361 for a used car, according to Experian Automotive. Unfortunately, these readers are also upside down on their loans, which means that if they want to sell their vehicles, they’ll have to write a hefty check to pay off the difference, and it’s money they just don’t have.

How about putting that car to work by bringing in extra income? Here are three ways you might be able to do that.

Drive It

If you’ve got some spare time, you may be able to pick up some extra cash by giving someone else a ride. The two most well-known ridesharing options are Lyft and Uber. (Other smaller companies include Shuddle for families and kids, and SheTaxis for women.) Driver requirements vary by company, but it’s safe to say you’ll need a current driver’s license, and a vehicle that meets minimum standards.  

These companies typically provide insurance for rideshare trips, but you’ll still need to maintain your own insurance for times when you are driving yourself. And you’ll want to check with your insurance company before signing up to make sure they don’t have a problem with your side venture. Harry Campbell, a.k.a. “The Rideshare Guy,” warns that rideshare drivers may be dropped by their insurance companies.

How much can you make? You’ll generally earn a significant portion of the revenue generated by the trip (which varies), and with Lyft, you earn tips. Lyft advertises that you can make up to $35 an hour, while Uber says an independent study has shown the average driver makes $19.04 an hour. But that’s gross income, not net. Still, the big draw is the ability to work when you choose. “Many Uber and Lyft drivers are making $15 to $25 per hour, but they are able to do it around their other jobs, when they’re bored or just when they have free time,” says Campbell.  “Many people don’t realize just how flexible driving is, but you really can turn your app on and off whenever you feel like it.”  

Rent It Out

Looking for passive income from your vehicle? Companies like RelayRides, Getaround and FlightCar allow you to turn it into a rental car

“We have created a marketplace so anyone with an idle car can make money from it,” says Steve Webb, director of community for RelayRides. “You can put it on our marketplace and rent it to travelers who have been screened by us.” The average rental period is three to five days, he says.

Safety-wise, all three companies provide insurance including primarily liability, collision and damage, comprehensive and theft. Beyond that there are some differences in additional coverage so you’re wise to discuss your insurance needs with your agent to make sure you are fully covered and that they are OK with your car being used this way. These services also screen renters, and cars must meet minimum standards.

How much can you make? “The average active owner on RelayRides made over $500 last month,” says Webb.

FlightCar, which operates out of 17 airports, offers the dual promise of saving money on airport parking (it’s free) while earning income on a per mile basis if your car is rented out. (I typed my Kia Forte into their calculator and was quoted 10 cents per mile.) On the average five-day trip, the company says members save $100 in parking fees and make $30 in rental earnings. It also has a monthly rental program that guarantees $200 to $500 per month  

Deliver Packages

Ever had to ship a large, heavy, bulky or fragile item? If so, you know how expensive it can be — especially if you want it to get there quickly. Roadie is an app-based shipping platform that enables drivers to deliver packages and earn extra money. “By utilizing the extra space in your car, you can earn extra cash on trips you were already taking,” says Marc Gorlin, founder and CEO of Roadie. (Sidecar Deliveries is another company that facilitates deliveries in eight U.S. markets.)

Drivers must have a valid driver’s license and vehicle insurance. With Roadie, senders automatically get $500 of insurance and can purchase more, up to $2,500. Again, check with your insurance agent to determine if you need additional coverage. There is an “open box” policy that allows a driver to inspect what they will be transporting. Waffle House (with over 1,800 locations nationwide) is an official safe place for drivers and senders to meet, though they can meet at any location they agree upon. 

How much can you make? “Drivers can get paid anywhere from $8 to over $300 per ‘gig’ with pricing determined by the size, urgency and distance of the trip,” says Gorlin. He says one Roadie driver returned to his home in Atlanta from a vacation in New Hampshire, and by picking up four gigs along the way, including moving boxes and a bike, made over $500.

Hidden Costs

Don’t forget that when you earn income, Uncle Sam wants his share. With these gigs you’ll generally be classified as an independent contractor, so you will need to set aside money for taxes. (Doing your taxes will also be a bit more complicated if you’re used to just receiving income from a job.) You will also pay for your own fuel and maintenance.

And then there is the issue of putting more miles on your car, which further reduces its value. The biggest hidden cost is depreciation, says Campbell. “Many people don’t realize that their car loses value for every mile they drive. These costs may not show up for months or even years though so they’re easy to overlook,” he warns.

But for those who can’t afford their car payment and feel trapped, extra cash may help them pay off their car loan faster, and perhaps even avoid damage to their credit scores if they miss payments or have to hand the keys back to their lender.

Late payments on a car loan or other debt can cause your credit scores to plummet and result in higher interest rates going forward. To see how your auto loan may be affecting your credit, you can view your credit report for free once a year at AnnualCreditReport.com and check your credit scores for free each month on Credit.com.

More on Auto Loans:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team