Everyone knows how expensive it is to own a car in Singapore. To get around these high prices ranging from S$100,000 and above, some savvy consumers have been resorting to renting from Uber and driving them for few hours a day to make up for the expenses. It is said that some people drive 4 hours a day for 6 days a week, and use these rental cars for their personal usage for the rest of the week. People who are interested in getting a car but can't afford S$100,000 outlays could be very interested in such a value proposition. But, what does it really take for this math to pan out? We've analysed the numbers to calculate how much you actually have to work as an Uber driver to break even on your rental cost.
How Much Does It Cost to Rent an Uber/Grab Car?
According to Lion City Rentals's website, it can cost anywhere between S$58 per day to S$80 per day to rent a car for driving for Uber. Combining this daily rate with Uber's various promotions for 1 year rental and driver incentives, we calculated that it costs around S$13,650 to S$21,680 to rent an Uber car for 1 year. The average cost was S$17,300 per year. While this is much cheaper than shelling out S$100,000 to purchase a car, it's still a fair amount of money more or less equal to 2x median household income in the country. Given this, just how much do you have to drive Uber to break even on this cost?
Breakeven Point: Drive At Least 2-3 Hours Per Day
According to our calculation, you need to drive at least 2 hours to 3 hours every day to breakeven on your Uber rental. Here's how the math works. According to Uber's own data, its driver partners in Singapore average about S$26.08 of revenue per hour. Given that Uber takes 20% of this as commission, it translates to roughly S$20.86 of earnings per hour for an average driver. We also estimated that an hour of driving around in Singapore costs about S$3.2 in petrol (SS$2 per litre x 1 litre per 15 km x 30km per hour x 80% for petrol discount), netting S$16.86 of gross profit for the driver. Using this figure, we can calculate roughly how many hours one needs to drive every day to earn S$13,650 to S$21,680 in 1 year: 2.12 hours to 3.36 hours per day for 365 days.
Is It Worth the Effort?
Renting a car from Uber or Grab to drive part time can be a savvy way of getting your own car for private use for cheap. Not only does it help you avoid the S$100,000 of initial payment, but it also helps you save on various things like car insurance and car loan interest. However, it seems rather unrealistic to be driving every single day after work from 6PM to 9PM just so you can get a "free" car that you can use. How many people really have that much energy and will power to do this for 365 days a year? Nevertheless, the good news is that even driving few times a week can meaningfully reduce the already "low" cost of S$13,650 to S$21,680 renting an Uber car. If you really need a car but can't afford a normal one, now you may have a legitimate alternative that can only cost you maximum of S$1,000 to S$2,000 per month, if not significantly less.
This post was first published at ValuePenguin.sg, "Renting and Driving for Uber: How Much Do You Need to Work to Breakeven?"