Thinking of Renting Out Your Car to Make Cash? Read This First.
Peer-to-peer car sharing allows you to rent your car for cash, at the risk of losing your vehicle forever.
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"Someone is driving my car 109 miles an hour!"
The voice that cried out on a late Saturday evening was my own. I was on my phone looking at a GPS app that tracked the speed and location of a 2017 Kia Forte owned and rented out by my car dealership. I wasn’t going to waste any time getting the vehicle back, but it took two trips and driving 60 miles to finally locate the car since my tracker temporarily lost contact with the Kia.
When I got there, the rear fender was smashed in with no driver in sight. I had fleet insurance that covered everything—except the $500 deductible. That was on me. But I didn't learn my lesson that day. It took six accidents over three months before I decided to pull the plug on renting out vehicles permanently.
Peer-to-peer car-sharing services like Turo offer ordinary car owners an opportunity to make extra cash with a vehicle that would otherwise be parked, but before you rent out your car to a stranger, you need to understand the risks.
Review Your Car Insurance Policy
Many auto insurance policies will not allow you to rent your vehicle at all. The very few that do are commercial fleet policies, which often have major exceptions that will not cover your car if it is wrecked. If the person you rent to flips the keys to someone else, and they end up in a bad wreck, it's you who will likely be paying for all of that damage—not the insurance company.
Renting Out Your Car Is a High-Risk, Low-Gain Proposition
Imagine taking a car worth about $15,000 and renting it out to a stranger who could use it for illegal activities. Is that worth $29 a day? The downsides of renting your car out are likely worse than you imagine.
I have sold roughly 90 vehicles over the last two years to aspiring entrepreneurs who thought they could make an easy buck renting their car out to strangers. Every single one of them learned the downside real quick. The car business on the fringes can be loaded with bad actors. Cars have been stripped to a shell, taken out of state, and smashed up in fatal crashes.
Are You Prepared for Your Car to be Damaged?
Even if you rent to a responsible and respectful individual, you’re agreeing to accelerate the wear and tear on your vehicle. Everything from your car's suspension to the seats and headliner (which can easily receive permanent cigarette burn holes and absorb smoke odors from drivers and passengers who decide to light one up) can be damaged.
From my experience, long-term rentals always get some damage that needs to be either detailed or repaired because, in the end, it's not the renter's car, and many customers don't care what condition the vehicle is returned in. If you plan to use this car when it’s not being rented, can you live with the scrapes, scratches, stains, and tears that are pretty much inevitable? Have you budgeted for earlier brake-pad and tire replacements? Everything in and on the car is fair game when renting out your car. If you’re not willing to accept that, flipping your keys to a stranger may pose more risks than rewards.
