Remember the stories of the little towns owned by coal companies? The coal company would provide housing and had a general store where the miners would use company script to purchase their needed goods. After paying for their rent and food needs, the miners often had nothing left while the coal companies made money from both the coal that was mined and from the miners themselves.
Fast forward to the “Gig Economy.” The Gig Economy, as it is known, has proven to be a decent way for people who are otherwise out of work to make some money. Think Uber, Lyft, and Airbnb. Some companies offering their platform offer money that rivals that of a full time job. The work they offer seldom comes with benefits. This post is a warning for people looking to lease through Uber.
As a bankruptcy attorney, I often see people who are down on their luck and who frankly have pretty bad credit. These people are often offered the very worst rate on auto financing, home financing and credit cards. How does a 29% interest car loan sound? Unfortunately, Uber is getting in on the subprime lease game through a company they own called Xchange Leasing. Knowing, presumably that their drivers are often people who have lost a job and thus don’t have credit, they offer people a way to get into an “Uber qualified” car. Bloomberg recently ran a report with an Xchange customer who is paying $160/week for a 2015 Honda Civic SE That works out to $693.33 per month. 52 weeks in a year / 12 months. Contrast that with Honda, who, as of this post, is offering a $139.oo per month lease with zero down. That is a 499% premium that Uber Xchange customers pay over a qualified lessor.
I have had two clients in the past month come to me with these leases. They have among the worst financing terms I have seen. It would be a far better move to attempt to build your credit a bit and then buy or lease at a much better rate. Granted, Uber has pretty liberal policies when it comes to getting out of the leases, but you would think that since they take the payment directly from the earnings of their drivers that they would offer something better than sub-prime lease rates. As it stands, Uber is making money from the trips that are driven and now from the drivers themselves. Sound familiar?
Best of Luck,