Loans for Lyft Drivers
Posted by Frank Gogol in Loans | Updated on May 25, 2023
If you are a Lyft driver, you may know that securing a loan can be tough. Luckily, there are certain loans that Lyft drivers can turn to in times of need.
This article goes over what kind of loans Lyft drivers may be eligible for, how to secure one, and much more.
Table of Contents
Different Types of Loans for Lyft Drivers
When taking out loans for either upgrading your old car or buying a new one, you need to know all the options. Here are some of the best options we’d recommend for Lyft drivers:
Secured Loans
This is by far the best type of loan you can obtain as a Lyft driver. These types of loans come with low interest rates in exchange for collateral. To obtain even lower rates, you can apply along with a co-signer.
Secured loans are mostly provided to rideshare drivers with fair-to-good credit scores. But a thing to note here is that if you fail to repay the loan, you might lose your car if it is part of the collateral, which in turn will make you jobless.
Unsecured Personal Loans
You also have the option of going for an unsecured personal loan. Unlike a secured personal loan, these require no collateral but are harder to qualify for.
If you prefer not to put your car up as collateral, an unsecured personal loan is a good option for Lyft drivers. We recommend comparing multiple lenders to find the best rates that you qualify for.
Bad Credit Loans
If you have a less-than-stellar credit history and you’re not eligible for collateralized loans, you can opt for bad credit card loans which have higher interest fees and more strict repayment terms.
On the bright side, once you start making payments on time for months in a row, you can refinance your rideshare loan to a lower interest rate.
>> Read More: Loans for Independent Contractors & 1099 Workers
How to Get a Loan as a Lyft Driver
Getting a loan as a Lyft driver is super easy and the whole process can be completed within a few days.
- Choose a loan type. First, you need to decide which type of loan you want to apply for.
- Compare options. Then you should compare loan options from various lenders. It’s important to shop around so you can find the best rates and most favorable repayment terms.
- Apply. Once you find one (or multiple) that you are interested in, you can begin the application process. You’ll be asked to provide personal and financial information in the form.
- Wait for a decision. Based on the information provided, your loan application will either be approved or rejected.
- Accept or decline your offer. If approved, you’ll receive a confirmation and the amount will be credited to your bank account if you accept the offer.
- Start repayment. Most institutions immediately set up an auto-pay which will automatically deduct money from your account at the end of the month to pay off the loan—though you can typically make manual payments if you wish.
3 Simple Steps to Applying for a Lyft Driver Loan
If you are considering applying for a personal loan for a Lyft driver, just follow these 3 simple steps.
1) Apply
Apply online for the loan amount you need. Submit the required documentation and provide your best possible application. Stronger applications get better loan offers.
2) Accept
If your application meets the eligibility criteria, the lender will contact you with regard to your application. Provide any additional information if required. Soon you’ll have your loan offer. Some lenders send a promissory note with your loan offer. Sign and return that note if you wish to accept the loan offer.
3) Repay
The loan then gets disbursed into your U.S. bank account within a reasonable number of days (some lenders will be as quick as 2-3 business days). Now you need to set up your repayment method. You can choose an autopay method online to help you pay on time every month.
Reasons a Lyft Driver Might Need a Loan
As a Lyft driver, you’re considered an “Independent Contractor.” That means you’d need to incur all the costs associated with being a contractor.
One of the main criteria includes having your own vehicle. Running or maintaining a vehicle is expensive over time, let alone easy. It requires spending money to keep it in a healthy state and functioning.
Below are the two main reasons we see Lyft drivers seeking a loan:
Maintain and Update Current Vehicle
As mentioned earlier, an automobile is something that calls for maintenance every now and then, regardless of whether you use it or not. Most Lyft drivers work full time which can stretch to many hours in a row. This translates to many hours of work for the vehicle. So, needless to say, you’ll need to do some tuning for it to work smoothly.
Moreover, Lyft has certain requirements which vehicle owners need to meet to be eligible as a driver on its platform. The car being driven should not be more than 10 years old. Second, the interior should be clean with no visible blemishes or cosmetic tampering. On top of that, each state has its own regulatory requirements that commercial vehicles must comply with. All of these require money now and then.
Purchase Car to Become a Driver
For every car owner, a time will come when tuning and upgrading their car becomes no longer viable. In such cases, purchasing a new car is the best and sometimes only option.
As per the Lyft requirement, the car shouldn’t be more than 10 years old. So you have to purchase either a used car that is less than 10 years old or purchase a brand new one. For many drivers, the latter option appears far more appealing. That’s why they take out an auto loan to purchase the most suitable car model for them.
Use a Loan to Become a Lyft Driver
Becoming a Lyft driver has a lot of benefits. On top of the competitive earnings that Lyft drivers make, they also have the freedom to when and where they want to work.
But what if you don’t have a car or a car that meets Lyft’s standards? In this case, you can try taking out a loan to purchase a car so you can start your ridesharing career.
If you’re using the loan amount specifically to work as a Lyft driver, then here’s how you can go about it:
1) Buy a Car With a Auto Loan or Personal Loan
First, get in touch with a car dealership before you take out a loan. This will serve two things. First, you’ll get a better understanding of the car you want to buy and which one will be right for your needs. Car salespeople will often guide you in this regard. You’ll also learn the exact amount you’d need for purchasing the car.
Second, you’ll also come across some curated offers that the dealership may provide to you. Most, if not all, car dealers closely work with loan providers to offer you loans at competitive rates which you otherwise might not come across. Therefore, you can visit a few car showrooms to learn more about your options.
You should compare rates from other lenders, as well, to make sure you’re getting the best deal possible.
2) Apply to Be a Lyft Driver
Once you’ve purchased a car of your preferred choice, you need to apply to become a Lyft driver. This is straightforward and requires an application with some formal background verification. You can sign up online and provide the required details there.
3) Meeting Lyft’s Car Requirements
Not only you, but your car needs to go through a requirement check to become a Lyft vehicle. If you’re taking out a brand new car, this will be like a walk-in-the-park kind of thing. Just make sure all the paperwork is in place.
Other requirements like having a 10-year-old car or newer, four doors with a seatbelt, and mechanical health will already be taken care of.
4) Use Your Lyft Income to Make Loan Payments
Finally, you can start driving your car and getting riders via the Lyft platform. Make the loan repayments with your Lyft income and within a few years, you’ll be out of debt.
Lyft has certainly made life easier for both drivers and passengers. With more innovation happening in the shared economy space, you can expect things to get better for you and everyone else.
Read More
- The Complete Guide to Personal Loans for Uber Drivers
- How to Get a Personal Loan as a New Employee
- The Complete Guide to Maternity Leave Loans
- Guide to Loans for Teachers
Final Thoughts on Lyft Driver Loans
Driving for Lyft is an accessible means of income for people—especially immigrants and non-citizens—but the main obstacle for many is getting a relatively new and possibly expensive vehicle.
Loans are a solid option for covering this cost. With a new or upgraded car obtained because of a personal loan, you can gain access to a huge income opportunity.
