Does Uber pay for gas? Does Lyft pay for gas? Or does the driver or passenger have to pay for gas? In this article, I will answer these questions and describe the various car-sharing expenses.
Does Uber pay for your gas? Does Lyft pay for your gas? Uber and Lyft do not pay for the gas. The individual drivers of Uber and Lyft have to pay for the gas for every trip. The drivers are not employees of Uber or Lyft but are independent contractors. As such, they have to pay for their own expenses, including gas.
Lyft and Uber drivers are not employees of these two companies. They are self-employed workers serving the transportation needs of customers of the two companies. In that regard, they have to pay for their gas and all other expenses related to their work performance.
Read on to learn more about why Uber and Lyft do not pay the gas and other expenses.
Does Uber Pay for Gas? Does Lyft Pay for Gas?
The working relationship of drivers with Uber and Lyft is that of independent contractors. Independent contractors who provide their services to any business shoulder all of their work-related expenses. They are not employees of Uber and Lyft.
Drivers of Uber and Lyft are just like small business people who provide transport services to their business customers. Their customers are the two companies: Uber and Lyft. These two companies pay the drivers for the service they provide to the companies’ own customers (those who use the transport app service).
In the course of providing transport services to the customers of Uber and Lyft, these independent contractors spend their own money on gas, maintenance of their cars, and other related expenses. Uber and Lyft do not pay for whatever expenses the drivers incur while doing their business.
As a similar example, when you hire a carpenter, you do not pay for the fuel expense of the car he uses going from his place to your place to build your house. Your agreement with him is that you will only pay for his carpentry services.
In the same respect, Uber and Lyft do not pay for their drivers’ gas expenses and other related expenses.
Do Uber Drivers Pay for Gas?
Yes, Uber drivers pay for the gas that their cars consume while they are doing their work for the company. These drivers usually collect $24.77 every hour that they drive passengers from point A to point B.
Every hour, a driver’s typical gas and car maintenance expenses are about $4.87 even after deducting taxes. But drivers still have to pay for the use of the app and other expenses. So, they still have a net income close to $8.55 and $11.77 per hour after paying for fuel, maintenance, tax, and other related expenses.
Based on Uber’s study, on average, Uber drivers earn about $18 per hour. This company also provides its drivers with a Visa debit card that offers cashback gas rewards. Cashbacks can be considered as discounts on gas.
Do Lyft Drivers Pay for Gas?
Like Uber drivers, Lyft drivers also pay for their gas expenses and other expenses related to their work performance. The tools of their trade are their personal cars. So, whenever they use their tools, they have to pay for all the expenses required by their tools to do their jobs.
As an independent contractor of Lyft, it is not right for the drivers to force the company to pay for their expenses, such as car washes, maintenance, wheels, tire services, and of course, gas expenses.
But Lyft is not oblivious to the drivers’ needs, so the company has partnered with Shell. Lyft offers its drivers a “Fuel Rewards” program. In this program, Lyft drivers can get discounts from 5 to 7 cents a gallon on gas.
On average, the take-home pay of drivers can range between $8.55 and $11.77 per hour. They earn this amount after paying all their expenses, including the cut from Lyft.
How Much Do Uber Drivers Pay for Gas?
There is no standard answer to this question because it is very dependent on a lot of things. These factors include driving habits, the number of hours and days driving on the road, the type of car, whether the car is fuel-efficient or not, and so many other things.
But to give you an idea of real-world terms, there are Uber drivers who spend $500 a month for gas, and there are other drivers who shell out $600 a month. Other drivers with SUVs spend $500 a week. Gas expenses are really an individual thing. But it also pays to be conscious of the other factors.
Some drivers run around 850 miles per week. From their experiences, this translates to about $50 per week in gas based on their car’s fuel efficiency and the current prices of fuel. If you use an SUV to run that kind of mileage, it will be easy for you to spend $100 a week for gas.
A rideshare driver should always have a very clear goal in mind. Reaching one’s goal will depend on how many miles it takes to reach that objective against the car’s fuel economy rating. If you have a very fuel-efficient car, you may be able to reach your dollar goal.
If your car is already old and does not have a high mpg to reach your goal, there is no way you can make money as an Uber driver. But you can still make it if you will junk your old car for a new one that is more fuel-efficient.
How Much Do Lyft Drivers Pay for Gas?
Doing the same kind of business as Uber drivers, Lyft drivers will also spend the same amount for gas. So, their gas expenses will also be between $500 and $600 a month. But Lyft offers some rewards for drivers who are willing to do more miles. Some of these rewards are credited to their gas expenses.
For instance, Lyft offers a Fuel Rewards program where their drivers are given certain discounts. To get these discounts, the driver should enroll himself in the Accelerate Rewards program of the company.
A driver can get a discount on gas at Shell Stations participating in the program. The amount of discount will depend on the driver’s Accelerate Rewards level. Therefore, Lyft drivers can reduce their gas expenses a little bit compared to Uber drivers.
In addition, Lyft drivers also get a tax write-off of $0.58 per mile. So if you drive 10,000 miles, you get a tax deduction of $5,800.
That’s why Uber and Lyft drivers appreciate it very much if their riders give them tips, whether in cash or through the app from the two companies. These tips will help them manage their increasing gas expenses due to ever-increasing fuel prices.
We’ve answered the questions, “does Uber pay for gas?”; or “does Lyft pay for gas?”; Next, let’s look at the other expenses that Uber and Lyft drivers pay for.
What Other Expenses Do Uber and Lyft Drivers Have to Pay For?
Uber and Lyft drivers have to contend with many expenses other than gas before saying they have earned an income from doing their business. What are these other expenses that rideshare drivers have to shoulder before they earn their keep?
1. Car Maintenance
Cars are the tools of the trade of Uber and Lyft drivers. Benjamin Franklin once said, “The best investment is in the tools of one’s own trade.” So, if a Lyft or an Uber driver is really serious in his trade, he should be spending money on his car’s upkeep and maintenance.
It is the tool by which he earns his income. Thus, he should set aside money for car maintenance. Drivers can set aside roughly 33 percent of their income for preventive and regular maintenance.
It may sound a lot, but if drivers are consistent in this area, they can avoid higher repair costs. Huge repair costs can adversely affect the viability of their business. Regular maintenance will enable drivers to see car issues before they grow bigger. Thus, drivers can prevent more expensive car repairs that could potentially bankrupt their business.
Moreover, by doing regular preventive maintenance, their car will be more fuel-efficient. A more fuel-efficient car means lower gas expenses, which will result in a higher net income. So, Benjamin Franklin is right.
Car insurance is not a wish but a need, especially if you are using your car for your business. Insurance is one of the major expenses of Uber and Lyft drivers that they can’t avoid. Some laws require car owners to carry motor insurance with yearly renewals.
Drivers should not look at insurance as ‘real’ expense because it protects them from unforeseen accidents that could negatively affect their business.
3. Uber and Lyft Fees
Uber will deduct 27.5 percent as a service fee from the passenger’s gross fare to the driver. But 2.5 percent of this amount is Goods and Services Tax (GST). The driver can claim back this amount on his Basic Allowance for Subsistence (BAS) at the end of every quarter. Therefore, the net cost to the driver is only 25 percent.
4. Income Tax
To conduct their business, drivers of Uber and Lyft have to pay their income taxes every fiscal year or be charged with tax evasion. If the driver’s income is below $18,500, he is not required to pay any income tax to the government.
But if the driver has an employment income of $21,000 and additional income from Uber or Lyft, then the marginal tax rate on his income from Uber or Lyft will be 21 percent. On average, about 6 percent of his gross income from Uber or Lyft will go to his income tax.
5. Depreciation Costs
Every time you drive a car, you are paying for its unseen cost. This unseen cost is called depreciation – the reduction in the value of something over the time it is used or in its existence. The newer the car, the higher its rate of depreciation. That’s just how this economic principle operates.
A car loses its original value at a certain rate. The primary reason is the wear and tear of its parts as the driver runs it for several hundred miles per day. The driver can’t see when a part of his car will break down. It is part of the risks of using a car for commercial purposes like ridesharing.
Depreciation costs normally run in thousands of dollars, even tens of thousands, depending on how the car is driven, how many miles it was driven, and how old the car is. An Uber or Lyft driver will only know how much his vehicle has depreciated when he trades it for a new car. Also, an Uber or Lyft driven car is a commercial car. These vehicles don’t fare too well in car trade-ins.
Conclusion – Does Uber Pay for Your Gas? Does Lyft Pay for Your Gas?
So, to summarize everything and to answer the questions: Does Uber pay for gas? Does Lyft pay for gas? No, Uber and Lyft do not pay for the gas that their drivers consume. The driver pays the fuel expenses for every trip.
Both Uber and Lyft drivers have to pay for the gas because they are not employees of Uber or Lyft. They are independent contractors; therefore, they have to pay for their own expenses.