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Car sharing companies are a pretty new way to rent cars instead of traditional car rentals. Car rental companies don't actually own any of the cars that they rent, so you may not actually know how these companies make a profit from the rentals they facilitate.
Car sharing companies make money from both membership fees and a cut of individual rentals. Though much of the rental cost will go to the owner of the car, car sharing companies will take part of the profit. This cut covers the company's efforts in coordinating and managing rides.
Car-sharing companies get their money from a couple of different places, and it is important to look at how they actually profit from them. It is also interesting to know how much the actual people who own the rented cars make.
Car sharing companies work through services online or in apps. However, renters can't just hop onto the website or download the app and immediately find a car to rent. You must first create an account with the company, fill out your information, and, most importantly, pay a fee.
Most car-sharing companies have a joining fee. These tend to be around $30. This is usually a one-time fee that you pay to get your account started. Before they can even start renting cars, customers have to pay this fee that doesn't get them anything except the ability to start figuring out how much they will pay to rent cars and have the privilege to pay this particular car sharing company to rent cars.
Some car-sharing companies will also have monthly or yearly fees. These fees typically range from $5 to $50 per month or $40 to $70 per year. Many companies advertise that they don't have monthly or annual fees, though the prices of rentals may be increased because of the lack of these fees.
These membership fees are an important fee for car sharing companies because this is a fee that they don't need to share and that doesn't come with inherent costs for the company. Car sharing companies will get a big chunk of their profits from the membership fees that renters will pay to start using the service.
Another way that car-sharing companies make money is, of course, from the actual act of renting out cars. This is a little more complicated than the membership fees because the company doesn't get to keep all the rentals' money. Some of it goes to the car owners.
Unlike car rental companies, car sharing companies don't actually own the cars they are renting out. Instead, they facilitate a rental of a car that is privately owned. Car owners can rent out their cars with car share services and get some of the profit back.
The renter will pay through the car sharing app or website. The company will take a percentage of the cost and send the rest of it along to the car owner. The percentage that the company takes is usually less than 50%. The car sharing company Turo usually takes 15 to 40% of the rental cost, depending on the area and the car itself.
The profit that the company makes per rental is marginal. However, after many rentals, even rentals for short periods of time, the profits can add up. Car rental companies try to ensure that each of the cars they rent out is rented out at least 50% of the time, or about 12 hours each day. Car sharing companies usually rent out cars for short periods of time, which is why the pricing system is based on hourly pay instead of daily. They tend to rent out cars to many people for lower amounts of money.
It is important for rental companies to make sure that the cars get rented out often because if a car doesn't get rented out often, the car owner just doesn't make money. However, the company usually spends money on advertising and insurance for all the cars they can rent, so they may lose money if a car is not rented enough.
How Much Do the Car Owners Make?
Getting involved in car sharing may be an attractive option for car owners. After all, why shouldn't you make money off of your car while it is sitting in your driveway and not being used? Car owners who rent out their cars with car sharing services get a percentage of the money from the rental.
The amount of money that car owners can make from car sharing depends on the company they work with and the value and condition of their vehicle. Nicer vehicles will cost more to rent, meaning that the owner will earn more.
The car sharing company HyreCar says that owners can rent out their cars and make over $9,000 per year, though this can vary depending on certain factors such as area and car value.
Turo, another car-sharing company, has a range of annual earnings based on different types of cars ranging from $6,000 per year to $13,000, though this does not include the maintenance costs owners have to cover. It also doesn't include the original cost of the vehicle. However, the company tends to cover advertising and insurance costs, so the owner doesn't have to.
Car owners will typically earn about 60 to 85% of the cost of each rental. The profits from an individual rental don't seem like much, but car owners who have their cars available to rent for long periods may make quite a bit of money.
Car owners will definitely not profit as much as the car-sharing companies will, and renting out your car will not get you enough money to live on. Depending on the costs of maintenance, cleaning, and other costs, it may not be worth the final profits. It just depends on your car, your area, and how much work you want to do on your car.