Opinion

If You Can Afford the Downpayment on a New Car, Uber May Help You Pay For the Rest

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Peter Lin

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The COE prices have gone up again, defying all logical explanation. Just like a certain Indonesian Vice-President. Singaporeans have gotten used to paying thousands of dollars just to own a car, but that doesn’t mean we have to like it. For many Singaporeans, the need to own a car goes beyond a status symbol or a luxury – it’s a necessity. But since you’re going to buy a car anyway, is it possible to defray the cost of the car? This may be an interesting point to consider:

 

Urgh, Uber again? Are they paying you to write this?

Wait, wait, wait… hear us out. I’m not saying that you should be resigning from your job and becoming an Uber driver. Neither am I saying that you need to become an Uber driver in Singapore just to afford your car.

I think the misconception is that to even earn a decent amount each month as an Uber driver in Singapore, you’ve got to do it full-time, all day and all night long. It’s understandable, since that’s pretty much how taxi drivers currently operate.

But unlike taxi drivers and the taxi companies that employ them, Uber doesn’t have any service standards to meet. Uber drivers are basically their own bosses. They decide how much they want to work, and when they have to work. Plus, becoming an Uber driver is easy. But what’s more, Singapore has more to offer Uber drivers than any other city in the world.

 

What makes Singapore the perfect city to be an Uber driver?

Firstly, the average daily taxi ridership has gone up by 5.5% from over 960,000 to over 1 million between 2013 and 2014. However, the number of taxis on the road has only gone up by 3.7% in the same time period. What do these numbers mean? Simply that the demand for taxis hasn’t matched the supply. In other words, we aren’t in the same situation as New York City, where one more Uber car on the road means one less taxi on the road.

Secondly, there are over 4 million 3G subscribers in Singapore and mobile data usage is on the rise. This makes it extremely convenient for a mobile app like Uber to reach as many potential customers as possible. Furthermore, there is no upfront booking fee for Uber rides, which gives Uber the advantage over booking a taxi and incurring $3 to $5 per booking.

Thirdly, the government seems keen on keeping the industry relatively open to new competitors or, at the very least, is taking a “wait and see” approach. This is good news for Uber, GrabCar and any other similar apps, as they can operate relatively freely in this lightly regulated environment.

 

But while that may sound good and all, it’s still just talk… show me the numbers!

Remember, what we’re trying to do here is suggest that being an Uber driver can help you significantly with your monthly car repayments. This only works if you’re being practical, and not hoping that you’ll be able to buy a new Lamborghini Aventador. So with that said:

 

1. Buy a car model that will serve you well

Firstly, let’s look at the kind of car models you should be looking at. Uber requires at least a 4 door car, but if you’re going to be driving your vehicle regularly as a Uber driver, you’re probably going to want to get a model that gives you really good fuel consumption.

A Toyota Vios, for example, should give you 15.8 km/l. If you’re willing to go with a hybrid car, like the Toyota Prius, you can get as much as 25km/l. Of course, a hybrid car’s going to cost more, but in the long run, you’ll be saving on fuel costs, and that’s a good thing if you’re planning to do this Uber driver thing for the long term.

For illustration purposes, let’s say we go with a Toyota Vios. A new model should cost you about $110,888 these days. That means you’ll first have to come up with about $45,000 for your downpayment, and then you’re probably looking at about $1,235 per month in car loan payments.

 

2. But wait… I thought your car needed to be fully paid before you could convert it to a private-hire car.

That’s actually not technically true. Yes, to use your vehicle with Uber you need to convert your vehicle to a Z10 registration – that is, private-hire motor car. This means that any loan on the vehicle should now be paid for by your “company” – 99% of the time, this is the business you set up through ACRA. What you’ll need to do then is get a bank to refinance your loan, from you as an individual, to your sole proprietorship.

If you’re just buying the car, then it’s even easier. Buy the car under your company, and take out the car loan directly. Since it’s a hire-purchase agreement, the interest rates offered will still be competitive.

 

3. How do I make more as an Uber driver?

Since we’re not asking you to quit your job and be an Uber driver full-time, how much you’re going to earn as an Uber driver is really up to you. While it may seem obvious that the more you drive, the more you make, it really depends on when you drive.

We’re going to assume that you bought the Toyota Vios mentioned earlier, which means you should qualify only for uberX, the low cost option for passengers.

uberX charges a base fare of $3.50, and then adds $0.25 per minute and $0.50 per kilometre. That means a 10 km ride that took about 15 minutes will cost $3.50 + $5.00 + $3.75 = $12.25. That’s how much the customer pays Uber. Uber then takes 20% of that, and then gives you the rest. So in 15 minutes, you can earn $9.80. Not bad.

But of course, life isn’t so straightforward, otherwise we’d all become Uber drivers. I’m not saying you can earn about $10 every 15 minutes. After all you don’t get paid for driving to pick up your passenger. Neither do you get paid for the time that you’re driving around waiting for your next passenger.

So, you’ve got to be smart. If you’re working in some ulu industrial estate, there’s a higher likelihood that someone’s going to want a ride out instead of fighting with the crowds for the sole bus service. If you’re out driving late, hang around the shopping malls, or bars and restaurants. Of course, taxi drivers know these tricks too. But because you’re not allowed to pick up passengers off the street, you don’t have to worry about joining taxi queues.

Uber also has a somewhat notorious feature called surge pricing. This means that if the demand is high in an area, fares can increase in order to attract more drivers to the area. So if you use your time efficiently, you can take advantage of the surge pricing to increase your earnings.

 

So is it worth it to use Uber to pay off your car loan?

Let’s just look at it in perspective. Say you drive for two to three hours after work. You can expect to earn at least $30 to $60 during that time, since surge pricing is often in effect during those hours. Even if you only work from Monday to Friday each week, that’s already between $700 to $1,200 a month. Just for an extra two to three hours every day. And this is a low estimate.

How much is your monthly car loan repayment for your Toyota Vios? That’s right, about $1,235 a month. Do this for the next 5 years of the loan, and you’re basically using Uber to pay off most, if not all of your loan.

Of course, once again, we’re not saying that this is something that everyone should be doing. If you’re starting a new family, the last thing you want is to spend another two or three hours away from your spouse and children. But if you’re really doing nothing worthwhile with your time, this might be something that you could think about. It’s definitely more logical than the COE prices.

 

Are you a driver using Uber to defray your car loan monthly repayment? Share your story with us.

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Peter Lin

I am the poster boy for reinventing one's self. I've been a broadcast journalist, technical writer, banking customer service officer and a Catholic friar. My life experiences have made me the most cynical idealist you'll ever meet, which is why I'm also the co-founder of a local pop culture website. I believe ignorance is not bliss, and that money is the root of all evil only if you allow it to be.