Payday Loans for Ride Share Drivers

Payday Loans for Ride Share Drivers

Kerry Vetter
by Kerry Vetter
Updated: July 9, 2021

Table of Content

Why Rideshare Drivers Have a Hard Time Getting a Loan?
Why Independent Drivers Need Payday Loans
What Loan Options Do Rideshare Drivers Have?
How Loans For Rideshare Drivers Work?
What Are the Main Benefits of Cash Advances for Rideshare Drivers?
What Are the Requirements for a Cash Advance?
How Can You Prove Your Income as a Delivery or Rideshare Driver?
Alternative Loan Options for Independent Drivers
FAQ

Why Rideshare Drivers Have a Hard Time Getting a Loan?

Delivery app drivers working for Uber, Lyft, Doordash, and other companies find it hard to apply for personal loans. And the reason is not that they have no unexpected expenses. They have a good share of business expenses on account of car maintenance costs and repair services. Most app drivers resort to a title loan by using their car as collateral to get a loan.

The issue with traditional loans is simple: submitting a loan request is more challenging for independent contractors. And most app drivers are technically considered independent contractors. However, financial institutions are reluctant to lend to Uber and Lyft drivers. A rideshare driver’s job is not considered stable. Applying for a personal loan with banks or credit unions requires a fair credit score, which an Uber or Lyft driver may or may not have.

Fortunately, gig workers have alternative financial solutions like payday loans.

Why Independent Drivers Need Payday Loans

Payday loans for DoorDash drivers

Independent contractors such as Uber drivers are not considered employees per se. In other words, getting approved for traditional installment loans is next to impossible for them. Financial institutions often reject gig workers’ applications after a credit check or upon learning about the unpredictable nature of their employment status. To banks, non-salaried contractors are risky customers.

Unlike traditional loans, cash advances depend less on credit scores, offering drivers the benefit of same-day approval. Moreover, the approval rate on payday loans is high. Borrowers can receive the money on their checking account as soon as the next business day. Among the most popular reasons to apply for a payday loan, Uber and Lyft drivers often report the below:

  • Financing car repair services;
  • Paying for gas and maintenance;
  • Funding car inspections costs;
  • Covering car insurance costs.

What Loan Options Do Rideshare Drivers Have?

When gig workers need additional money to cover certain expenses, they have two quick options to get cash: payday loans and installment loans. Both are solution-tailored loans for rideshare service providers.

Payday Loans

A cash advance represents a short-term loan amount that you typically pay off when you receive your next paycheck. Main characteristics:

Amount: up to $1,000;

Terms: up to one month (on your next payday);

Fees: from $10 to $30 for every $100 that you borrow;

Repayment: in one lump sum.

Short-Term Installment Loans

Payday installment loans are a form of short-term financing. This option is somewhere in between a personal loan and a cash advance. Unlike payday loans, you can take larger amounts of money and repay the lender over several months. Main features:

Amount: up to $5,000;

Terms: several months, depending on the amount;

Fees: depend on the loan conditions;

Repayment: in fixed monthly installments over several months.

How Loans For Rideshare Drivers Work?

The application process for a cash advance is straightforward:

  1. Apply
  2. Get approved
  3. Receive the funds

If you apply for a cash advance on a typical workday, you can receive the money in your bank account within one business day. Although applying doesn’t guarantee approval, you will most likely qualify.

What Are the Main Benefits of Cash Advances for Rideshare Drivers?

cash advances for Uber and Lyft drivers

Uber drivers, as well as other representatives of the gig economy, enjoy numerous benefits when applying for payday loans, including:

Quick Loans

If you qualify on the main set of requirements, you will receive your money in record time compared to traditional loans.

Quick Online Application

Customers usually complete the form in a few minutes. All you need to complete is personal information relevant to your identification, job status, and simple financial details.

Instant Loan Decision

Most drivers receive an almost instant loan decision. On a typical business day, we’re talking about a matter of minutes.

Fast Deposit of Funds Firectly into Your Account

Once you sign the loan agreement, you will have the funds in your bank account within one business day. If you get approval later in the day, the deposit will be processed the following business day.

Easy Repayment

With your prior consent, the loan amount will be automatically debited on the due date. That way, you don’t have to worry about missing your payment.

No Hidden Fees

Borrowing from reliable direct lenders doesn’t involve any additional costs.

What Are the Requirements for a Cash Advance?

To be eligible for a cash advance, an Uber driver doesn’t necessarily need an excellent credit score, which is mandatory for personal loans. What you do need is to have the bellow:

  • a state-issued ID (your driver’s license, too);
  • your social security number;
  • proof that you are a US citizen or permanent resident;
  • an active bank account and recent bank statements.

A loan provider will look into your earnings and expenses to determine whether you will be able to pay them back.

Who can start an application process for payday loans? The service is available for most delivery company workers and rideshare drivers working with:

  • Uber
  • Doordash
  • Lyft
  • Truckers
  • Taxi
  • Amazon Flex
  • Postmates
  • Grubhub
  • Instacart
  • Shipt
  • Caviar

How Can You Prove Your Income as a Delivery or Rideshare Driver?

loans for rideshare drivers

Delivery and rideshare drivers are not considered employees but independent workers. For that reason, they do not receive pay stubs, which lenders require. As a rideshare driver or delivery worker, you can prove your income to the lender.

  1. Form 1099. As an independent worker who earned more than $600 the previous year, you get this form at the beginning of each year.
  2. Bank statements prove that your company transfers money into your account on a monthly basis.
  3. Monthly income summary. If your company sends employees monthly records of earnings, you can use yours as proof of income.
  4. Weekly earning screenshot. If your company has an app or website where employees can monitor their earnings, you can take a screenshot to prove your income.

When your lender asks you for proof of income, ask them what they accept. Different loan providers will have different requirements. Expect additional questions about your insurance type, your monthly expenses, including car maintenance costs.

Alternative Loan Options for Independent Drivers

A new driver’s first question is what it takes to buy a car as a ride share driver. And while Harry Cambell makes an excellent point of why that makes sense, the US Small Business Administration (SBA) may have some additional options on how to get low-risk loans.

Paycheck Protection Program (PPP)

As an independent contractor, you could benefit from PPP if you meet a series of required criteria. PPP loans are available for small businesses, which Uber drivers, Doordash drivers, and others qualify for.

Economic Injury Disaster Loan (EIDL)

Uber drivers are not employees of the company per se. As an independent Uber driver, you are eligible for an EIDL loan in case of a pandemic or other factors that affect your financial wellbeing.

FAQ

  1. Can an Uber driver get a payday loan with bad credit?
    Yes, bad credit is not an issue when getting a cash advance.
  2. What unsecured loans can independent drivers access?
    Rideshare drivers can access small business loans, federal loans, and payday loans. Some small business options may lend to app drivers in exchange for a part of their future sales.
  3. Do Uber, Lyft, and Doordash offer loans for drivers?
    No, Uber, Doordash, and Lyft don’t offer loans for their drivers. Uber ended its car financing program in 2017.
  4. Are drivers and delivery workers eligible for small business loans?
    Yes, they are eligible for small business loans in most cases, depending on the exact requirements.

Kerry Vetter is a consumer finance expert and writer, who has been engaged in creating finance-related content for more than ten years. Her expertise is approved by obtaining a Bachelor of Science in Finance from Boston College, as well as receiving three major certificates as a professional advisor and counselor.  At the moment, Kerry is an author of multiple educational articles and insights that have been created in order to increase and develop financial literacy and responsible borrowing among US citizens. Her expert relevant savings advice has helped a lot of people overcome their financial issues and find out more about principles of smart spending, the right investment decisions, and budgeting.  You can read more about Kerry’s professional background here.

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