How to Use Your Car to Get Out of Debt


use your car to get out of debt
Photo: Engadget
6 min read

If you’ve ever been in debt (or you are right now), you know how all-consumingly stressful it can be. And if you already have a job – not to mention a family – it can be difficult to get out of debt because working another job with set hours can be a scheduling nightmare.

But fortunately, technology has brought us the sharing economy, which brings flexibility and optionality to your job search. What’s more, if you have a car, you have a valuable asset you can use to your advantage – and in some cases, you don’t even have to do work. Read on to learn how you can use your car to get out of debt – including what you need to know for sharing economy insurance and tax implications.

Ridesharing

Okay, so most folks are pretty familiar with this one. But it’s worth listing, as ridesharing (through companies like Lyft and Uber) has become a major source of income for countless people around the world.

Ridesharing allows individuals to advertise their driving services on an app, connect with drivers based on mutual interests and needs, and earn a fee. This side hustle requires time and effort, as you’re the driver, but you can earn a significant income if you plan carefully. How much you make depends on a variety of factors including the service you opt for, what time of day you drive and in which cities, and even tipping. Insider info reveals that rideshare drivers can expect to make something in the realm of $15-20 per hour on average (more or less depending on supply and demand).

Where ridesharing operates

Uber operates in many towns and cities worldwide (though not everywhere), and Lyft is broadly available across the U.S. Smaller local rideshare companies may also exist in select U.S. cities.

Uber driver in traffic

Renting Your Car

For a side hustle option that you can run without working extra hours, you can rent your car out when you’re not using it. Services like Turo, which has been called “the Airbnb of cars,” allow car owners to list their car for rental whenever they choose. Turo:

  • Insures your vehicle for you
  • Offers free listings with no monthly buy-in or fees
  • Provides three options: deliver your car to the renter, meet them at the airport, or have them meet you

With Turo’s interactive feature, you can figure out just how much money you could make with your specific vehicle on your particular rental schedule. For instance, renting a car worth $20,000 for 15 days a month could net you over $6,000 a year. Turo operates in select cities and airports around the U.S.

Deliveries & Errands

  • TaskRabbit: Use the extra space your SUV or large van affords you to your advantage by renting out your errand-running abilities. TaskRabbit connects you with people in need of services in your area. You set your own rate, and your own hours, but TaskRabbit’s founder Leah Busque says “taskers” can earn up to $60,000 a year.
  • Postmates: Become an independent delivery driver with Postmates, now operating in many cities and states across the U.S. Drivers for Postmates bring customers items from places that don’t traditionally offer delivery, like the local coffee shop. Like other independent driving and delivery services, you’ll set your own hours, a major bonus if you’ve already got a regular gig. Postmates says you can make up to $25 an hour working for them.
  • Favor: Similar to Postmates, Favor drivers make themselves available to deliver anything within the local area. Favor currently operates in 13 cities in Texas. The company claims most runners earn between $10 and $18 an hour.
  • Buddytruk: Billed as “delivery on demand,” Buddytruk allows owners of large vehicles (like a light truck or a van) to become one-person moving companies. Drivers help customers move small items short distances, just like your “buddy with a truck” would. The increased effort with Buddytruk translates to reported increases in hourly earnings – the company claims drivers can earn up to $40 an hour.

Buddytruk

Car Wrap Ads

Make your ride a traveling billboard with no extra effort on your part and start earning income immediately. With companies like MyFreeCar, you simply enter your info, get matched with an appropriate sponsor, and go. You can make up to $400 per month, but payments will depend on where you drive and the model and age of your vehicle. The ads are stick-on decals that are not permanent, and won’t ruin your paint job. You’ll have to sign up with your local info to find out if an advertiser wants to take you up on your offer.

Many other national and local vehicle advertising options exist, so shop around a little to find an ad you’re comfortable with at a rate that makes it worth your while.

CFP on How to Get out of Debt: Earn More and Make Spending Sacrifices

The above options for earning extra cash will only help you get out of debt if you have a real plan. Simply earning more money doesn’t translate to becoming debt free, experts assert.

Certified financial planner (CFP) Mark Carruthers told us that in his 20 years of working in the finance industry he’s seen everything when it comes to getting into and out of debt and, unfortunately, he’s seen much more of the former than the latter.

Carruthers has had clients sell their cars and buy cheaper ones and others who have taken up ridesharing to pay down debt.

“In the financial planning world, getting out of debt falls under the reality of, ‘do what you have to do,’ and this often involves compromise,” Carruthers said. “Skip a vacation, work a second job, pack a lunch everyday, skip the coffee shop in the morning, etc.”

Carruthers adds that doing without isn’t easy — and no one likes it — but if you’re going to make any progress getting out of debt, you’re going to have to make sacrifices, and be creative and realistic about earning extra money.