Millions of Americans earn money either full-time or part-time as gig drivers for rideshare or food delivery companies like Uber, Lyft, DoorDash or Grubhub.
The Census Bureau estimated more than 2.7 million individual proprietorships in the taxi and limousine service and couriers and messengers categories as of 2023. Picking up passengers or delivering meals, the drivers put several hundred miles on vehicles each week.
Buy-here, pay-here dealers, who are carrying the notes on vehicles, are presented with challenging considerations when these gig drivers arrive at the dealership as consumers. Due to the heavy mileage, wear and tear on the collateral, many dealers are cautious about approving deals for full-time gig drivers.
“We do have dealers that will sell to those in that type of industry, but they are picky when they do it. They look for larger down payments and the right structure,” said NIADA 20 Group Moderator Brad White during the B28 BHPH 20 Group meeting in Houston. Dealers discussed taking on notes for gig drivers along with several other industry topics, including collections and underwriting strategies.
Along with the right deal structure, White said a consideration is having the right vehicle.
“You don’t want to put them in a 160,000-mile vehicle for an extended term. That’s not going to work out well,” White said. “On top of that, some of you offer warranties and vehicle service contracts. How does that work?”
Keith Thacker of Autoland in Somerset, Kentucky, said his decision on underwriting a deal in the scenario depends on if consumer is driving part-time or if it represents a majority of their income.
“If the gig work is a majority of their income, we’re probably not going to approve it. If it’s part-time, we don’t want to penalize someone for wanting to earn some extra income on the side,” Thacker said.
He said they will ask for a larger down payment and a shorter term.
Chris Pollock of Cherokee Auto Sales in Knoxville, Tennessee, also worked to limit the term for deals for gig drivers.
Many of the dealers said a lot of the time, they don’t know the vehicle is being used for gig work until after it is sold.
“You can’t predict it unless you know it is their primary source of income, and you find out later. As a dealer, if the account is current, there’s not much you can do then. You can’t dictate how they are going to use the vehicle,” said Cesar Stark of S&S Motors in El Paso, Texas. “You have to do the work during underwriting and then you either don’t do it or get a higher down payment and shorter term.”
White suggested that during the underwriting process to look for payments from the rideshare or delivery companies to inform you about the use of the vehicle.
