Half of all Uber drivers last about six months before they quit.
Since they need more drivers, they have come up with a scheme to get drivers with bad credit a loan for a new car through Xchange Leasing. The Houston Chronicle explains:
If you’ve got a license and are willing to drive, Uber will hook you up with a new car, no matter how bad your credit. To make sure you make your payments, though, Uber will automatically deduct them weekly from what you earn as a driver. If you don’t drive enough, or you fail to make your lease payment, Xchange has folks to take the car back.
Goldman Sachs just put up a million dollars to expand the program.
Here’s what this looks like to me:
#1 You can’t get approved by another lender so you know that the terms will be bad. Can we say “sub-prime” lending?
#2 Uber, or XChange, sets the rates for the loan and then Uber turns around and sets the rates that drivers drive for. You’re telling the drivers what they’ll pay to lease the car AND controlling how much money they earn.
#3 The lease payment comes out of the Uber driver’s pay that week, before the driver gets the money.
#4 If the driver doesn’t drive enough to make the payments, then the car is repossessed.
This does not sound like a good deal for Uber drivers that don’t already have a car loan.