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Whether you’re already an Uber driver or you’re thinking about becoming one to earn some extra income, you may need to upgrade or repair your car. If you don’t have the cash on hand to cover the expense, you can take out a personal loan as an Uber driver to help finance the work. First you’ll want to make sure a personal loan is the best option for you. Read on to find out what personal loans for Uber drivers are, when you might need one, and the factors to keep in mind before applying.
Why an Uber Driver May Need a Personal Loan
With a personal loan, you will get a lump sum of money to be used for almost any purpose, including as a loan useful for an Uber driver. You pay back the loan in regular monthly installments with interest over time. Things an Uber driver can use a personal loan for include:
Car repairs
Making upgrades to their vehicle
Buying a new or used car
Covering medical expenses
Consolidating debt
If you need money quickly to repair or upgrade your car, a personal loan for Uber drivers could be worth considering. In some cases, the timeline for personal loan approval may be as little as one day, though it can take longer if you are asked to submit documents, such as proof of income. You can also use a personal loan to purchase a car with no collateral or down payment required. However, an auto loan may be a better bet because the interest rates will be lower. Check into a personal loan vs. an auto loan to see what makes the most sense for your situation.An Uber driver loan may also come in handy if you have medical costs to cover. You can use a personal loan to pay for an upcoming procedure or pay off medical costs you’ve already incurred. And if you have a number of different debts you’re paying off, such as bills for home repairs or multiple credit card bills, you could consolidate them into one loan. That means you would only have one monthly payment to make. This might be an option to consider if you can get a personal loan with a low interest rate.While personal loans are flexible and can be used to cover almost any expense, there are certain things that may not qualify, depending on the lender. For instance, some lenders may have restrictions on using a personal loan for certain business expenses, so it’s important to check the terms of any loan you are considering.
How Frequently Can You Get an Unsecured Personal Loan as an Uber Driver?
You can have multiple personal loans as an Uber driver. However, some lenders may limit the number of loans you can take out. Also, when they are considering whether to give you a loan, lenders will typically look at how much outstanding debt you already have using the debt-to-income ratio (DTI). In general, the more debt you have compared to your income, the less likely you may be to get a new loan.
Can You Get a Secured Personal Loan as an Uber Driver?
Many personal loans are unsecured, but a secured loan may be an option for an Uber driver loan. With a secured loan, you put up collateral, such as your car, to back up the loan. Secured loans are less risky for lenders because if you don’t make your payments, they can take your collateral. As a result, a lender may offer lower interest rates and better terms. Borrowers with low credit scores may find it easier to qualify for a secured personal loan. But it’s very important to understand that if you default on the loan, you can lose your collateral.
Payday Loans vs Personal Loans for Uber Drivers
If you rely on your car for work and need to pay for a sudden repair, it may be tempting to consider a payday loan for quick financing. However, these loans come with high fees and terms that can be difficult to meet. Payday loans are small, short-term loans that are repaid on the borrower’s next payday in two to four weeks. The way a payday loan typically works is that the borrower writes a post-dated check for the loan amount plus fees, or they give the payday lender permission to take the amount directly from their bank account. Laws governing payday loans vary by state, but loan fees are usually capped at $10 to $30 per $100 borrowed. However, if you can’t make the loan payment, the payday company may roll it over, charging you the fee again and potentially sending you into ever deepening debt. It’s best to avoid payday loans whenever possible.
Qualifying for a Personal Loan as an Uber Driver
The requirements lenders use to determine a borrower’s eligibility for a personal loan as an Uber driver typically include:
Credit score
Income and employment
Debt-to-income ratio
Personal loan eligibility requirements may vary by lender, but lenders will typically look at your credit score, income and employment, and debt-to-income ratio. The interest rate you can get on a personal loan is based largely on your credit score, which lenders use to determine your creditworthiness. A FICO® score of 670 or higher will generally give you the best chance of getting a loan with a lower interest rate. Lenders will also consider your debt-to-income ratio (DTI), which is your gross monthly income compared to your monthly debt. Generally, the lower your DTI, the better. This indicates that you are not stretched thin financially.Borrowers who don’t have don’t have a robust credit history may want to look into personal loans based on income. In this case, a lender may have minimum income requirements you need to meet. They may also ask to look at proof of your income and employment to verify it. If you haven’t yet started your Uber job and need money, it is possible to get personal loans with no income verification. These loans tend to have higher interest rates and there may be a limit on the amount you can borrow. The repayment time might also be shorter and the fees could be higher.
Compare Personal Loan Rates
As you’re exploring the option of a personal loan as an Uber driver, it’s important to shop around to get the best terms possible. Lantern by SoFi can help make the process more convenient. In our marketplace, you can quickly and easily do a comparison of personal loan rates from multiple lenders to help find the best terms and rates for your needs. Check your rates with Lantern.
Frequently Asked Questions
Can Uber drivers get personal loans?
Are personal loan requirements different for Uber drivers?
What loan options are available for Uber drivers?
Photo credit: iStock/adamkaz
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About the Author
Austin Kilham
Austin Kilham is a writer and journalist based in Los Angeles. He focuses on personal finance, retirement, business, and health care with an eye toward helping others understand complex topics.
