You’re not commuting—should you rent your car out on Turo?

A few months ago, I would never have considered renting my car out to a stranger. I couldn’t imagine being without it, and also didn’t like the idea of someone else driving it. Eating in it. Maybe parking it too close to another car in a parking lot. But, fast forward to now, in the post shelter-in-place world, where I work from home and seldom need to drive anywhere.

Making payments on something I’m not using suddenly seems like a lot.  So the thought of renting my car out and making a few hundred dollars a month definitelyhas some appeal.

I’d heard about companies like GetAround and Turo; they’ve been making it easy to list your car for rent for a while now. Depending on the car you have, how often you rent it, and the area you live in, it’s possible to cover your entire monthly car payment, or even make a profit. Some people buy multiple cars just to rent them out and take advantage of all the earning potential. I decided to do a little research.

So you list your car, set your price, and strangers rent your car via the Turo app. What could possibly go wrong?

A number of things, as it turns out.

Damage, and insurance uncertainty

As all of us know, we are good drivers, but most other people aren’t. (This is a fact.) So what happens when someone rents your car, and then they damage it?

In the case of relatively minor damage—where no police report is taken, or no other party witnesses it—this can get really sticky, with Turo. If a renter returns your car and you discover a dent or scratch, they may claim they didn’t do anything to damage your car, that it must have already been there when they picked it up. Can you prove that it wasn’t?

Turo offers a protection plan to owners, at an additional charge. Their terms state that “Turo is not responsible for any damage or claim that arises from a trip booked through our marketplace for hosts who have declined a Turo protection plan.” (Yes, they refer to the car owners as “hosts,” and all I can think of when I read that is Dolores and Teddy from Westworld.)

You basically need Turo’s coverage anyway, because unless you have a commercial policy, your insurance company won’t cover any damage or loss—from you or any other driver—if they find out you’ve been renting your car out. (That violates the terms of non-commercial policies and instantly voids your coverage.)

Turo’s coverage options

Turo’s coverage comes in three tiers: 15%, 25%, and 35% of the owner’s trip price. You’d likely want at least the mid-grade coverage, so it takes a substantial chunk out of the profit each time your car’s rented.

Only the 35% tier covers “wear and tear” which is any dent, ding, or scratch less than 3 inches in diameter. So if you have a car in nice cosmetic condition, you’ll want that level of protection to keep it that way. That’s also the only tier that covers the cost of a rental car while yours is being repaired, and also covers lost rental income from your car’s downtime. So you’re probably pretty safe if you opt for that level of coverage, but… 35% really cuts into your profit margin.

Also worth considering is resale; a car that’s been rented out meets most definitions of a “fleet vehicle.” It remains to be seen whether CarFax or other reporting will ever make that known, but it’s a risk to be aware of. Resale values usually take a serious hit for a fleet vehicle, and some lenders won’t provide financing to a potential buyer, or will charge higher rates. Extended warranties and vehicle service contracts often exclude fleet vehicles, as well.

Serious damage or total loss

It seems to be not terribly uncommon—especially with some of the faster and supercar-level rentals—for Turo drivers to wreck the car, to the extent that it’s totaled or close to it. This is where the Turo protection seems to get especially contentious; there are numerous accounts of owners who believe Turo substantially undervalued their car when paying out in the event of a total loss.

One of the most notable of these stories is the tragic tale of the 2009 Audi R8 that met its end on a rainy Maryland night after the driver crashed it into two other cars. The owners “highly suspect speed would have been a factor,” and that seems like a reasonable assumption because a) it’s an R8, and b) look at it…

Rented to stolen: the line isn’t always clear

The main risk factor here is the old adage  “drive it like you stole it/rented it.” And in the case of Turo, it’s sometimes both. Because theft is not altogether uncommon on Turo. And it’s not as clear-cut as regular car theft; usually, if someone steals your car, it’s obvious and you know to immediately call the police.

On Turo, a renter may be in contact but give you excuses for the continued delay in returning the car. In those cases, you’re kind of on your own—by most accounts it sounds like Turo just tells you to keep trying to reach the renter, and wait for them to get back to you or return the car, instead of calling the police right away.

In many of these cases, the owner of the car uses GPS to track it, and goes looking for it themselves. Which is exciting, and can be effective, but… it’s also a little dangerous.

One of the videos detailing this type of situation is from a Turo member whose Kia Sorrento has been stolen by a renter. The video is informative and actually pretty entertaining (it’s a little like an episode of ‘Cops’!) The same Turo member also had a similar incident with another of her vehicles—a brand-new Corvette Stingray—in which the car was abandoned in a parking lot. She was able to track it with the built-in GPS.

Another member had his BMW M4 stolen. It was recovered, but pretty much trashed. In his case, it sounds like the Turo repair coverage, and the way their team handled the whole situation was excellent, and the owner was very satisfied. (He did sell the M4 after it was repaired though, because there was a feeling of violation attached to the car after that. I’d be curious to know how he did on resale, given the damage and the fact that the car had been rented out on Turo and stolen.)

Risk vs reward

Should you rent your car on Turo? It seems to come down to numbers and emotions.

Do the numbers make sense, when you estimate how much you can likely rent your car for, and how many days per month, minus the cost of insurance (whether it’s your own commercial policy or Turo’s coverage)? And it’s also worth taking into account what your car might be worth when you’re ready to sell it, if sellers do become aware that it was a rental vehicle—is the profit you might make during its time on Turo significant enough to offset the (potential) additional “fleet vehicle” depreciation?

Also, how emotionally attached to your car are you? Will you be upset on a personal level if it’s stolen, to the point where you don’t enjoy the car anymore even if it’s recovered, like the BMW owner above? Or is it strictly a business proposition, where all you care about is that the car’s recovered, or the damages/replacement costs are adequately covered?

If it all makes sense for you, it can be a profitable side hustle, or an innovative way to help finance a dream car… or simply a way to help pay for that hunk of metal that might just be sitting around gathering dust, these days.

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