Peer-to-peer car rental - what is it and how does it work?
Posted on 16 September 2016
Buying a car can be an expensive enterprise. And if you’re wondering whether you can afford it, or you’re struggling with the ongoing cost of running your car, you might like to find out more about peer-to-peer car sharing.
Peer-to-peer car sharing has been around for a while overseas, and is growing in popularity in New Zealand. If you own a car but you don’t use it all the time, you can convert the time when it sits in your garage or at work, into potential revenue earning time. If you don’t own a car you can get access to one when you need it, without the cost of ownership and ongoing maintenance.
It currently comes in two forms and has a range of benefits for both the customer and the car owner. Car Sharing Schemes tend to be run by a business that owns a pool of cars and rents them out as needed to a group of members. Peer-to-Peer Car Sharing in comparison involves individual car owners offering their cars for rent to the general public through a connecting website.
Car Sharing Schemes explored
Car Sharing Schemes are the group form of car sharing. They involve signing up to a group, usually with paid membership included, and getting access to a pool of cars that are available on demand. After any membership cost, payment for what is effectively rental is by the hour or by the day, depending on your needs. There are sometimes also additional insurance or administration costs.
Who does it work for?
A car sharing scheme is a great option if you live in a city and can rely on public transport to get you where you want to go for the majority of your week. If there are regular occasions where you may need to visit a client out of the city or you want to drive North and enjoy a weekend away with friend, access to a short-term car rental could be just what you need.
Another added benefit is that the companies that are getting established to meet the car sharing market are also mindful of their customers enthusiasm for high quality drives and low or zero emission options. So you may find yourself enjoying a fun driving experience as well as the knowledge that you are keeping your costs down in the short term.
Car sharing schemes are not something that you can easily include your own car in as an individual. Most car sharing schemes are run as businesses and involve a pool of cars owned by the business itself.
Peer-to-Peer Car Sharing
Peer-to-Peer Car Sharing allows individuals to connect with customers through a car sharing website, and offer their car for rental by the hour or day. Terms and conditions do apply, and it’s important to be very clear on insurance requirements both as a user and a car owner.
The process for the customer is simple. They go online and choose the car that they want and how long they want it for. Booking is made and the payment is collected. Then the customer receives instructions on how to pick up the car. After use the car is returned and both the owner and the driver are asked to provide feedback.
Who does it work for?
As a car owner this is a great way to put your car to work when you’re not using it. Obviously you will need to maintain it to a high standard both internally and externally. If you’re familiar with Uber or Air BnB then you may already know about the power of the connectivity business model. Smart websites that put you in touch with customers who are looking for what you have available. In this case this is your car and you get to set the price and decide when and where you want it to be used.
If you don’t own a car then Peer-to-Peer Car Sharing is still worth exploring. It could offer you the chance to get access to the wheels you need to get from A to B. It could also present you with an opportunity to plan your future car purchase by including a strategy to raise some extra funds. If you’re considering peer-to-peer sharing you could structure your car loan for faster repayment by putting money earned into additional payments.
Peer-to-Peer Sharing is a demand-based business model so it isn’t possible to guarantee a revenue stream from it. Because of this we do recommend that you avoid using potential car sharing revenue to calculate your ability to make your regular loan repayments. It’s more reliable to organise a loan that allows additional payments for when you have a good rental month.
If you’re thinking of buying a new car or you already have a car and you’re taking a closer look at your car loan: give Enterprise Cars a call. Our team can help you to work out the best loan for your situation. We also offer support with working out your car loan budget when you need it. Contact us today to find out more.