Peer-to-peer (P2P) car sharing, in which ordinary people rent out their personal cars, is the next step toward more affordable car rentals in the new sharing economy. Your car is an asset that costs you money every day in the form of loan payments, insurance, depreciation, maintenance and so forth. But think about how much time it sits unused. What if you could put your car to work, earning you money instead of sitting idle?
That’s the idea behind P2P car sharing. Rather than parked in your driveway, at work or in the airport parking lot, your car is available for someone else to rent. A number of online websites match available registered cars with prequalified renters. Be advised, though, that this is a relatively young industry, with most available rentals concentrated in major cities, such as San Francisco or Boston.
How Does It Work?
Car owners interested in renting out their vehicles can register at one of the P2P sharing sites, such as RelayRides or JustShareIt. Some sites require a few photos of your car, which may be helpful to include even if they’re not required. Sites determine rental fees based on the type of car, locality and so on, while owners specify the car’s availability. Depending on the P2P site, an owner may choose to have his car picked up at his house, deliver the vehicle or, where available, have it picked up at an airport. Owners typically receive between 65 and 75 percent of rental fees, which usually run between $5 and $15 an hour. Most payments are through direct deposit.
Renters also register with the P2P site. As with car owners, registration only takes a couple of minutes, though the site will conduct a background check, looking at driving records before approving applicants. The rental process involves choosing an available car, reserving a rental date and time and providing credit card information if it isn’t already on file. At the end of the rental period, the driver replaces any consumed fuel before returning the car to its pickup location.
What Are the Benefits?
Through P2P car sharing, a car owner can recover a portion of his or her monthly vehicle costs. For example, if a car rents for $8 an hour, with the owner receiving 75 percent or $6, each 10 hours of rent nets $60. For airport rentals, most sites will cover an owner’s parking fee and have the car washed before it’s returned.
Renters benefit from using a car for as little as an hour at a time at a very affordable rate, without the hassle and expense of car ownership. They’re also often able to access cars within walking distance.
What Are the Risks?
Owners face the most risk with P2P sharing and must come to grips with strangers driving their cars. P2P sites maintain additional insurance (RelayRides carries $1 million, for example) for the car, as well as liability for accidents involving other cars and drivers. But only a handful of states have addressed P2P insurance complications, such as who pays for what in the case of an accident. To play it safe, anyone offering their car for rent may want to beef up their liability coverage.
What it means to you: Because car sharing is relatively new, some legalities are unsettled. Before committing your car, talk to your insurance agent or maybe even a tax specialist to ensure that all of your bases are covered.