If you are approaching retirement, chances are you’re concerned about whether you have enough money stashed away to weather the years ahead. You may have even started to think about creative ways to make a little extra money in retirement… especially if your retirement account isn’t exactly bursting at the seams.
So, determined to make the most of the situation, you start to create an inventory of all of your assets, skills and business opportunities. As you are searching, you come across an article in the New York Times that describes how ordinary people are making $10,000 a year renting their cars on websites like Turo (formally, RelayRides) and Getaround.
The idea is appealing. Perhaps you have already left your job and no longer have a daily commute. Or, maybe you are still working, but, don’t need your car on the weekends because your kids have left the house. Either way, the idea of making a little extra cash from your car is music to your ears.
As with most things in life, the devil is in the details and, while services like Turo and Getaround may indeed be appealing to older adults, there are several reasons to be cautious.
So, here are 2 reasons to hit the accelerator and 2 reasons to hit the brake.
It’s no secret that retirees are suffering in today’s historically low interest rate environment. $100,000 in retirement savings sounds like a lot of money, until we realize that at 2% interest (what we might expect from a money market account), we would receive $166 a month in passive income. And, even if we get closer to 4% from bonds, our monthly passive income might only reach $333.
Renting out your home, car or parking space changes the dynamic entirely. Instead of having to stash away $100,000s in additional retirement savings, monetizing these assets could potentially add $100s or $1,000s of passive income to your family budget sheet.
All peer-to-peer rental sites from Airbnb to Turo realize that owners are unlikely to let strangers use their most prized possessions unless they feel protected.
Specifically, property owners want to know that they will receive their car or apartment back in good shape. And, if something does go wrong, they want the platform to make them whole again.
Unlike renting your car out directly, platforms like Turo and Getaround do offer some protection. For example, as of the writing of this article, Turo offers car owners $1-million in liability insurance. It also claims to protect owners against direct damage to and theft of their vehicles. Getaround offers a similar insurance program for car owners.
In addition to providing insurance, Turo also claims to screen all of the people who want to rent cars from the site. For example, they only allow drivers who do not have major accidents on their records.
That said, there are several reasons to be cautious when it comes to renting out your car for cash.
While Turo and Getaround are doing their best to address the most common concerns of their customers, there is little that they can do to protect against new laws or the interpretation and enforcement of insurance policies.
As just one example, a few years ago, New York effectively banned Turo from operating in the state. And, while Turo claims that it is not illegal to share your car in any state, there is no guarantee regarding how the existing laws regarding insurance and other issues will be interpreted (or reinterpreted) in the future.
Here’s a link to Turo’s official statement on the legality of its service.
In addition, many owners have expressed concerns regarding whether the insurance policies offered by Turo and Getaround would cover against the most common risks. For example, one Audi R8 owner claimed that Turo’s insurance partner significantly undervalued the car when responding to a damage claim.
Of course, this kind of situation is not unusual in the automotive insurance space. Most of us have, at one time or another, argued with an insurance company about the replacement value of a bike, car, apartment or other valuable assets.
What’s different in this case is that when you rent your car out you aren’t in control of what happens to it. So, you might end up paying for someone else’s mistake.
Just because many of us have more time in our 50s and 60s doesn’t mean that we want to spend it explaining the inner workings of our cars to strangers.
When you choose to rent your car on a platform like Turo, you are signing up for a part-time job. Given the potential financial rewards, it may be worth your time to hand over the keys to your car once in a while. Only you can decide whether the benefits outweigh the costs.
Whether you are renting your apartment on Airbnb or your car on Turo or Getaround, a little planning goes a long way. Here are a few things that you can do to maximize your chances of having a good experience.
First, take the time to read through all of the latest documentation from your platform of choice. Look at the insurance fine print and talk to your own insurance company about what they might cover in the case of an accident. It also makes sense to do a quick Google search to make sure that the laws in your state that govern peer-to-peer car rental services haven’t changed.
Second, be sure to document the condition of your car every time that you hand over the keys. Take plenty of pictures and be sure to make a note of any damage that existed before the handover.
This is not just about protecting yourself in the case of an accident. Most renters will be much more careful if they know that you have this documentation.
Third, be aware of your own physical safety. Each handover should be done in a safe location. It’s also not a bad idea to bring your partner along.
Finally, think hard about the type of car that you have and the reasons that someone might want to rent it.
While I have sympathy for the Audi R8 owner mentioned earlier in this article, it’s not a stretch to assume that the type of person who wants to rent a $100,000 sports car for the weekend might be more likely to drive aggressively than someone who is in the market for a 5-year-old Toyota Prius.
Would you ever consider renting out your car on a website like Turo or Getaround? Why or why not? What would your main concerns be when it comes to using one of these services?