Driving with Lyft as a College Student: Things You Need to Know?

Online taxi services like Lyft can be a dream for any college student. They have a lot of great benefits and virtually zero cons. Such jobs come with the promise of ultimate flexibility. Drivers can choose their own working hours, make instant cash, and even bag a bonus on a busy day by working during Prime Time hours.

While driving with Lyft sounds like an excellent summer job, there are a few things you should keep in mind before signing up as a driver. The job has many demands, and they span over the basic requirements of owning a car and holding a license.

Here’s everything you should know before signing yourself up as a driver.

1. Legal Requirements for Driving with Lyft
2. Car Requirements
3. Driving Without Owning a Car
4. Insurance
5. Financial Aid Impact
6. Tax Implications
7. Potential Perks
8. Earning Potential
9. Best Time to Drive
10. Lyft vs. Uber: Ultimate Comparison Showdown

Legal Requirements for Driving with Lyft

If you’re planning on driving with Lyft as a college student, make sure you’re at least 21. This rule applies everywhere, save New York City, where the minimum age requirement is 18 years.

Additionally, you will require a local driver’s license with at least one year’s worth of driving experience under your belt. If there are legal requirements for drivers in your area, you should also be in line with those.

Car Requirements

There are also some basic requirements for your car. For starters, your vehicle should have four doors and be able to seat 4 people. 2-door vehicles are not allowed in any case.

Your car should have passed Lyft’s vehicle inspection. After that, it will be deemed fit to drive. The review includes both mechanical and cosmetic aspects.

Your vehicle should be registered with access to original registration documents. It does not need to be registered, but insurance must be under your name. You can drive a leased car, too.

Moreover, rebuilt or salvage vehicles are not allowed, even if the car is in excellent condition. Your vehicle must be a 2004 model, at the very least. The car must also have four passenger seatbelts.

Also, full-sized vans like 12 or 15-passenger vehicles do not qualify, and neither do some subcompact models. You cannot use a commercially marked vehicle, like a taxi, for Lyft services.

Other Requirements

To drive with Lyft, you’ll need to own a smartphone. You’ll either need an iPhone with iOS11+ or an Android device with 7+.

Driving Without Owning a Car

You can drive with Lyft even if you don’t own a car, which is a huge plus for college students! However, there are some strings attached to this.

You may even have to rent a car from a company or individual and earn enough to pay them back and still have some earnings left over for yourself.

Lyft itself offers a rental car program called “The Express Drive Program.” This is only applicable to drivers who are 25 and older, so it might not work for most college students.

Insurance

The great thing about driving with Lyft is that it offers its own insurance. However, you will still need to have a basic insurance policy intact before your vehicle is eligible for Lyft.

The driver’s name must be on the vehicle’s insurance policy, so make sure of that. Each state has a slightly altered threshold for drivers.

As most insurance policies do not cover rideshare accidents, Lyft has drawn up a set of things to cover when you work for them.

It doesn’t cover everything, though, but qualifies as a pretty sweet deal considering it’s free. Let’s look into what Lyft’s insurance policy offers:

• No coverage when driver mode is off
• Contingent liability coverage when driver mode is on, but no ride is accepted: $50,000 maximum limit for person, $100,000 maximum limit per accident, and $25,000 maximum limit for property damage
• Coverage during an accepted ride: This ends when the ride ends. The maximum coverage provided is $1,000,000 ($1 million) per accident. This coverage comes with a $2,500 deductible and applies regardless of whether or not you are at fault

You can check out a more detailed explanation on Lyft’s website. Remember that these thresholds can vary depending on your state. For the most part, though, the same rules apply to everyone.

There’s one more important thing to keep in mind before you start to rely on Lyft for insurance.

While the company will help you in most cases, you must first report it to your personal insurance provider if an accident occurs. If they reject the claim, only then will Lyft step up and take care of coverage.

Financial Aid Impact

If you’re on need-based financial aid, you’re going to have to check if working part-time reduces your aid. Whether or not you qualify for aid depends on your tax information from two years ago.

So, any money you earn this year may reduce the aid you receive after two years. But, if you’ll graduate by that time, you don’t need to worry about losing your aid.

An income protection allowance lets students earn a certain amount before they can qualify, affecting their need-based scholarship. For the 2019–20 school year, this totals $6,600.

Luckily, the allowance threshold is higher for independent students and parents.

Students working as independent contractors have the edge over others.

They can deduct certain expenses from their income, allowing it to fit within the allowance limit. This rule applies if you sign up as a driver for Lyft or other ridesharing companies.

Tax Implications

If you drive with Lyft, you’re legally obligated to pay tax. Rideshare companies like Lyft won’t deduct the amount from your paycheck, so you’ll be compelled to pay up yourself.

By subtracting driving-related expenses like gas, tolls, repairs, and maintenance from your paycheck, you can potentially reduce the amount of tax payable. This works by paying tax only on generated profit and not on the total amount Lyft pays you.

Hence, your taxable revenue decreases, and your eligibility for need-based financial aid remains unaffected.

For this to work, you’ll have to keep strict track of your Lyft-related expenditures and use the mileage tracker on the app.

The IRS lets drivers subtract a small set amount for every mile driver in a rideshare or business-related purpose. In 2019, this amount was 58 cents per mile, a jump from 54.5 cents the year before.

Lyft provides an annual report to drivers that cover total mileage and earnings. You can use this to calculate your taxes and deductibles. If you’re unsure how to do this, consider using TurboTax Live online to speak with a credentialed income tax preparer from your home in New York City, Chicago, San Francisco, or anywhere else in the United States.

Potential Perks

Driving with Lyft may sound complicated after learning about all the requirements and restrictions, but you’ll be happy to know about some potential perks the job offers.

Lyft also provides a set of perks known as “Lyft Rewards.” Currently, this is only available to some drivers, but here is an overview of the system:

• Point-system that lets you earn points and swap them in for rewards
• Points can be earned by accepting or dropping off a passenger during a busy hour or Prime Time. You earn points off base fares, time and distance covered, and tips for these hours. You don’t earn points on some things, like ride bonuses and cancel fees.
• For every dollar, you earn 3 points. All earnings are rounded off to the nearest dollar, and points are allotted accordingly. This applies to tips, too.
• These plans give you amazing rewards, like gas cashback, cash bonuses, and your AT&T phone plan savings. There are three reward tiers: Silver, Gold, and Platinum. Each comes with a new set of rewards, and redeeming points will not set you back. For Gold or Platinum, you’ll need a minimum rating of 4.90.

Apart from points, you can earn rewards on ride bonuses like personal power zones and streak bonuses.

Also, once you complete 1000 rides, you get a special 1K Club jacket for free. You can read more about rewards here and here.

Earning Potential

Before committing to Lyft, you should know how much you can make through your ridesharing partnership. The general understanding is that Lyft drivers earn about $17.50 an hour. But this can vary depending on tips and bonuses.

Generally, drivers between the ages between 18 and 30 earn more than their older counterparts. They earn an average of $18 an hour, which is great if you’re a college student. Still, there is no guarantee of what you will make.

In larger cities like Los Angeles and New York, you can make up to $35 an hour. Lyft guarantees you can make $1000 in your first 30 days by giving 125 rides, given you’re driving your own car.

The time of the day you choose to drive during also affects the amount you earn.

Working at Prime Time will give you bonus cash, whereas working when there is less demand will not only give you minimum wage, it will also be harder for you to find a ride.

Again, there is no guarantee of how much you will earn. First, you have to ensure you get a ride, which is not always necessary.

Compared to Uber, Lyft takes a smaller commission and charges customers slightly more for rides, maximizing your earnings as a driver.

Still, remember that you’ll be paying for gas and additional maintenance from your own earnings, which can significantly reduce your profit.

The good part is that Lyft allows in-app tips, which is a great way to make some extra cash.

Best Time to Drive

Prime Time pricing is the best way to make money because you get paid more per ride.

Prime Time is when there are more passengers requesting rides than drivers available. This usually occurs during rush hours and after large city events like concerts, parades, sporting events, or holidays.

The best times to drive are on weekends because demand is high. For weekends 3:45 pm and 8:45 pm, and 9:45 pm and 1:45 am are the best hours to drive in.

During the workweek, drivers earn the most by working from early morning to 10:15 am, and 3:45 pm and 9:50 pm. Of course, these timings can vary depending on your city or town.

Lyft vs. Uber: Ultimate Comparison Showdown

College drivers often wonder which ridesharing service to sign up for. Let’s compare details so we can decide on a verdict.

Lyft offers brilliant bonuses for completing rides.

If you complete 75 trips in 30 days, Lyft may reward you with a $500 bonus. Uber has no such benefits.

Also, Lyft drivers claim to earn more than $2 on average per hour, which is true in most cases.

Lyft drivers also earn much larger tips. Uber, however, has recently come up with a scheme for in-app tipping that wasn’t available earlier. Remember that this depends on where you’re driving and when.

Lyft drivers are generally higher paid, have better ratings, and are more satisfied than Uber drivers, according to technology company Earnest and data from Certify.

Overall, Lyft is a better option for drivers in the US.

Conclusion

If you’re in college and need a side-hustle, considering Lyft is a great idea.

However, it would help if you remembered that it is a large commitment, and you will have to balance your work-life alongside college life without letting your grades slip.

While this sounds stressful, ridesharing apps allow you to customize your work timings, making them a great choice for college students. Though cars cost a lot to maintain, you’ll have to pay for petrol yourself.

All in all, working with Lyft is smart, but make sure you can keep up with the job’s demands, like minimum rides and paying for your car’s resources by yourself!