UBER, Goldman Sachs & Subprime Lending

User Forum Topic
Submitted by HLS on June 1, 2016 - 5:07am

In its relentless pursuit for growth, Uber needs new drivers, and many of those drivers need cars.

To help them get started, Uber has been offering short-term leases since July through a wholly owned Delaware-based subsidiary called Xchange Leasing, LLC.

It partners with auto dealerships, advertises to drivers, manages risk, and even pays repo men to chase down cars whose drivers aren't making their payments.

http://a.msn.com/r/2/BBtH9Ej?ocid=Money

Submitted by spdrun on June 1, 2016 - 7:16am.

Uber is a privacy-stealing company -- they track trips, tied to an identity, and that info stays in a database for posterity. Unlike taxis, where you can pay in good, old-fashioned, anonymous, cold, hard, cash.

Uber is also dumping their "product" on the market under cost, funded by cheap VC money. If they were a foreign firm, there'd by a trade war right about now.

Submitted by no_such_reality on June 1, 2016 - 7:42am.

That's the same way Amazon grew. Skirting taxes and selling below cost until competition crippled and they grew big enough.

Submitted by SK in CV on June 1, 2016 - 8:35am.

I suspect they'll be either out of business, or completely change their model within a couple years. They're facing some huge DOL issues, and their drivers can't really make a living as it is. Even their part time drivers, can't turn a profit. Flame out or make big changes. Those are their only options.

Submitted by spdrun on June 1, 2016 - 8:44am.

Self-driving cars, baby! This being said, if realtors are contractors, there's no reason why their drivers should not be classed as contractors.

Submitted by harvey on June 1, 2016 - 9:08am.

A substantial portion of auto loan industry has always been sub prime.

Submitted by SK in CV on June 1, 2016 - 9:03am.

spdrun wrote:
Self-driving cars, baby! This being said, if realtors are contractors, there's no reason why their drivers should not be classed as contractors.

Realtors, or more specifically, licensed real estate agents, can be treated as independent contractors as a matter of law. The law provides no such exemption for uber drivers. The legal issues are not the same.

Submitted by livinincali on June 1, 2016 - 9:09am.

spdrun wrote:
Self-driving cars, baby! This being said, if realtors are contractors, there's no reason why their drivers should not be classed as contractors.

Uber or one of their competitors will be a shop of self driving cars in the not so distant future. They are just exploiting people now until they can make that a reality in the future. Uber as a side job for a little bit extra money driving drunk people around on Friday/Saturday night might be relatively decent. Doing it as a full time job isn't going to cut it. Of course Taxi drivers weren't really making much of a living either. It was the owners of the taxi medallions that made all the money. Driving people around for money is the next job that disappears in mass.

Submitted by Escoguy on June 1, 2016 - 9:11am.

I've done 600 trips with Uber and 100 with Lyft, recently switched to Lyft.

Lyft is better as it allows tips and you can put in your destination so the passenger is matched to where you are going anyway.

Uber drivers can only get 50% or $2.40 for short trips.
I try to filter rides by calling passengers, in the morning I try to only get rides to the airport.

On Friday/Saturday, I may drive downtown in the evening for 5-6 hours. My wife calls it my hobby, I make probably $20-25/hour, after expenses, perhaps $17.

In Escondido I can tell by where the ride originates if they are going to SAN Airport or not but I call anyway.
It is not worth it to do short rides as the driver may need to drive 5-10 miles to make the pickup. If the passenger is only going 2-3 miles, it can be a total of 7-15 miles for $2.40. Uber needs to let the driver put on automatic filters to prevent that.

Also if Uber would add the destination filter like Lyft, that would be helpful. I don't mind driving 5-8 miles out of the way if I can get paid for 30-25 miles plus tip.

If they had a $5 minimum for drivers on short trips and they are not more than 2-3 miles away, that might work but passengers should still have the ability to tip.

Most riders are fine, but one did damage my car. Uber did cover that. It can be fun on occasion to drive but I wouldn't want to try and make a full time living doing it.

Lyft does offer the ability to order a ride the previous day too.

If you use the service and you're going to an odd direction, please text or call the driver to let them know. San Clemente or TJ doesn't always work. Also if you take a short ride and the driver is slightly irritated, please don't ding on the rating as that doesn't make anything better. Just be grateful that he came as it is impossible to make a living on short rides.

Keep in mind Uber/Lyft cost about 1/3 the amount of a taxi.

Submitted by spdrun on June 1, 2016 - 9:12am.

Uber drivers set their own hours, use their own equipment, etc, etc, etc. They pass multiple aspects of the independent contractor test.

Personally, though, I think the US labor law system needs a dramatic overhaul. A lot of the costs (health insurance, etc) should be socialized. i.e. insurance for all, funded by a % income tax.

Make work a simple exchange of money for labor, subject to reporting requirements and safety requirements. If fixed costs are minimized, then there would be less incentive to keep employees working 50-60 hours a week.

Submitted by harvey on June 1, 2016 - 9:21am.

Uber is big in NYC and definitely cheaper than cabs. It works well there because there's already an established "car service" industry and most of them just signed up for to be Uber drivers as well.

The no-tipping thing is BS, as many drivers expect a tip. Uber deliberately disallows tipping through the app and then boasts about their "tip free experience" which means you have to cash tip or be a cheapskate. Uber should just give up on this angle. It's never good when everyone knows a core part of your brand image is a misrepresentation of reality.

Submitted by spdrun on June 1, 2016 - 10:01am.

I live in NYC. Plenty of non-Goober cabs and cars. You can even order a non-Uber car service online. "Cheaper than a cab" really depends on time of day/surge.

Submitted by livinincali on June 1, 2016 - 12:49pm.

spdrun wrote:

Personally, though, I think the US labor law system needs a dramatic overhaul. A lot of the costs (health insurance, etc) should be socialized. i.e. insurance for all, funded by a % income tax.

At current total income and current medical spending it would have to be approximately 20% gross income tax. I don't know that the population could stomach that big of an increase. I suppose you could try to play the social security game where the employer picks up the other half. The real issue is the cost side. Obamacare for the most part attempts to throw more money at the problem rather than actually reducing costs.

Submitted by svelte on June 2, 2016 - 4:40am.

Escoguy wrote:
I've done 600 trips with Uber and 100 with Lyft, recently switched to Lyft.
...

Wow, I had no idea there were so many unwritten rules. I was about to start using Uber/Lyft, now I'm not so sure.

There is a place we like to go here in town but the parking is limited, so I was thinking of Uber/Lyft to (a) eliminate the need to park, and (b) allow me to drink as much as I want. But it would be a short 3-4 mile ride, and if drivers are upset by that, maybe I shouldn't bother.

That being said, I'd never give a driver $2.40 for a ride. I'd feel guilty giving under $10!

Plus, I feel these companies have skirted the rules to get in the door...Uber is not a "ride sharing service" - most of the rides are NOT where the driver was going anyway! They are taxis, pure and simple, and have used the cover of "ride sharing" to get the camel's nose in the tent. They should have to abide by the same rules as taxis.

Submitted by treehugger on June 2, 2016 - 2:37pm.

Driving for Uber is a choice, I don't understand the controversy? Go get a job at a regular taxi service and/or only use regular taxi service if you feel so strongly against Uber. As a driver you sign up to drive for a service where tips are not expected, so why am I taking a flat fee service and putting a tip on top of it? Like anything in the service industry a tip should be earned not expected.

I have an app, I type in where I want to go, it tells me how much the ride will cost and someone comes and picks me up. There is a picture w/description of driver and reviews, I appreciate that a lot more than a regular taxi service (which I have taken in the past and been scared by my non-English speaking drivers). I have used it in various cities to get around, few miles here or there it was convenient and cheap, even with surge pricing. If we had a really engaging driver we gave them a tip otherwise no I did not tip nor did I feel obligated to. If drivers don't like that don't drive for Uber.

I am not sympathetic to the lawsuit.

Submitted by joec on June 2, 2016 - 6:59pm.

treehugger wrote:
Driving for Uber is a choice, I don't understand the controversy? Go get a job at a regular taxi service and/or only use regular taxi service if you feel so strongly against Uber. As a driver you sign up to drive for a service where tips are not expected, so why am I taking a flat fee service and putting a tip on top of it? Like anything in the service industry a tip should be earned not expected.

I have an app, I type in where I want to go, it tells me how much the ride will cost and someone comes and picks me up. There is a picture w/description of driver and reviews, I appreciate that a lot more than a regular taxi service (which I have taken in the past and been scared by my non-English speaking drivers). I have used it in various cities to get around, few miles here or there it was convenient and cheap, even with surge pricing. If we had a really engaging driver we gave them a tip otherwise no I did not tip nor did I feel obligated to. If drivers don't like that don't drive for Uber.

I am not sympathetic to the lawsuit.

I think the overall problem is there are very few decent jobs now for most folks so some people do Uber just because they don't see any/much other options in terms of work...

I'd think most people wouldn't do Uber if they didn't have to honestly. No benefits, pay gets cut without ANY control to you (I think this is where they should lose in any lawsuit as realtors or consultants can definitely setup their pay rates, etc...and have more freedom as independent contractors...)

The problem was cabs were a rip off and didn't drive everywhere. Uber comes and messes everyone up and skirting all the labor laws IMO and the pay for these guys BEFORE any car expenses is pretty pathetic IMO.

As I have family driving full time for Uber, I think the company is a crock and until you do the math or know people personally who drive it full time, you really don't know what it's like and from reading your post, just come off as elitist and with the mindset of, don't like it, then don't drive it (which is true to a point though...)

I honestly hope the company crashes and burns.

Submitted by livinincali on June 3, 2016 - 5:48am.

This is some interesting information about Uber's app.

Quote:

One of the things you may not realize is that Uber can tell when your phone battery is about to die. In an episode of NPR’s The Hidden Brain, Uber’s head of economic research Keith Chen says when you hit accept to download, you give Uber the permission to know this in order to tell when to switch to low-power mode.

While that’s interesting, what’s even more revealing is how much people are willing to pay surge pricing depending on their phone’s battery level. Chen says users will pay up to 9.9 times in surge if their battery is critical just so they’re not stranded wherever they are (of course, assuming that your driver doesn’t cancel on you after your phone’s dead.)

http://thenextweb.com/insider/2016/05/20...

Submitted by Escoguy on June 3, 2016 - 9:41am.

svelte,

If you're in a high density "drinking zone" like OB/PB, Little Italy. Many rides are short and that's not a problem because I might do 10 of those. It is just be aware that a few dollars tip is greatly appreciated for those short rides.

In some areas the short rides just don't work, like when I get off the freeway to take a kid to High School or a guy home from the gym.

I wouldn't want to make you not use the service, but just be aware of the economics so it works for everyone.

Submitted by treehugger on June 3, 2016 - 10:33am.

joec wrote:
treehugger wrote:
Driving for Uber is a choice, I don't understand the controversy? Go get a job at a regular taxi service and/or only use regular taxi service if you feel so strongly against Uber. As a driver you sign up to drive for a service where tips are not expected, so why am I taking a flat fee service and putting a tip on top of it? Like anything in the service industry a tip should be earned not expected.

I have an app, I type in where I want to go, it tells me how much the ride will cost and someone comes and picks me up. There is a picture w/description of driver and reviews, I appreciate that a lot more than a regular taxi service (which I have taken in the past and been scared by my non-English speaking drivers). I have used it in various cities to get around, few miles here or there it was convenient and cheap, even with surge pricing. If we had a really engaging driver we gave them a tip otherwise no I did not tip nor did I feel obligated to. If drivers don't like that don't drive for Uber.

I am not sympathetic to the lawsuit.

I think the overall problem is there are very few decent jobs now for most folks so some people do Uber just because they don't see any/much other options in terms of work...

I'd think most people wouldn't do Uber if they didn't have to honestly. No benefits, pay gets cut without ANY control to you (I think this is where they should lose in any lawsuit as realtors or consultants can definitely setup their pay rates, etc...and have more freedom as independent contractors...)

The problem was cabs were a rip off and didn't drive everywhere. Uber comes and messes everyone up and skirting all the labor laws IMO and the pay for these guys BEFORE any car expenses is pretty pathetic IMO.

As I have family driving full time for Uber, I think the company is a crock and until you do the math or know people personally who drive it full time, you really don't know what it's like and from reading your post, just come off as elitist and with the mindset of, don't like it, then don't drive it (which is true to a point though...)

I honestly hope the company crashes and burns.

If the company crashes and burns then your family that drives for Uber is out of a job. Nice.

Uber is a luxury to me and as an elitist I can choose to indulge in a luxury or not. If I needed to I could drive myself, walk, ride a bike, take a bus/cab/train......

You are trying to argue from the drivers perspective and I don't know anyone that drives for Uber you are correct, although most of the drivers I have experienced were exceptionally nice and really seemed to enjoy what they did, everyone I met did it as a part time gig many to off-set the car payment of a nice car by working a few hours here or there when their schedule permitted. I maintain that they have a choice and the choice is someone sitting around without a job or wanting extra income decides to drive for Uber (known for non-tipping) or not....I choose to take Uber and I appreciate the way it works, if I get good service I will give a good tip, otherwise no I do not feel a tip is required.

Life is all about choices, if that makes me an elitist so be it I will own it.

Submitted by Escoguy on June 3, 2016 - 3:48pm.

treehugger,

You're touching on the real issue.

Some of us drive for Uber/Lyft part time and would never dream of trying to making a living doing it with a family/mortgage and real obligations.

The social interaction is fun and the rough economics are exactly as you said, it pays for the car plus a little extra as long as Uber doesn't squeeze too hard.

Given, a single person can make $800/week doing it full time and for those who have a choice of minimum wage or nothing it is clearly a better choice. Many drivers are semi retired and like having company.

I spoke with one Lyft driver who mentioned he makes more driving than being a care giver which paid $13/hour.

He also mentioned he couldn't get a loan as the bank said, Uber can be gone tomorrow. This goes back to the original topic, that Uber becomes a subprime lender for vehicles with the accompanying credit risk. It would be interesting to know just how many vehicles are being purchased with the idea of ride share paying some or most of the payment.

If a person is in a situation where they depend on Uber/Lyft to make a living, then my advice would be to get more skills as sitting in a car 40-60 hours/week isn't healthy even if the conversation is fun etc.

For drivers who started over 2 years ago, the rates were much higher and it may have led some to conclude this would last and make plans around it, alas that isn't the case.

I am convinced it will be better one day once this price war stops and the app improve with better options for matching riders and drivers.

If the payment was roughly $1.50/mile that might be fair but for now it's about 1/2 that.

Due to the low payment, it is easy to get emotional and react negatively about Uber, but that underscores my point. It is not a full time job.

I certainly hope none of this discussion puts anyone off from using the service.

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