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If you’re looking to find out who’s better to drive for Uber or Lyft, you’ve come to the right place.
Ride-sharing apps have become as 21st century as the internet and they aren’t going away any time soon. And with fierce competition between them, I’ve decided to review both of the largest companies out there, Uber and Lyft.
In fact, I’ve spent some time driving for both. So I’ll draw a little from those experiences to give you an idea of which one might take the top spot for drivers looking to earn some income.
Let’s get started.
Table of Contents
What is Uber?
Uber is a ride-hailing company that was founded in March of 2009. The company is headquartered in San Francisco, California and operates in 63 markets worldwide, including 785 metropolitan areas.
Uber generates over $11 billion annually and has an estimated 110 million users worldwide. This ride sharing company also has the lion share of the market at 67% of all ride sharing for 2019.
The idea behind Uber came to light when Garrett Camp realized that sharing the cost of transportation with others, could make it more affordable. This was after he spent $800 to hire a private driver for a New Years Eve celebration with friends.
What is Lyft?
Lyft is a ridesharing company that was also founded in San Francisco, California. The compay launched in 2012 and currently operates in 644 cities in the US and 12 cities in Canada.
Lyft has 28% of the ridesharing market share and is the second largest company in the US behind Uber.
The company was founded by Logan Green and John Zimmer, who were both computer programmers.
Why Drive For Uber or Lyft
When it comes to flexibility, being your own boss, and setting your own hours, ride sharing apps are King.
So before we look at a comparison of both of these two ride-hailing giants, here are a few reasons why you should be driving for Uber or Lyft if you aren’t already.
This is where both Uber and Lyft shine! Unlike most other kinds of part-time work, you can make your own schedule. You can start at any time, and you can end at any time you want.
Uber now requires you to work at least a few hours each month to stay registered with them. Lyft will probably do the same at some point. But at the time of this review Lyft doesn’t.
Financially, things can take you a bit by surprise if you have never done independent contracting before.
You must file special self-employment tax forms to report taxable income.
If you earn over $600 from any single legal company as an independent contractor, that company is required by the Internal Revenue Service to report those payments.
Therefore, the IRS expects that you will report that income. If you do other independent contractor work, you will need to report that as well.
Every mile you drive, even if it is to a rider’s pickup point, or between drop-offs and pickup points, is tax deductible.
There are other expenses that may also be tax deductible.
For example, if over 25% of your vehicle’s mileage during the tax year was used for independent contractor ride-sharing, you can also deduct an equal percentage of your car’s repair and routine maintenance costs.
Uber gave free access to a special version of TurboTax, which allowed me to figure out if my standard deduction based on miles driven was better than deduction itemization.
This did not include state taxes. That version also allowed for free e-filing of federal taxes. I still had to seek other tax help for state taxes.
If you diligently start the app each time you start your Uber and/or Lyft apps, then turn it off when you are finished driving, it will record all those miles you drove both with and without passengers, all of which are eligible for tax deductions.
House Keeping With Uber and Lyft
If you are driving in a city like New York, realize you are probably going to beat your car up within a couple of years if Uber or Lyft is your major source of income.
The stop-and-go traffic, the weather, and bad street conditions (such as pot holes) can really do a number on your vehicle.
Yes, some riders do reek. I’ve had rides where it would take over an hour after the customer left the car before the odor wasn’t an issue. Heavy tobacco smokers can also cause issues.
Some passengers will use your vehicle for illegal activity. If you have any reason to believe this is happening, you have the full right with both companies to reject that ride.
Lyft now requires all drivers to go through a 20-minute video training with simple questions about content, that covers sexual advances and inappropriate driver or passenger behavior.
Both Uber and Lyft have firm policies about how to handle driver-rider issues.
How to Join Uber or Lyft
Joining Uber or Lyft is relatively easy and the same process for both apps.
Here are a things that need to be done to join:
You can sign up via their apps. Both are available for the iOS and Android platforms in the Play Store and Apple Store.
You must give them enough personal information for them to do background checks. Information such as:
- Driver’s license number
- Social Security Number (which is also needed for tax reporting purposes, even if you’re just a contractor)
- Current address
- Cellular phone number
- You must check the vehicle requirements for your state. I’ve seen anywhere from 2002 to 2007 or newer required for Lyft. For Uber, your vehicle must be 15 model years old or newer.
- You must have a four-door vehicle, capable of transporting at least four people.
- It cannot be a rental vehicle.
- The vehicle cannot have any significant damage.
- Your vehicle must be adequately insured and you must provide an insurance company proof of insurance.
- Your vehicle registration must be current.
- A valid driver’s license.
- Proof of residency in your city, state, or province.
- A bank account for automatic deposits.
- You must have a smartphone that has a cellular plan capable of at least 3GB data per month. (Uber and Lyft do not state how much data you may need, but I have found in my limited use, and private use I needed to add GBs of data a few times. So make sure you have a solid data package.)
- You must take your vehicle for a vehicle inspection. This needs to be with one of their authorized inspection locations. Personally, I take both my Uber and Lyft inspection forms to the same ASWE-qualified mechanic. The inspections are virtually identical, so it is easy for them to fill out both forms at the same time. If you check around, they will do both forms for the same price, with no extra fee. Dealers might try to charge two fees since you are doing two forms.
- You must have at least one year of driving experience.
- A great driver profile photo is necessary. There are specific requirements for the photograph, which are different from getting a United States Passport photo done. For Uber, your identity will sometimes be confirmed by facial recognition when you start the app for a drive.
- For all driving companies, you will need jpg images of all of your documents to upload. Scanned copies work best, but you can photograph those documents with a smartphone.
After they have accepted you, you must read through company-specific documents relating to driving in your state, and some videos.
Lyft does have some mandatory videos to watch as well. You will not be able to start your driver’s app until you have consented to the document information.
Uber and Lyft Apps
When talking about how the Uber and Lyft apps work, it is important to remember that all companies with active apps are continually updating them.
Since major app revision update times are not usually publicly discussed, many of the items mentioned here could have changed, hopefully for the better.
It is possible to use both the Uber and Lyft driver’s apps at the same time. The nice thing about this is, if you live in an urban or populated area, using both apps assures that no matter where you are you can give a rider a ride.
But be extremely careful if you try driving for both companies at the same time! If you accept a call from Lyft, make sure you immediately make yourself unavailable on the Uber app, and vice-versa.
Otherwise, you may get called to drive for the other company when you cannot. Also, be aware that alternating between companies may prevent you from getting consecutive trip bonuses.
Both apps have some features in common. Some of these similarities are as follows:
- Drivers are visible in both apps.
- You can use the app as a traveling GPS system to get to passenger pickup and drop-off points.
- The ability to summon emergency help from the normal driver’s screen.
- View your earnings for the day.
- See how much you have earned for the current week.
- Both apps allow you to see how much time you have been online.
- You can get notifications from both apps and promotions.
- You can be tipped by customers either by cash or through the apps. Increasingly customers tip through the apps.
- These apps both allow you to set destinations if you need to be someplace at a certain time. Uber’s Trip Planner limits you to two destinations per day, whereas Lyft’s allows for up to six.
- After picking up a rider and on the way to the destination, both Uber and Lyft will alert you to another rider whose location may be very close to your current destination. This is nice for keeping busy and on the move! But you must be careful about which rides you accept.
- In semi-rural areas and in cities during non-peak hours, your next rider may be a 10 to 20-minute drive away. You do not get paid for the time you are driving without a passenger!
Pros and Cons of the Uber App
- You can see the name of the person you will pick up during the whole trip.
- It has a status bar, which is supposed to let you know if business is slow or fast-paced.
- The app makes it very easy to see how much you have earned for each trip, usually within seconds after the passenger acknowledges on their app the trip is finished. This information is easy to hide from customers using an incognito mode.
- You can quickly check how much you have earned in a day and how many trips you have done. This also has an incognito mode.
- Uber has a unique point system designed to encourage drivers to drive during peak demand hours. This has an incognito mode as well.
- It is easy to see how many points you have earned and how many more points you need to get to the next level. Different levels can get you different discounts with various gas stations, car repair, car emergency, and towing services, etc. They can even give you free cookies and drinks at participating Subway.
- If you are an UberX driver, you usually qualify to also do Uber Eats deliveries. Tips from that can sometimes be very good.
- While Uber claims that you can rely on its app when you are out of range from your cellular service, I know for a fact that it does not work perfectly everywhere. Dead zones in and around college campuses and large malls or shopping centers can cause the Uber app connection to fail. So beware of this.
- Uber’s app will sometimes require a facial recognition scan before starting it before a drive. I personally have no objection to such scans, but this can be a problem in bad light conditions. I once did a refueling at night and when I tried to restart my app, it asked me for a face scan. Then it rejected three scans in a row. Most likely because of bad lighting conditions. The fourth scan was successful probably because I finally found a lighted location where the scan could be more accurate.
Pros and Cons of the Lyft App
The Lyft app is different in a number of ways. Here are some of the features that are unique to the Lyft app:
- Lyft has a very clear chart that shows peak travel times very clearly by each hour. I like that! Uber claims to have a chart on the Trip Planner (as shown on its website) that shows peak hours for driving, but I have yet to see that at the time of this review.
- Lyft allows you to schedule pickups. This is nice if you develop a great relationship with a customer that may have special transportation needs. This will route their request for a drive directly to you if you are online.
- The Lyft app’s most annoying problem is that you must hit three different buttons to start a trip. It also uses weird language for completing a trip like “Exit”?
- Generally, the more you drive with an app, the more familiar you will become with its quirks. Lyft’s app has more quirks than Uber’s.
Uber Lyft Competitors
Uber and Lyft are the two biggest players in the ride-hailing industry. You will probably be able to drive with one or both of them, no matter where you live in the United States.
But they do have competitors. Let’s talk about a couple of them that might be worth mentioning.
Local Taxi Companies
The biggest competitor is the one who has been there the longest. That is your local taxi companies.
As you can imagine, when both Uber and Lyft entered the marketplace, the taxi companies lost marketshare, causing them to lay off drivers.
Here’s a graph by Statista that shows when ride-sharing apps surpassed taxis in New York City.
Here’s another graph by Statista that shows that ride hailing has been stagnant over the following year for ride sharing apps.
Over time, taxi companies have been seeing an increase in business. A big reason for this is, the local taxi companies are sometimes union operated.
This means they have significant political clout. They also control access to train station taxi lines, airport taxi lines, and many other transportation locations.
NOTE: In many airports, subway and train stations, it is illegal for Uber or Lyft to pick up or drop off customers. Drivers can face significant fines for doing so.
Since taxi companies have drivers on call 24 hours hours a day, 7 days a week, they still get business when Uber and Lyft drivers are offline.
Uber and Lyft have made on-demand travel normally much cheaper, so more people depend on their services. When their customers cannot get Uber or Lyft, and a customer is short on time, the local taxi company gets the call.
So, while the initial impact on traditional taxi services was painful, they are starting to see an uptick in demand.
Within the United States, Curb is another competitor.
It is unique in the sense that it also works with traditional taxi companies allowing them to hail a taxi from their smartphone. This also means that customers can pay with cash wherever Curb operates.
Uber vs Lyft
Here’s a Uber vs Lyft slide deck comparing both companies. These slides point out some key differences in their business models.
Earnings Potentials With Uber and Lyft
For both Uber and Lyft, there are other aspects that come into play when it comes to earnings. Location, hours worked, tips, expenses and other factors all come into play.
For the time and miles you drive without a passenger, you aren’t paid.
If you have fewer than four trips in an hour, there is a very good likelihood you are earning below minimum wage for your state.
You are only paid for the time you have a passenger in your car. Also, you are paid only for the miles you drive with a passenger in your car (though Uber does start giving a small amount per mile after 12 miles as a long-pickup fee).
Let’s take a look at other factors that can affect your income.
In big cities on the coasts like L.A. and New York, drivers can average $35 per hour. Whereas in a small town in Anywhere, USA a driver could earn substantially less.
According to Ride Share Central some of the top cities to drive with Lyft are:
- Los Angeles
- Orange County, CA
- San Francisco
- San Diego
- Silicon Valley
- New Orleans
- Minneapolis-St. Paul
- Washington, D.C.
For Uber, some of top cities to drive for in the U.S. are:
- Los Angeles
- Orange County, CA
- San Francisco
- Las Vegas
- Washington, D.C.
- New York City (and surrounding areas in New Jersey)
- Salt Lake City
As there are better cities to live in to earn more money, there are also ideal times to drive to bring in more cash.
If you are going to drive for Uber during peak times you want to follow the company’s advice. In Uber’s official statement they stated that their peak driving times are the mornings between 7-9 am and the evenings from 4-7 pm.
If you looking to drive for Lyft, the best times to drive are on the weekends between 3:45 pm and 8:45 pm and from 9:45 pm to 1:45 am. If you’re looking to drive during the workweek, the best times are between 4:15-10:15 am and 3:45-9:45 pm.
The most obvious reason earnings can fluctuate between cities is gas prices. This hits me harder than most drivers in the United States living in New York City.
We usually have some of the highest gas prices in the nation. Here are some other states that have notoriously high gas prices:
- Washington state
Uber and Lyft will allow drivers to request almost immediate payment for driving. Both companies pay weekly and run Monday through Sunday as the workweek. And both start payment transactions two days after the previous week’s work.
However, both also state that different banks may deposit in personal accounts at different speeds, which I have found to be the case.
Both will also pay you $50 if you recruit a new driver.
All ride sharing services try to maximize their profits, and rider/driver satisfaction using formulas that may change with little notice.
In cities with high gas prices, expensive insurance, plus when you factor in wear-and-tear on your vehicle, then it gets hard to support yourself with the income from driving for either company. These all need to be considered.
Other Factors to Consider When Driving For Uber or Lyft
There may also be airport, parking, bridge and highway tolls (paid by the customer, but initially charged to you) that can cut into your earnings.
Insurance rates can also vary greatly depending on your location and vehicle. Another factor that can impact your earnings.
In California, the 2019 California Assembly Bill CA-5 may put a big dend in all Uber and Lyft driving by forcing Uber and Lyft to declare all drivers as employees. Because that same bill affects independent truck drivers, freelance writers, newspaper delivery people, independents landscape workers, and many other types of workers, there are a lot of challenges against this bill.
My home state of New York has already passed similar legislation, and other states are considering such laws.
These legal challenges will determine the fate of a lot of workers who depend on side jobs for extra income.
In 2018, new pay rules voted on by the New York City’s Taxi and Limousine Commision established a minimum wage for drivers. That rate was set at $17.22 after expenses. This made New York City the first city in the US to adopt minimum pay regulations for app-based drivers.
Keep all of these factors in mind when deciding whether or not it makes sense to drive for Uber or Lyft in your area.
For all the benefits, it seems as if both Uber and Lyft are on par with each other. If one company starts something popular, the other will add something similar very soon.
Your vehicle insurance will probably go up. Most vehicle insurance is based on an estimated number of miles you plan to drive any given year. Once you start ride-sharing, those miles will go up substantially.
How Much Does Uber Pay?
How much you are paid is based on your location and other factors as I mentioned. But to give you an idea, for Uber you are paid in the following ways:
- A base fare (i.e. 86 cents).
- Rate per mile (i.e. 58.5 cents per mile).
- A wait fee per minute, which does not start until you have waited for two minutes.
- A long pickup fee if it takes more than 10 minutes to get to the rider, but if it takes 9 minutes and 45 seconds, or if the app thinks you took too long to cover the distance, you don’t get it.
- A surge fee, if applicable.
- A cancellation fee if the rider orders your car and you have traveled at least two minutes towards their location. That sometimes is much nicer than if you had actually picked up the person!
- Tips that are given via the app.
- Uber has direct financial promotions of various kinds such as:
- Surges – These are peak times when demand for services may be exceptionally high, but there may not be enough drivers. For example, just after New Year’s Eve in 2020, around 1:00 am, surge additions per ride locally of between $9 to $12 per ride were given.
- Boost Zones – These are areas where you can get paid extra money, such as 1.3 times the regular fare.
- Quests – These are times when if you do three, four, or another number of consecutive trips on Uber, you can get bonus earnings that may vary from $3 to $60 (of quests I have noticed locally).
- Consecutive Trip Bonuses – These are separate from Quests.
- Uber also has a point system that can earn drivers discounted or free services, including free university education.
For more information, visit the Uber website to get started.
How Much Does Lyft Pay?
When I started driving for Uber, Lyft was not yet a major player in my area. But I applied for both of them at the same time.
In terms of general employment benefits, Lyft seems to offer better benefits. If you live in an area where Lyft is very active, it might be a good idea to do most of your driving with Lyft for this reason.
Lyft’s financial incentives are:
Ride Challenges – if you give a certain number of rides within a set time period, you get financial bonuses. These are similar to Uber Quests.
Personal Power Zones – These are like Uber’s Boost zones. The longer you stay in those zones, the more you get. If your next ride doesn’t take you out of them, which is hard to predict.
Earnings Guarantee Promotions – These guarantee you will earn a certain minimum amount of money per set amount of time. If your trips do not accumulate over that minimum, Lyft pays the difference.
Streak Bonus – These require back-to-back consecutive trips over a certain period of time. You cannot change to Uber for a trip, then back to Lyft.
However, the way the trips are arranged are nicer than Uber’s Point System benefits.
For more information, visit the Lyft website to get started.
Uber has several advantages over Lyft with its app. This is why the Uber app is my preference.
But when it comes to earnings, driver experience, and culture, I think Lyft has the edge for me. For you, this might be different depending on the factors I mentioned above.
My recommendation though, is that you drive for both of them. In this review, I shared some tips on how to effectively work for both companies.
Because as I mentioned, in my experience with driving for both, there are some shortcomings with both companies that can be made up for by the other. And you create more opportunities for yourself to earn.
So in the end, if I were to pick just one, I’d probably choose Lyft. But if I wanted to really increase my earnings potential, I’d drive for both Uber and Lyft.
I’ll leave you with an excellent video that shares a comparison between Uber and Lyft below.