Does your family own more than one car but only regularly use one or two of them? Do you only drive your vehicle on weekends or on a once-a-month road trip? You can put it to good use earning money while you work or go to school by renting it to someone who needs a vehicle through Turo.
Turo functions on the same premise as Airbnb for homes. You rent what you don’t use to someone who needs it and pays a fair price for it. Turo handles all the contracts, payments, and payment distribution for you. It also deals with the auto insurance, so you don’t have to do it.
Turo makes it easy for you to start a micro car rental business. Let’s consider its getting started guide and business planner tool.
What You Need
To rent a vehicle to others using Turo, you’ll need to own a late-model, clean, fully functioning automobile. The vehicles available on Turo range from Kias to Mercedes-Benzes.
If you do not already own a vehicle, the business planner tool offers a calculator that enables you to determine the most financially feasible option for purchasing a car or truck. A slider lets you choose the vehicle cost, while drop-down lists let you set the percentage of the down payment and interest rate. This results in a table of information providing you with your:
- Necessary down payment,
- Monthly payment,
- Needed loan amount,
- Typical loan length,
- The interest you’d pay,
- The vehicle’s total cost to you.
Once you’ve purchased a vehicle, you’re ready to register it with Turo and start making money.
Your vehicle needs to meet Turo’s eligibility requirements. Turo only allows vehicles 12 years old or newer, although it does make exceptions for some specialty cars, such as classic cars. If you want to rent out your 1968 candy apple red Corvette Stingray, apply for a Turo exception. Your vehicle cannot be a limousine, large-scale vehicle that seats nine or more, motorcycle, trike, or three-wheeled automobile.
You must maintain and regularly clean your vehicle. Turo charges fees to the vehicle owner if a renter proves the vehicle was not clean when they received it.
Building a Killer Listing
When you list your vehicle, fully describe everything that makes it special. If you opted for added manufacturer or dealer packages or purchased a higher trim of the automobile, note that in the description.
Take lots of clear, high-quality photos that reflect the actual condition of the vehicle’s exterior and interior. Conduct your photo shoot after cleaning and detailing your vehicle. Turo requires at least six different views of each vehicle, so take more pictures than you think you will need, so you can choose those that provide you with the best views of your car, truck, or SUV.
Setting Realistic Expectations
Turo’s business planner tool also helps you set realistic business expectations. Even the most experienced of the Turo hosts don’t rent out their vehicles 100 percent of the time. The average rental time percentage stands at about 65 percent.
In the Hosting Assumptions section of the planner tool, choose from the drop-down for the percentage of days booked. The range provided starts at 35 percent and goes up to 95 percent. Run each provided scenario to explore how wide of a range exists between the least often rented and the most frequently rented vehicles.
The same assumptions section allows you to plan your business by running various scenarios based on the “host take,” meaning the percentage of the rental you take and the protection plan you choose. Turo links the two numbers. Let’s consider how this works.
Turo gets a piece of each rental you make for hosting the website, the platform, and handling all the overhead. You can choose to share with Turo between 10 and 40 percent of your booking earnings. If you only share 10 percent of what you make with Turo, meaning you choose 90 percent host share, then the Turo company provides less insurance coverage and you pay a higher deductible if an accident does occur. Choosing the low end, where you, as host, get 60 percent of the take and Turo gets 40 percent, nets you an impressive insurance policy that even covers a replacement vehicle if yours has to go in the shop or payment for lost hosting income.
Install the Turo App
Make everything easier to handle by installing the Turo App. The app lets you, check in guests, manage trips, submit vehicle photos, and message with guests.
Estimating Your Operational Costs
Before you rent your vehicle using Turo, consider the operational costs. Set an operating budget for your entrepreneurial endeavor, so you know your overhead costs and can find ways to save money on them.
The business planning tool offers four sliders in the operational costs section. Run a variety of scenarios that each considers monthly costs for:
Depending on the slider category, these options range from $0 up to $100.
Considering Depreciation Value
You have one last business planning step before offering your vehicle for rent through Turo. You need to estimate your depreciation value which sounds complex but Turo included this in its business planning tool, too. Choose the age of your vehicle at the time you purchased it from new to five years old.
In the drop-down box next to it, choose the vehicle depreciation rate. These options include low, medium, or high. Check the Kelley Blue Book or a similar reference to learn the typical depreciation value for your vehicle. For example, Toyota Corollas hold value well, while Land Rovers depreciate more quickly.
What You Could Earn
After all of this preparation, consider the important numbers under the heading “Estimated Financial Projections.” Here, the business planner tool provides you with two numbers – your five-year cumulative profit and the number of booked days you would need each month to earn your car payment. Essentially, the second number lets you know how many days you need to book the vehicle out in order to have it pay for itself. If you already own your vehicle fully, this will reflect that and will show all profit.
Most hosts book about 65 percent of the available month’s days and earn about $704 per month per car. If you want to let your car pay for itself, get started on Turo today!