You're paying $300 a month for your car, yet you use it no more than an hour or two a day. Is there some way to reduce your car costs and perhaps make some money from those idle hours? A new company, RelayRides, is trying to establish a business to do just that, using peer-to-peer renting.
The company works this way: The person renting out his car signs up with RelayRides, selecting how much to charge and the location and hours when it will be available. RelayRides equips that car with a special computer that tracks mileage, location and automatically unlocks the door for a renter bearing a membership card. It also provides insurance for the rental.The location where this car is parked, gassed up and ready to drive is then listed on the RelayRides website.
The renter in need of a car will consult the website to find the closest car and make a reservation. Once at the car, he waves his card, the car unlocks, he enters and, using the key left inside the car, drives off. No need for any face-to-face meeting of renter and rentee.
The renter is automatically charged for the rental based on mileage and time, and, at the end of the month, RelayRides processes payment to the car owner.
The rentals are best for short-term, in-town travel, according to the price structure. An average full-size car from 2007-2010 would rent for approximately $10 an hour or $75 a day with an hourly mileage cap of 20 miles and a daily cap of 160 miles. Excess miles would run 50 cents per.
Before you leap to enroll, RelayRides is only available in Boston and San Francisco at the moment. But the company has aggressive plans.
WalletPop had the opportunity to talk via email to Shelby Clark, the founder and CEO of RelayRides.
Q: You've been in business for half a year now; how are things going?
A: Business is going well! It was an incredibly exciting time when we started up, as we were essentially pioneering a model that has never been done before. We started off with a pilot in Cambridge to prove the business (plan), fine-tune the technology and improve our service. The response has been fantastic -- not only (have) the quality and type of cars exceeded our expectations (our first vehicle was a Porsche!), but it's great to see a community starting to develop around our borrowers and owners.
Q: Do you have any imminent expansion plans?
A: After operating in Cambridge for the past half a year, we just launched in San Francisco and will be pushing forward with our Boston expansion. It's only the beginning -- we will be launching in more cities around the U.S. in the near future. As a matter of fact, you can vote for the next city right on our website at www.relayrides.com.
Q: What's been the biggest challenge to date?
A: It's a complex business with a lot of moving parts. One of our biggest challenges has occurred before we launched -- when we had to develop a specialty insurance product for our industry. That alone took over a year to put together, but we finally developed a $1,000,000 insurance policy that protects our owners and our borrowers. As we move forward and scale the business, our current challenge is improving the technology to scale with us.
Q: How's your retention rate with those renting out their cars?
A: It has been good so far. Generally, when car owners enroll their vehicle into the system, it's because they aren't using it on a regular basis. We represent a way for them to make money off their underutilized asset, while helping out neighbors within their community. So, there isn't a whole lot that changes for them after they enroll -- other than having to use a special card to access the vehicle. Most of the car owners end up staying with us for as long as they keep their car.
Q: What's the average earnings of a car owner so far?
A: The average earnings can certainly depend on the vehicle and location. Especially since every car owner can set their own rates and their availability, the earnings vary. However, our average owner is making around $200 per month. We have had a number of owners who grossed in excess of $600/mo to as much as $1,000. The potential is definitely there -- a reasonably priced car in a good location that's available a large part of the time can easily earn several hundred dollars per month.
Q: What's your bigger challenge; finding owners or renters?
A: I would say neither, exactly. When we launched in Boston, we were getting requests from car owners from Day 1 and borrowers were very quick to adapt to the idea, as well. Our bigger challenge has been finding owners and borrowers that are located close to each other. Being a hyper local service, we get the best utilization in our network when borrowers are located within a 5-10 minute walk of the vehicles. So, as we expand, we have to be very conscious about growing our presence within each neighborhood to a level where there are enough vehicles and borrowers to make it convenient for everyone.
Interested in this concept? One caveat; make sure you know the complete cost per mile to drive your vehicle (gas, maintenance, insurance and depreciation). It's probably more than you think. And make sure you set your rental costs higher than that so you can, in fact, make some money.
Peer-to-Peer Rental Can Turn Your Car Into Cash