I got into the Turo game in 2018 with a car that was coming to the end of its lease and I was trying to decide whether to keep it or turn it in.
I decided to finance the residual and keep the car to host on Turo. But from there, I built a fleet of 20 cars, most of them leased. I was soundly ridiculed by a lot of hosts in the Turo Facebook groups and repeatedly warned about all of the terrible things that people felt could go wrong. But being the stubborn, and determined person I am, I went full steam ahead. For me, the advantages outweighed the risks.
I could scale my fleet quickly without touching my liquid capital through zero-down, no deposit deals with crazy low payments.
My cars would all be new, with all of the latest tech, safety features, the new car smell, and I could charge higher daily rates.
I’d never have a repair bill because of the warranty.
I’d have an easy out after three years without having to try and sell a bunch of cars.
There was always the question about the terms of the lease contract and if I was violating it by hosting on Turo. I had those conversations with the finance managers at my dealerships and none of them affirmed that carsharing violated the commercial use clause. It is a grey area, and is always best to get a clear answer before proceeding. On a couple, where I couldn’t get a clear answer, I did choose to move forward cautiously.
When I was starting, Turo was very generous toward hosts with mileage overage policies. We could set the daily mileage limits. We determined the mileage overage rates, all the way up to $3.00 per mile. There were a few times I got $1,000 mileage overage payouts. It was the wild west and I was winning. Leasing turned out to be a great strategy for me and it was working just as I planned.
But then, in 2020, Turo changed the mileage overage policies.
No longer could we set our daily limits, Turo set them for us at 200 miles per day (up to 6,200 miles per month). And the mileage overage amount was determined by the daily rate/mileage allowance rate calculation. Under these new policies, I seldom get more than 30 cents a mile, of which, Turo takes their cut.
So, does it still make sense to lease a vehicle to host on Turo?
My short answer is “no.” I’ve now been in the game over three years. Some of my leases have already ended and they ended well. Most of the others are ending this year and I’ll be sunsetting my Turo operation. My timing was great and leasing was a great choice for me. But if I was building my fleet today, I would not do it through leasing, strictly because of the new Turo mileage policies.
But if you’re stubborn and determined, like I was, and you want to proceed with leasing as an acquisition option, here is my advice to you. If you follow this advice, you may still come out okay with a lease-based fleet, but it will require your absolute commitment to a set of disciplines.
How to successfully lease for Turo
The first steps come at lease signing. Here are the “must haves” in my view.
First, you want to build 20,000 miles per year into your lease. Your payment will be higher, but you WILL use these miles, and it’s often cheaper to pay for them up front than at lease end.
Second, if you’re offered a “wear and tear” package, go ahead and get it. It’s just a few bucks per month, but your leased car will be beaten up on Turo and this offers you additional protection against lease end expenses, especially tire replacement. That alone will pay for the package as you can return the car with bald tires if you want.
And third, go ahead and get the GAP coverage to pay any difference between your total loss payout and the amount owed. There’s a chance a GAP claim could be denied when they find out it happened on a Turo trip, but other hosts have successfully used GAP.
The next steps involve your own personal discipline through the life of your lease.
First, you should add 50% to your monthly payment, every month. If your payment is $250/month, then pay $375/month faithfully. You’ll pay your lease off several months early, and you’ll then have the option to turn it in early if your mileage ends up being out of control. If you keep it until maturity date, you’re still winning because you now won’t be making payments for the last several months of the lease.
Second, put 10% of your earnings, every month, into an interest bearing bank account and don’t touch it. If your car brings in an average of $900/month on Turo, then $90 goes into that account every month. This is your end-of-lease expense fund. Hopefully you won’t need it and now you have a few thousand dollars in the bank that you can use to help acquire another car for the fleet. But if you do end up with a large mileage overage expense at lease end, you’re prepared, and it will be less painful.
If you do the math with all of these steps in place, and the car will still give you a monthly profit that you’re happy with, then go forward and may the odds be ever in your favor!
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What’s the best car to buy for Turo?
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If I do decide to go this route I definitely will follow all these helpful tips and tricks to the T