Home News Thinking of Being a Carpool Driver? Here's What You Need to Know

Thinking of Being a Carpool Driver? Here’s What You Need to Know




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As ride sharing apps become more popular and the cost of owning and maintaining a car is becoming more expensive, some Singaporeans are turning to freelancing as a carpool driver. However, is the extra money worth increasing the hassle of your commute? If you are thinking of earning some extra money as a carpool driver, here are some things you need to know.

Know the LTA guidelines on being a carpool driver

Before you start offering rides to everyone you know, you should be aware that the Land Transit Authority (LTA) has strict guidelines regarding what qualifies as a carpool driver versus being a full-time driver. The main requirements are that you can only use your car for carpool services if it is incidental to your commute or and you can not do more than 2 carpooling trips per day (however, picking up multiple passengers per trip is allowed).

Additionally, the money you get paid should go towards the maintenance of your car (fuel costs, maintenance, wear and tear) and can not cost more than the expenses incurred for adding passengers on your commute. Additionally, you can not scout passengers in a parking lot or on the side of the road—they must designate the pick up and drop off points. Lastly, you can not set your own prices and must charge the fare your chosen carpool app sets (usually based on distance), even when your passenger has more than one person riding with them.

The longer your commute, the more you’ll benefit

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Since apps like GrabHitch charge anywhere between S$5 and S$15 per ride, you can make between S$2,500 and S$7,500 per year if you were to offer carpool rides twice a day, 5 days a week for 50 weeks out of the year. Rates apply based on distance, so the longer your commute is the better chance you are of maxing out your rate to S$15.

After doing some quick calculations, assuming you have a 2017 Toyota Corolla Altis that sees the average 17,500 miles a year, your yearly costs of fuel and car maintenance will be S$3,867 (this includes road tax, fuel cost and maintenance). For fuel expenses alone, a 25 km carpool drive each way to and from work 5 days a week will cost S$1,789 per year. However, this commute length will bring in the maximum S$7,500 per year, covering not only your fuel expenses, but also leaving you with S$5,711 to cover miscellaneous expenses like parking costs, gantry fees and even your car insurance (which is a costly expenditure in and of itself).

Expenditure Cost/Year (Toyota Corolla Altis 2017)
Road Tax S$742
1st Quarter 2018 Petrol Prices S$2.33 (average)
Commuting Fuel Costs (12,500km) S$1,789
Miscellaneous Fuel Costs S$715
Maintenance S$621
Total Annual Cost S$3,867

On the other hand, if your carpool rides cost between S$5 and S$7 each way, you won’t be able to cover all of your yearly car costs as you will bring in between S$2,500 and S$3,500 per year. However, this is still a 40-50% decrease in your annual car expenses and will fully cover your fuel costs. If you want to increase your savings even more, you can consider getting a petrol credit card, which can give you around a 20% discount on petrol expenditures as well.

Make sure your insurance policy coverages carpooling

First things first, if you are a carpool driver, you do not need to get commercial car insurance. That being said, not all insurers cover carpooling with private motor insurance plans. If your current car insurance won’t cover you if you use your car for carpooling, you should consider switching to an insurer who will, such as Etiqa, FWD, Budget Direct or Aviva. The good news is that these plans are actually some of the cheapest car insurers on the market, so you could end up saving 30-40% off your current car insurance plan. To double check if your policy covers carpooling, you can either check with your carpool app (some work with insurers directly), read the policy wording of your insurance or inquire with your insurer directly.

You may receive free supplemental car insurance, but there’s a catch

Depending on the carpool app you choose, you might receive free supplemental accident insurance for your passengers. This is a very convenient feature since private car insurance generally requires you to identify who you want covered in your policy and may not necessarily provide medical or personal accident coverage for passengers. This supplemental insurance makes the passengers feel safer, as they know they’ll be covered if they were to get injured during the ride. However, there are some stipulations with the supplemental insurance—for instance, the person who booked the ride is the only one who will receive coverage. This means if you booked a ride for someone else, they won’t be covered during their trip. You should always make sure you read the terms and conditions of the insurance policy to know what will and won’t be covered.

Your fuel costs won’t increase with more passengers in your car

Even though you may think that by adding more weight to your car, you will be decreasing the fuel efficiency of your car and thus spending more money on petrol, this may not be the case. In fact, adding 4 passengers to your car results in a negligible fuel efficiency per kilometre decrease of 5%. Since you won’t be carrying 4 passengers every single day, the impact on your car’s fuel efficiency becomes even less noticeable. However, loading cargo on your roof, driving aggressively in stop-and-go traffic and only driving short distances will increase your fuel costs and thus should be taken into consideration when choosing your passengers.

It’s a good way to make new friends

Last but not least, carpool apps are created as social services first. This means that passengers sit in the front seat and may engage you in conversation. Drivers have the ability of seeing the rider’s facebook and passengers have the option to choose their driver based on gender, pick up time and add any notes regarding their upcoming trip. Because carpooling apps have made the social aspect of carpooling a focus, signing up as a driver can be a good idea for those who want new ways to network or just make their commutes slightly less dull.
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