Turo’s ‘Airbnb for Car Owners’ Helps Consumers Pay Off Auto Loans Faster

Alfa Romeo owned by Turo entrant Ryan Ortmann

Courtesy of Turo

A few years ago, a company called Relay Rides operated a peer-to-peer car rental business where consumers could rent a car by the hour for everything from shopping to traveling. But the traditional car-sharing market was getting crowded, and the CEO had another idea: What if car owners rented their own cars to peers on a daily basis?

This piqued investor interest, and in November 2015, Relay Rides was reborn as Turo.

In a similar model to Airbnb, Turo allows car owners to advertise on its website for free, and as soon as they rent their car, Turo’s insurance plan kicks in. This way, your personal auto insurance is not affected by the rental. your car, depending on the company.

The rebranded company now operates in at least 4,700 cities in the United States, Canada and the United Kingdom, with 130,000 cars listed and 2.5 million registrations, according to communications coordinator Christin Di Scipio. Car owners set the rental fee and Turo charges an average of 25%, depending on the vehicle protection plan they sign up for. According to a new report from Turo, many car owners cover their entire auto loan by leasing their vehicles, with some paying off the loan a year or more up front.

Among them is Jeff Cohen, who lives in Alpharetta, Georgia, and works full-time for California-based ChargePoint, which oversees electric vehicle charging stations.

Cohen was all about electric cars and had a new Tesla Model S at heart. However, the $85,000 price tag was a major hurdle. “My wife – and she would agree – is the Genghis Khan of financing, so she wanted to know how we were going to pay for such an expensive car,” he says. “Well, I remember going to a sermon in church once where the pastor said he bought a grand piano by selling one key at a time. And Turo was a key part of that. my strategy.

Make a Tesla self-financing

Planning ahead, Cohen started a sole proprietorship to lease the Tesla (and eventually other cars) and opened a separate bank account for his limited liability company. He also spent an additional $5,000 on ceramic paint, window tints and other protections that made the electric car easy to clean. By combining federal and state EV tax credits, depreciation, and Tesla rentals through Turo, Cohen was able to pay off his loan and own his Tesla for free and in the clear within two years, paying it off a year longer. sooner than expected. .

Cohen family

According to data from Turo, Cohen’s experience is not an anomaly: the average monthly salary for a Tesla is $913 per month, and for the latest model, it’s $1,031 per month. Since the average monthly loan payment for a Tesla is $1,020, a Tesla can be self-financing if it’s only rented 7 days a month, according to the company. (On Turo, cars are rented by the day, not by the hour.) Turo’s data also shows that a Jeep Wrangler can pay for itself if rented 6.5 days a month, and a Honda Civic if rented 11 days per month.

Was it difficult for Cohen to rent his beautiful new electric car to complete strangers?

“Overall, people have taken very good care of it,” says Cohen, who rented the Tesla for between $179 and $199 a day. “I had an app where I could see how fast they were going, and once I noticed a driver going 95 miles an hour in my Tesla on I-20. I texted warning about that to the person who had rented it in. You don’t want to be all Big Brother-ish, but you definitely want people to know you’re watching.

From customer relations to pricing, Cohen has found the perfect partner in Turo. “I can’t say enough good things about their customer service,” he says. “I tried to drive for Lyft once, but I couldn’t reach anyone when I needed them,” he says. “But Turo answers you during the day: it’s the very essence of high technology, high touch.” His experience with Turo spawned another weekend activity: using his Tesla to drive married couples from their wedding to their next destination (“In the business, it’s called the ‘getaway car,’ he says) .

Di Scipio notes that many of his clients are car enthusiasts. “We have a lot of customers who like vintage, classic and foreign cars, and renting them on Turo has helped some afford to buy those cars or pay them off sooner.”

Car lovers and Alfa Romeo

Ryan Ortmann of Monrovia, Calif., is among the car enthusiasts who use Turo — “actually, I probably love cars too much,” says Ortmann, 31, who works as a paralegal. His passion for cars led him to buy an Alfa Romeo 4C that he and his girlfriend saw advertised for $55,000.

“When I tried it, it was love at first sight,” he says with a hint of admiration. “An Alfa Romeo is like the exoticism of the poor: it’s like a racing car homologated for the road. It doesn’t have power steering or heated seats. It’s all about driving. It might be a little chaotic, but I love it. It’s the perfect car for me.

Since Ortmann already had another car and a mortgage to pay, he planned to pay for the Italian car by renting it on Turo. For almost a week no one answered and he began to worry that he had made a big mistake.

“I was sweating bullets,” Ortmann says. “The car loan was $1,200 a month and I started thinking, ‘Oh my God, what did I do?’ I lowered the price until finally someone contacted me and before long the rentals took off.

Ortmann remembers her first rental experience as a little unsettling, though it turned out to be an anomaly. “I remember texting the driver saying I hope you’re enjoying the car,” he says. “And he sends me back a picture of my Alfa Romeo right by the beach, on the sand! Oh my god, my heart was pounding in my forehead. And when it finally came back, very late, it was dirty and covered in dirt with a scratch under the bumper. I almost had a panic attack. However, says Ortmann, Turo solved the problem by paying him back for the bumper repair and everything else.

Ryan Ortmann with his Alfa Romeo in the background

Ryan Ortman

Since then, Ortmann says his journey with Turo over the past year has been smooth. Turo rentals have fully paid Alfa Romeo payments for all but one month, he says, and he is months ahead of his car loan. Last February, he says, he earned $3,100 renting it out.

However, Ortmann warns that this experience may not be for everyone. “Someone else I know tried to rent an Alfa Romeo and it didn’t really work out,” he said. “You have to grow your business.” (Ortmann would also like the company to decide how to make it up to owners when renters return cars with the wrong octane rating, which has happened at least once.)

Safety instructions for drivers

Turo’s safety precautions for customers include providing 24-hour roadside assistance with its insurance and requirements that cars be no older than 2005 or have more than 130,000 miles on them. Its website allows customers to rate cars and their customer experience, and if safety flaws are found, Turo blocks the car listing until the vehicle is repaired.

Like car-sharing companies Uber and Lyft, however, Turo does not check its customers’ cars for open recalls, that is, for a recall fault that has not been corrected. (Customers who want to make sure recall defects have been fixed should look up the Vehicle Identification Number, or VIN, and then compare it to a list of open recalls.)

“Last year, the federal government demanded that [traditional] car rental companies correct any recall defects before renting them to customers,” says Rosemary Shahan of Consumers for Auto Reliability and Safety (CARS).

Shahan launched the campaign to fix open recalls in rental cars after being contacted by a mother who lost two daughters in a tragic rental car crash that occurred following an unresolved recall fault. “Customers rent cars expecting them to be safe,” she says. “Turo could really get a leg up on the competition by making sure they are.”

Car owners should also consider a commercial insurance policy: cover you in the event of a dispute over insurance coverage if someone rents your car is involved in a serious accident. MoreoverAccording to Shahan, some “lemon laws” do not allow car owners to return a faulty car if they used it for commercial purposes.