Jane’s car used to sit for days on end outside her Fitzroy home, as she preferred riding her bike or using public transport to get around. Fed up with paying the high costs of registration, insurance and maintenance on a car she hardly used, Jane decided to save money by listing her car for rent through neighbour-to-neighbour car sharing platform Car Next Door.
Three years later, Jane says it has been a success.
In the first twelve months Jane rented out her 2008 Toyota Yaris 125 times so far to people nearby who need one for a few hours or days, and is covering the car’s annual running costs with the $4,022 she has earned.
Three years later, Jane's Yaris has been borrowed over 373 times and earned more than $20,200. More than covering the cost of the car itself!
Car Next Door’s growth so far
Over 1000 car owners in Sydney, Melbourne and Brisbane have signed up to rent out their car through Car Next Door and more than 37,500 members have signed up to borrow cars. With over 30,000 regular borrowers the service has clocked up over 200,000 bookings since it launched just over six years ago.
There has been no problem attracting car borrowers, who are attracted by the community-powered nature of the scheme as well as the lower prices when compared to other rental options.
Car owners have been attracted by the opportunity to offset the cost of owning their car while they aren't using it.
So how does it work?
To hire a neighbour’s car, members can log on and search on a map for cars available nearby, with the features they need. The hourly and daily prices are set by the car owners, and vary with the vehicle’s model and condition. You select the dates and times you want the car, and can book instantly.
Unlike other peer-to-peer car sharing models operating overseas, there’s no waiting for the car owner to accept or reject the booking. Cars on the platform can be booked at any time other than when the car’s owner has reserved it. The owner controls the availability of their car via an online calendar where they can block out times for when they need their car.
The unique "lockbox" technology allows borrowers to access and return the owner's car without having to exchange keys or meet up with the owner.
The cost of the rental covers the borrower under Car Next Door’s comprehensive insurance policy, covers the borrower's fuel consumption and wear on the car; and gives them access to a 24-hour member support hotline and roadside assistance. Borrowers get the car’s keys from an electronic lockbox on the side of the car, which is opened with a one-time PIN that is sent by SMS just before your booking starts.
Earnings guarantee for car owners
To keep up with demand for cars, Car Next Door offers an earnings guarantee to people who list their car for rent in certain suburbs. Provided that your car meets selected criteria around age, condition, location and availability, they guarantee that you’ll earn at least $2,000 (on top of costs) in your first year of renting your car out. If not, they’ll pay you the difference.
Who is eligible to list their car?
In order to list your car your vehicle needs to:
- Be no older than 2001
- Have fewer than 300,000 kms on the clock
- Have a value of less than $50,000
- Be in reasonable condition. (A few scratches and marks are totally fine, but it has to be running well.)
Car Next Door have a list of target suburbs where they are focusing on attracting borrowers which is growing regularly. If you live outside a target suburb and you car is 100% available to share, you can park your car closer to a central location.
Owners can set the price they want to charge – bearing in mind what others in their area are charging. Cars that are more reasonably priced tend to attract more borrowers and generate more income overall. Car Next Door give the owner 50% of the first $240 earned each month, and 75% of earnings thereafter.
How does the insurance work? What happens if there's an accident?
The key to Car Next Door’s success has been its insurance model. When a car owner lists their car, they switch from their current comprehensive car insurance to Car Next Door’s fleet insurance policy – so the car is covered against damage or theft, whether a borrower or the car’s owner is driving at the time of an accident. This also saves the owner from the cost of their existing insurance policy.
The $60 monthly membership for Car Next Door owners covers both the owner's and borrower's insurance, roadside assistance and 24/7 phone support. Provided the car is available for at least 50% of the time, the cost of membership should be easily covered by rental income. For some owners, the $60 monthly fee is already less than their current insurance cost.
In order to borrow owner's cars, renters need to be aged between 21-70 and have held a full licence for at least two years, with a clean driving and credit history. Car Next Door completes a series of security checks on potential borrowers including a face-match with the borrower's drivers licence to verify their identity.
Jane’s take on renting her car out
Jane has found renting out her car “surprisingly easy.” She says “the car just goes out and comes back, often while I’m out at work or at uni.”
“I get the income paid into my bank account each month. Last month I got $438, which really helps with day-to-day expenses.”
Jane says most of her hirers live nearby and usually take the car at the weekend. If she needs the car herself, she simply blocks the times out on the website.
“I’ve now got a couple of regulars, which is good. I guess you’ve got to be flexible to make it work. I sometimes take the train rather than drive, just so that my car will be available for bookings and I’ll earn a bit extra.”
“I have to give the car a quick tidy-up every now and then before bookings, but it doesn’t need to be spotless.”
“I had one person smoke in the car about a month ago, which is against the rules. I got $50 as compensation, and they had to pay for the car to be cleaned. But after more than 300 bookings, I’ve been pleased by how well people have treated my car.”