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I can't find the post, but there was a 'UBER finance guy' (self-claimed) on HN a few weeks back that 'spilled the beans' and quit on what Uber is actually: a su

I can't find the post, but there was a 'UBER finance guy' (self-claimed) on HN a few weeks back that 'spilled the beans' and quit on what Uber is actually: a sub-prime auto loan company. Again, this is my recollection, take it with salt. It goes like: Driver (D): I want to drive for Uber! Uber (U): Sure! Do you have a car that is safe and less than 5 years old? (I have no idea what the car reqs. are) D: No U: Ok, well, we can loan you one! Just sign this! D: Great! I signed! What are the loan repayments like? U: Well, you owe us, per the 3 year contract, $100/week (I have no idea what the actual loan terms are like, but 100 is a nice round number so lets use that) D: Ok! That's not bad! U: It gets better! We'll just auto-deduct the money you owe us from your driver's account, after that, all the money is yours! You don't have to worry about any of it, just drive for us, we'll take care of it. D: Cool! What happens when I get sick or something and can't drive? U: Well, then you still owe us the money, plus a 10% fee on that week's loan payment (again, I have no idea what the loan agreement is like, YMMV) that we'll automatically tack on to the next week's loan payment. -A week goes by- D: Oh man, the weather was great this week, not a lot of people needed me to drive them around! I only made $90! U: Ok, well, per the loan agreement, you owe us $10 more then (100-90=10), plus the 10% late fee, making your next week's payment $100 + $10 + (0.1 x $100) = $120. D: Oh man! I better hope that the weather is bad so people want to take an Uber that I am driving! -Another week goes by- D: The weather was really rainy, but even still, I only got notifications to pick up $90 worth of people! Not again! U: Well, now you owe us $120 - $90 = $30 plus the 10% late fee on the $120, making your next week's payment $100 + $30 + (0.1 x $120) = $142. D: Well, darn, I thought a lot of people wanted to take Ubers! All my friends take them! But I don't get enough notifications to pick people up from Uber! U: We know. We are the people that are giving you a loan and simultaneously are the ones that control how much of that loan you can pay back because we are the ones that tell you how many people you pick up and we also set the 'surge' rates and regular rates that we tell you. Also, we have something of a history of acting in morally reprehensible way without shame. D: Wait, what did you say?! U: Nothing! Nothing at all! Get back to driving! That car we bought isn't going to pay itself off, you are!

aetherson 9y ago
I'm as negative as the next guy on Uber, and that's a great narrative, but they are losing vast quantities of money. Any dastardly deed that they do has to square itself with the fact that they are losing vast quantities of money. A predatory auto-loan company is not a $70B business.
- HarryHirsch 9y ago
  No, but the loan sideline allows to classify the drivers as contractors. And there's externalities. No properly run bank would issue a car loan to an Uber driver, they'd run the math for the applicant and find it isn't going to work out. But Uber with its infinite pockets does not have to consider profitability, and eventually the driver has to declare bankruptcy and becomes a burden on the public pocket. It's a disgrace.
- Balgair 9y ago
  True, but you can make a ton of money when you design a system where you have no labor costs (drivers make no net income). It's not $70 billion, but it is on the order of billions carried out for a decade. Perhaps that is why Uber is so ... nasty. Even with their scummy tactics and greyball and whatnot, they still can't make ends meet. Also, what is stopping them, or anyone else, from running the same scam with other large capital expenditures? AirBnB could do this with houses, DoorDash could do this with heavy industrial kitchen equipment, etc. It's evil as hell, but Wall Street backed VCs have no issues finding people to do it.
- yeukhon 9y ago
  I said this before, Uber should seriously consider closing down its operation in other countries. It is expanding virtually exponentially (they have a huge engineering team) for the type of company they are running. They need to focus on the U.S. market. They are losing way too much money everywhere combiend.
  - jorvi 9y ago
    Microsoft did this with the Xbox One (almost all the extra features they advertised were US only) and it completely destroyed their market share, making the PS4 sell 2-to-1. WhatsApp went the other way (the US doesn't matter, you want the global market) and it got them a $19 billion sticker price. The US is a market, not the market.
lr4444lr 9y ago
Why not just lease... Are the drivers really falling for this en masse?
- leesalminen 9y ago
  Leases tend to be low mileage which is not conducive to taxi driving. Yes lots of people do this.
microtherion 9y ago
As far as I know, Uber car loans are fairly different from typical subprime car leases in that you can get out of them with little or no penalty.
- Balgair 9y ago
  Thanks for the data! I had heard the lease terms were for 3 years, no exceptions and no getting out of them. Still, they may change from location to location and over time. As always, read the contract!
  - microtherion 9y ago
    My original source for the cancellation terms was an Uber driver, and I just looked on Uber's web site, which more or less seems to confirm this: "Flexible leases from Xchange Leasing, LLC are potentially up to 36 months with the flexibility to return the vehicle as early as 30 days after the first payment due date with a payment of a $250 disposition fee. Not all applicants will qualify for this program. Certain items present on your credit report, and other information, may cause you to be excluded from this offer, including without limitation, a repossessed vehicle within the last 12 months, a pending bankruptcy, or a discharged bankruptcy within the last 12 months." https://www.uber.com/drive/vehicle-solutions/leasing/ https://www.uber.com/drive/vehicle-solutions/leasing/
j_s 9y ago
https://news.ycombinator.com/item?id=13764994 https://news.ycombinator.com/item?id=13764994 -> https://www.reddit.com/r/cars/comments/5wrdk2/car_that_uber_driver_claims_cost_97k_what_is_it/decxcxi/ https://www.reddit.com/r/cars/comments/5wrdk2/car_that_uber_... It's their xchangleasing leasing program. It's basically a sub prime car loan like from the housing bubble days. if Uber cuts it's rates they still have same payment but less fare money each month. They did this to a lot of people and it's well known within the company that a lot of Uber black drivers were screwed when this happened.
- Balgair 9y ago
  Bingo! Thank you for the links!

aetherson 9y ago

I'm as negative as the next guy on Uber, and that's a great narrative, but they are losing vast quantities of money. Any dastardly deed that they do has to square itself with the fact that they are losing vast quantities of money. A predatory auto-loan company is not a $70B business.

HarryHirsch 9y ago
No, but the loan sideline allows to classify the drivers as contractors. And there's externalities. No properly run bank would issue a car loan to an Uber driver, they'd run the math for the applicant and find it isn't going to work out. But Uber with its infinite pockets does not have to consider profitability, and eventually the driver has to declare bankruptcy and becomes a burden on the public pocket. It's a disgrace.
Balgair 9y ago
True, but you can make a ton of money when you design a system where you have no labor costs (drivers make no net income). It's not $70 billion, but it is on the order of billions carried out for a decade. Perhaps that is why Uber is so ... nasty. Even with their scummy tactics and greyball and whatnot, they still can't make ends meet. Also, what is stopping them, or anyone else, from running the same scam with other large capital expenditures? AirBnB could do this with houses, DoorDash could do this with heavy industrial kitchen equipment, etc. It's evil as hell, but Wall Street backed VCs have no issues finding people to do it.
yeukhon 9y ago
I said this before, Uber should seriously consider closing down its operation in other countries. It is expanding virtually exponentially (they have a huge engineering team) for the type of company they are running. They need to focus on the U.S. market. They are losing way too much money everywhere combiend.
- jorvi 9y ago
  Microsoft did this with the Xbox One (almost all the extra features they advertised were US only) and it completely destroyed their market share, making the PS4 sell 2-to-1. WhatsApp went the other way (the US doesn't matter, you want the global market) and it got them a $19 billion sticker price. The US is a market, not the market.

lr4444lr 9y ago

Why not just lease... Are the drivers really falling for this en masse?

leesalminen 9y ago
Leases tend to be low mileage which is not conducive to taxi driving. Yes lots of people do this.

microtherion 9y ago

As far as I know, Uber car loans are fairly different from typical subprime car leases in that you can get out of them with little or no penalty.

Balgair 9y ago
Thanks for the data! I had heard the lease terms were for 3 years, no exceptions and no getting out of them. Still, they may change from location to location and over time. As always, read the contract!
- microtherion 9y ago
  My original source for the cancellation terms was an Uber driver, and I just looked on Uber's web site, which more or less seems to confirm this: "Flexible leases from Xchange Leasing, LLC are potentially up to 36 months with the flexibility to return the vehicle as early as 30 days after the first payment due date with a payment of a $250 disposition fee. Not all applicants will qualify for this program. Certain items present on your credit report, and other information, may cause you to be excluded from this offer, including without limitation, a repossessed vehicle within the last 12 months, a pending bankruptcy, or a discharged bankruptcy within the last 12 months." https://www.uber.com/drive/vehicle-solutions/leasing/ https://www.uber.com/drive/vehicle-solutions/leasing/

j_s 9y ago

https://news.ycombinator.com/item?id=13764994 https://news.ycombinator.com/item?id=13764994 -> https://www.reddit.com/r/cars/comments/5wrdk2/car_that_uber_driver_claims_cost_97k_what_is_it/decxcxi/ https://www.reddit.com/r/cars/comments/5wrdk2/car_that_uber_... It's their xchangleasing leasing program. It's basically a sub prime car loan like from the housing bubble days. if Uber cuts it's rates they still have same payment but less fare money each month. They did this to a lot of people and it's well known within the company that a lot of Uber black drivers were screwed when this happened.

Balgair 9y ago
Bingo! Thank you for the links!