 In the studio recorded live at Davis Media Access, today we're going to be talking a little bit about Uber. I'd like to let you know that in 2013 a Princeton researcher found that 30% of drivers who started in the first half of that year had stopped working for Uber a year later. This has precipitated Uber needing new drivers and new drivers for Uber need new cars so Uber formed Exchange Leasing LLC. Goldman Sachs led a deal to get exchange a large credit facility over $1 billion in fact which is basically a line of credit that exchange, i.e. Uber, uses to lease cars out. Also in the deal are Goldman Sachs, Citigroup, Deutsche Bank, JP Morgan, Morgan Stanley, SunTrust, a lot of these banks that we've heard before. Anyway, Exchange Leasing LLC is the leasing company. They partner with auto dealerships to lease cars so this is a new model that has recently entered the car leasing market. With us today is Ernie, who is a local Davis site, long term Davis local site, local light. Ernie's actually volunteered down at Davis Media Access before, we've known each other for a while. He recently entered the Exchange Leasing Uber driving program and he and I have been talking on social media and other places sort of just to get a sense of what this new program is about and our conversation we have today is by no means to, is just a frank conversation about his experience with this program so Ernie, welcome and thanks for coming in today. Thank you Jeff, I appreciate the invite. My first question of course is going to be why did you, I'm kind of guessing that you signed up for this program because you wanted a car. You needed a car for some reason. Having a car is certainly advantageous in a lot of different ways, but mostly I needed a job. Okay. I was working construction remodeling and polypines and by the way that's still going, I thought it would be over but it's still going. So now I use the car to get to that job, but most, you didn't get the car because you wanted to be an Uber driver, you got it because you needed a car. Because I needed a job, I needed a tool so that I could go from one job into a job that I could have right away and yes, having a car is a good thing for a whole host of reasons. And previous to this you've hardly ever owned a car, am I right? I am 58 years old now and in my whole life I have, if you take the two cars that I've owned, both junkers, that whole time would be about three months. Okay. So did you look into other car leasing programs before you posted this program and did you do comparison shopping when you did all of that? I did. And did you, well I guess that's actually, the lease that you signed, I guess I'm wondering, did you read the whole thing before you signed up for it and you sort of looked at some of the trade-offs with other leases and you decided that the weekly cost for this particular lease, is it better than the other ones or is it what they do? There are more factors than just the cost. Now I think I read every word, but maybe not every word. There may have been some places where I scanned, but essentially I read the whole thing and I had a friend of mine who was a lawyer also read it. And the cost is insanely expensive. Right. Generally for like, and what I've read is that the term of the lease is three years. Three years. And you end up spending, you end up paying $6,000, $7,000 more than the actual value of the car given the term of the lease. Yes. Just due to interest and due to payments and everything, which is typical for a lot of car leasing programs. I'm paying per week approximately what some people who could get at another type of lease would pay for a month. But one key difference is that I have access to unlimited miles. I can put 150,000 miles on that car. And a lot of other leases have limitations. Yeah, very tight, very tight limitations and you pay a lot to go over those. Before we get into some of the specifics, I want to get your thought on I don't know if you've been following sort of subprime auto leasing stuff and then it's been going on in the media like I haven't. So this executive vice president of the Center for Responsible Lendings says the subprime auto is sort of the hot new place to get in the securities market. There are some similar things going on in the auto market that look a lot like of what was going on in the mortgage market pre-crash. Which I don't know, you know, that's kind of those are. I wonder what your thought of was on that quote. A friend of mine thought it would not be a good idea for me to do this because they considered this to be predatory lending. Right. But I have access to a tool to make money that I didn't have access to before. Yes. So now it's mostly up to me to utilize that tool. Yes. So even though I'm paying a lot for this car, because I've ruined my credit and I'm working on repairing that. But first of all, I couldn't put together a down payment to get a car. If going with the regular lease, then we have the unlimited miles. And the down payment for the Uber lease is really low. It's like $250 and you're in. Well, you have to buy the insurance, which they're going to want a couple hundred dollars down. So for less than $500, including the insurance, I can get into a car. OK, so let's show a picture of the car that you're getting into a car, I believe. And what kind of car is this? It's a Honda Fit 2016 Honda Fit EX. And so did you have to buy insurance for the car? Yes, and there's special insurance when you're working a transportation network. You can't just have any insurance. You need to have a rider on your policy that allows you to use that car in a transportation network, like Uber or Lyft. Are there limitations on what you can use the car with according to the insurance policy? No, just keep it legal. But you can't use it for. Yes, actually there are limitations. You can't use it for some of the services that Lyft offers, like food delivery or package delivery. They have some limitations. So you mentioned Lyft is another car with a, what would you call Uber and Lyft as far as that? The transportation network, it's like a services. So there's limitations, say that again, that you can, you can't, under the insurance, you can't use the car for certain things or? For package delivery, Uber offers a service where you can have food or packages delivered, like Amazon would might call us and say, you know, do that. Yeah. The insurance say, people say don't do that under any circumstances, do not do that. Okay, so otherwise you'd violate the terms of your insurance. If you got an accident while you're doing that, you wouldn't be covered. Yeah. Ice, okay. So let's, let's move on a little bit to how does you, so you have to do a weekly payment and you have to, the money that you pay comes directly out of what you earn. Is that how it works? Yes. Or Uber or? Uber takes their cut first, they take 25% off the top. And then exchange leasing at the beginning of the week on Mondays, they take the lease out of whatever I earned for that week. Right. And if I didn't make it, then. It rolls over. So you, I mean, if you didn't, if you didn't make your payment for the week, it can add up pretty quick, I assume. I would assume it does, I just don't let that happen. Yeah. I use the car to go to Pollock Pines and I make money there. I see. And because I'm driving Uber part-time right now, actually I'm paying for the car with the job in Pollock Pines, mostly. Gotcha. I pay the lease the Thursday before it's due on Monday. Okay. And then it's covered. So let's talk about some of the pitfalls that I've read about and you tell me some of your experience. You mentioned that you're going to be paying for this lease through other means, which is allowed. Not through driving for them. Can they deactivate your driver account? I've read where a story where some guy got a lease in Vallejo, California, his driver account was deactivated and I'm wondering if you don't drive for them, can your driver account be deactivated? Have you heard of that at all? I don't know what, if there's a time frame like that. I don't think that would affect the lease though. Okay. It could affect the Uber driver account and the Uber driver account and the lease are two separate things. Even though the parent company is connected, there's an umbrella there. And what about, so people who do drive for Uber and so we'll talk a little bit about that since you're driving for Uber, what if they slash fares nationally? I've also heard this where people just pin on a certain amount of income and Uber suddenly slashes or they knock down the fares. I know you're a recent driver but have you experienced that at all? I think the fares are already really, really low and sometimes it doesn't seem worth it. It's a good deal for the riders. The fares are so low that sometimes the trips that I go on actually cost me money. Right. And what about? I can give you an example if you like. Yeah, give me an example. I was up by Safeway on Covell and I accepted a call, a ride request that was in Woodland. So I took that request and went to Woodland. Do you have to take all requests? No. Okay. I could not. But it counts against your percentage of acceptance. Okay. So you get ranked. Everything gets logged. Every little piece of data gets logged. Either counts for you against you in the long term. It either looks good or does it look good. Yeah. So you took the ride and the people were just going from one place just down the street to the drugstore. Which is okay. They're entitled to that. But I think they also dinged me on the rating because it took so long to get there. I can't think of no other reason because I treat my people well. I open doors. I treat people like a guest in my home. If they're a guest in my car, I treat people the best I can. So you're at the mercy of their rating of you as well to some extent. And what if gas prices go up? I'm in trouble. Hopefully if gas prices go up, then maybe the fairs will go up along with that. I would hope there would be some consideration for that. But you are again at the mercy of either sort of Uber changing their rates or adapting to the market gas prices or your, of course, what other pitfalls of you, like phone service, does it affect your phone? Do you have to have your own? You have to have your own phone. They don't give you a phone to use. So how does that work? Like it's basically you have to have a good phone plan. Yes. And it has cost me to not have a good phone plan. And yesterday was the last straw with that. I have what is, I had and still have what is commonly known as an Obama phone, a California lifeline. Right, lifeline. And the phone is really wonderful for everyday use. It's a great program for people who can't afford a phone. Wonderful. However, for Uber, not so good. It's really slow. The data is really slow. I'm holding a phone here, by the way. Yeah, I can see that. So yesterday, I received a ride request and I'm fast on, I accept the ride request right away. And it starts, it's processing, it's processing the ride request. And it took so long for that to process that it dropped, they treated it as though I didn't accept the request. So if there's technical problems with the network, with the phone, it counts against you? Yes. So I went to AT&T and I got a good phone, I got a good plan and I have that now. But that's more money that I have now invested into making this work. And again, this is sort of a different model of employee-ship, I'm wondering what you think about that. I mean, I understand that sort of living marginally, as far as trying to use a tool, as you said, to improve your income and all that kind of situation, there's always going to be compromises. But this is definitely like a different model of being not an employee, I should say. You're not an employee. You're a contractor, I guess. And I wondered, you're recent to this, but maybe we'll check in with you in a couple months or like a year and see how it's going because it is a different model of being a contractor. And I'm wondering if you've had insight into that. Given that you do have to upfront a lot of these costs that normally be taken on by a business. Yeah, I am the business. There are people who are out there who are Uber drivers who are advocating for employee-ship with the company. How do you feel about that? I haven't given that enough thought. I've agreed to their program, so I'm bound by their program and that indicates that I'm an independent contractor. And I accept that. And if something changes where, you know, there's a possibility of employee-ship, I'll consider that. When I drove a cab years ago, I had the option of working for the company. I had an option of leasing my own cab. And I did it both ways. There are pluses and minuses to both. So if that happens with Uber, you know, I'll consider it. Last question. Do you know some of the local cab drivers and have you met, any sense of how cab drivers feel about this sort of new model? I do not. I know one cab driver, but I haven't seen her recently. It's been more than a year. But from my experience, and I don't know about Davis, so I don't want to cast any aspirations on Davis, but my experience, three years to driving a cab, year and a half in Pittsburgh, Pennsylvania, a year and a half in San Diego, there are a lot of dishonest people in that system, dispatchers and drivers included. A lot of honest people, too, I'm sure. But with the Uber and Lyft systems, it's almost impossible for anyone to cheat anyone. It's computerized. Everything is tracked. You have GPS. Everything is pretty tight. Right. You have a GPS in your car. And on the phone. Yeah. Yeah, they install in the car part of the, I was pointing to a picture that wasn't there. Yeah. Part of the prep for the car is that they put a GPS system in there. So everything is tracked and it keeps things more above board and people have better access. You know, because you only have a few cabs, but you have a lot of Uber. I would suggest the cab drivers come to Uber or Lyft. Uh-huh. Well, I mean, it's an interesting, I think there's, it can go either way with new technologies and I think the jury is still out in a lot of ways on some of these, on some of these new models. There's critics on both on one side and then there's people like yourself who are actually exploring it and seeing how you can make it work. So. I'd like to correct something. I'd like to clarify, when I say I would suggest cab drivers come over, I would suggest the cab drivers who are negatively affected by this transportation network change. One thing they could consider would be to come over and do that. I know in France, you know, they're protesting against and actually asked other cities of, you know, banned Uber outright or something. So it's, it will, we'll be following it. I'd like to have you back on at some point just to see like how it's gone and when did you start this? I can't remember. A little more than a month ago. Oh, so it's really recently. Very recent. I know we've been doing a part time so far. So we'll check back in in about six months and see how it's working out for you. I think I'll be pretty interesting to hear and I appreciate you coming in today. I know you're busy. You've got to turn the phone back on just in case you get rides right away. Actually, I'm going to Pollock Pines now. Okay. So do some work out there over the weekend. Yes. We'll be back early next week in Ubering about and lifting. All right. You may see him around town. All right. Well, this has been in the studio. My name is Jeff Shaw. With me has been Ernie today. You'll maybe see him around town driving his Uber car and appreciate him coming in. Hopefully they'll come back and we'll check back in on this program that he's enrolled in. So thanks very much for tuning in. This is Davis Media Access.