How to Rent Out Your Car

Is renting your car out legal? What's the best rental service? Your questions, answered

Co-authored by Christopher M. Osborne, PhD

Last Updated: March 13, 2023

Steering Clear of Legal Problems

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Making Your Car Available

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Completing a Rental

Renting out your car when you're not using it can be a great way to earn some extra cash, and there are now companies that facilitate peer-to-peer vehicle rentals. That said, due to insurance and liability issues, it’s important to do your homework and think carefully before using one of these companies to rent out your car. We'll show you how to navigate the legalities, listing your car as a rental, and getting your rented car on the road and cash in your pocket.

Things Your Should Know

Use a service like Turo, HyreCar, or Getaround to rent out your car legally.
Update your car insurance policy to cover renting out your car to a third party.
List your car on a rental service and include its make, model, and availability.
Check the renter's license and inspect your car before and after the rental to check for damage.

Method 1

Method 1 of 3:

Steering Clear of Legal Problems

1
Avoid trying to rent out your car on your own. It may be tempting to think that you can just use social media, peer-to-peer commerce sites, or even word-of-mouth to rent out your car yourself. However, there are so many legal complexities involving things like insurance and liability that it’s simply not worth the risk.^{[1]
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- It may be illegal to rent out your car on your own where you live. Even if it is legal, a worst-case scenario might cost you hundreds of thousands of dollars.
2
Determine which, if any, companies can legally operate where you live. As of 2019, the most well-known companies in the peer-to-peer car rental business (in the U.S.) are Turo, HyreCar, and Getaround. However, even the largest of these companies—Turo—doesn’t operate in all 50 U.S. states, let alone in all international markets. Search online to identify the key companies in the industry and confirm that they can operate legally in your area.^{[2]
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- You’ll likely be blocked from signing up with one of these companies if they don’t operate where you live. This is for the best, as the insurance package they provide would likely not cover you.
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3
Get clarification from your lender if you’re still making car payments. Some car owners rent out their vehicles to help defray the cost of their monthly car payments. However, in some cases, doing so may violate the terms of your financing agreement. It may even give your lender the legal grounds to terminate the agreement and repossess your car.^{[3]
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- Contact the bank, financing agency, or other lender—in other words, the company that you send your car payments to—in order to get clarification as to whether you can rent out your vehicle. Ask them specifically, "Is it a violation of my financing agreement to rent out my car for money to other drivers?"
4
Contact your car insurer regarding your coverage in this situation. Even if your auto insurance policy covers you if someone else is driving your car under normal circumstances, it may not cover you if you rent out the car. In some cases, your car insurer may even be permitted to cancel your coverage if you use your car for commercial purposes.^{[4]
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- Each U.S. state individually regulates auto insurance companies, so the coverage requirements for peer-to-peer rentals varies widely.
- Whenever it's being rented, your car will be covered by the insurance policy provided by the peer-to-peer rental company. The only exception is if you waive this coverage because you already have car insurance (such as a commercial policy) that covers this scenario.
5
Read the fine print before signing up with a listing company. This is good advice no matter what you’re signing up for. Once you find a company that operates legally where you live and seems like a good fit for your needs, take the time to dig deeper. Examine the website, contact the company with any questions you have, and read through all the “terms and conditions” before agreeing to them.^{[5]
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- The most important thing is to be clear that you’ll be covered by the company’s insurance policy if your car gets into an accident while being rented. Make sure you’re clear on any exclusions or limitations to the coverage being offered.

Method 2

Method 2 of 3:

Making Your Car Available

1
Provide accurate vehicle information to the listing company. Listing your car with a peer-to-peer rental company requires proof that you own the car—such as the car’s VIN number and your driver’s license number, among other identifying into. Additionally, provide the requested info on the make, model, mileage, and condition of the vehicle, and send along pictures if required.^{[6]
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- Not all cars make the cut. Most companies list only newer model cars, such as those less than 10 years old, and have mileage and condition restrictions.
2
Document your car’s condition for your own records. While putting together the required car info for the rental company, document the car’s condition in even greater detail for your own benefit. Take photos of the entire interior and exterior of the car and carefully describe its current condition.^{[7]
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- Document in detail now so you can more easily prove damage caused by rental drivers later.
3
Set your car’s availability schedule and rental rates. It’s completely up to you when to make your car available for rent. The specific process varies by company, but you can typically block out certain days or times on a recurring schedule, as well as add or remove your car from availability as needed.^{[8]
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- You can typically set the rental price yourself as desired. However, some companies may encourage you to instead use a specified dynamic pricing model that raises and lowers the rental price for your vehicle based on factors like overall demand.
- Weekends and holidays tend to produce higher demand, so you can expect to attract more renters and higher rental rates if you make your car available during those times.
4
Maintain a realistic outlook on the amount of money you’ll earn. If you live in a high-demand area (such as a large city), have a high-demand vehicle (Teslas, for example, tend to be very popular), and make your car available much of the time (including high-demand times), you can make good money renting out your car. In some other cases, you may struggle to earn enough to make it all worth your while.^{[9]
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- In 2017, for instance, people who listed their cars on Turo earned an average of $720 USD per month ($8,640 per year).
- Full-day rental rates tend to run in the $10-$100 USD range.
- Remember to factor tax benefits into your earning potential as well. In the U.S., you may be eligible for a per-mile federal tax deduction while your car is being rented. If, for instance, renters drive your car for an average of 100 mi (160 km) per week, you might earn a deduction approaching $3,000 USD.^{[10]
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Method 3

Method 3 of 3:

Completing a Rental

1
Set up pick-up and drop-off locations and times with the renter. Once you list your car, your chosen rental company will notify you when someone is interested in renting it. If you agree to the rental, work through the company’s app or site to arrange exchange times and locations that suit both of you. Do not deal directly with the prospective renter.^{[11]
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- While it’s more convenient to make your home the transaction site, it’s safer to choose a public location—like the parking lot of a busy shopping center—for both the drop-off and pick-up. In exchange for the extra safety, you’ll have to arrange to get a ride from someone else!
2
Check their license and show them the car before making the exchange. Once you both arrive at the exchange spot, look over the prospective renter's ID to make sure they are who they say they are. Then, show them the outside and inside of the car and mention any existing damage or problems. In addition, give them any driving tips you have—for instance, let them know if the steering wheel pulls a bit to the left. So long as no “red flags” pop up—for example, you think the person has a fake ID or may be impaired by drugs or alcohol—go ahead and hand over the keys.^{[12]
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- You’re not obligated to hand over the keys if you have legitimate reasons for concern. Cancel the exchange and contact the rental company right away.
- No money should exchange hands. That’s all handled by the rental company.
3
Inspect your car and report any problems upon its return. After heading to the agreed-upon pick-up spot and getting your car back, do a full inspection. Snap pictures of any new damage or wear and take detailed notes. Report any problems to the rental company right away.^{[13]
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- Always report any problems before renting out the car again, and within 24 hours if at all possible.
- Because your car is covered by the insurance policy offered by the rental company (while it’s being rented), you’ll have to work with the company’s insurer to make claims and get repairs done.
4
Keep an eye out for tolls, tickets, and unexpected charges. Unfortunately, there’s no way for either you or the rental company to force the renter to pay charges like unpaid tolls or parking tickets. Follow the company’s procedures for requesting payment from the renter if this issue arises. In the meantime, pay any money owed so you don’t accrue additional fines.^{[14]
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- If, for example, you live near a major toll road that uses license plate photos to charge tolls, you may end up footing substantial bills.
- The company can ban the person from renting again, but that’s usually about it.