Author Topic: Should I regularly lend a friend my car?  (Read 1864 times)

Tass

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Should I regularly lend a friend my car?
« on: October 19, 2021, 08:31:59 PM »
I own a 20-year-old car that I use a few times a week (I usually bike or walk). Is it reasonable to loan it to a close friend 1-2 times per week, with him paying me for the trouble? If yes, what should the parameters of our agreement be? I stand to gain a small offset of my car costs and help out a friend, and he doesn't have to buy a car or spend more money on uber. I might also score a few rides to the airport.

Relevant details:
- I trust this friend financially - we were roommates for years - and I would get our agreement in writing and signed.
- He would be covered under my car insurance policy. (I called and explicitly asked.) He does not currently have car insurance. Him getting non-owner insurance is a potential requirement of the agreement.
- I do not have collision coverage. The friend is a relatively new driver. He would be on the hook for any damage he caused to the car, but there is a risk he totals it and I get $2k from him but have to pay more than that for a new (old) car.
- I've seen conflicting information on which of us is on the hook if he causes damage exceeding my coverage (100/300/100). I'm concerned about this risk and want to know how to mitigate it.
- If he gets in an accident, even if it's not his fault, it would likely increase my insurance rates. Not sure how to deal with that.
- I'm currently considering charging him roughly $20/month + 30 cents/mile, which I expect to come out to $25-50 per month. (My main costs are about $100/month in insurance and ~$50/month in maintenance, which I split with my partner, and gas here is over $4/gallon.)
- He would be cool with me saying no.

Am I overlooking anything? Is this a bad idea?
« Last Edit: October 19, 2021, 08:33:33 PM by Tass »

seattlecyclone

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Re: Should I regularly lend a friend my car?
« Reply #1 on: October 19, 2021, 08:40:29 PM »
This seems like a nice and generous thing to do for a friend. The risk seems pretty small given the age of the car. For accidents exceeding your coverage limits, I'd naively assume that the person actually driving would incur the financial liability, but I guess I could be wrong! Do you have an umbrella policy? If you have a high enough net worth that a bankruptcy would really set your financial plans back, you should probably consider one, independently of what you do with sharing a car with your friend.

Tass

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Re: Should I regularly lend a friend my car?
« Reply #2 on: October 19, 2021, 08:41:58 PM »
I do not have an umbrella policy. My NW is under $100k so well covered by my auto policy, but we have higher coverage to protect my partner's larger NW, as he is also on the policy. (As a driver - the car is exclusively in my name.)

Zamboni

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Re: Should I regularly lend a friend my car?
« Reply #3 on: October 19, 2021, 09:38:42 PM »
I let reliable friends borrow my van sometimes for one-off trips to get large loads of yard or construction supplies. To me it seems like you should indeed list them as a driver on your policy if they are a regular driver, though. If that makes the rate go up, then it makes sense that you ask them to pay the difference.

Only you can be the judge of if this person is cool or will eventually become an entitled ass about using your car. There have been plenty of "Court TV" cases where the latter happened, and someone either wrecked a borrowed car or just decided to "take" the car and never return it, so be careful.

Tass

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Re: Should I regularly lend a friend my car?
« Reply #4 on: October 19, 2021, 09:52:48 PM »
I called my insurance company about this today and they said a few hours a week would fall under permissive use, even if it was regular. Thus, no need to add him to the policy.

I trust my friend to follow the rules we set, and I'm confident this will work fine as long as no accidents occur. But I want to make sure I have my bases covered for the low odds it goes very bad.

yachi

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Re: Should I regularly lend a friend my car?
« Reply #5 on: October 20, 2021, 06:40:48 AM »
Check if your partner is being covered for more than these auto policy limits:
$300,000 person/$300,000 occurrence (bodily injury), $100,000 (property damage)
or $250,000 person/$500,000 occurrence (bodily injury), $100,000 (property damage)

If so, you should look at the cost to set the auto policy to the above limits and get an umbrella policy.  The above limits are the Required minimum to carry umbrella insurance, and umbrella insurance is fairly cheap.  If you save some on your auto policy with lower coverage, you might be able to cover the cost.

Fishindude

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Re: Should I regularly lend a friend my car?
« Reply #6 on: October 20, 2021, 12:24:21 PM »
My policy on that stuff is, that if it breaks when you are using it, you pay for proper repairs at your expense, and get it taken care of right away.  You better have deep enough pockets to repair or replace the vehicle.
If they can live up to that, I'd have no problem.


nessness

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Re: Should I regularly lend a friend my car?
« Reply #7 on: October 20, 2021, 12:36:34 PM »
My policy on that stuff is, that if it breaks when you are using it, you pay for proper repairs at your expense, and get it taken care of right away.  You better have deep enough pockets to repair or replace the vehicle.
If they can live up to that, I'd have no problem.
That seems pretty unfair for a 20-year-old vehicle. If the friend gets in an accident, sure, he should take care of any needed repairs. But the owner of the car should be responsible for any mechanical failures, regardless of who happened to be driving the car at the time.

SunnyDays

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Re: Should I regularly lend a friend my car?
« Reply #8 on: October 20, 2021, 03:16:15 PM »
How many miles does your friend expect to put on per month?  When I used my car for work, we were payed .43/kilometre and that was almost 6 years ago.  Even that did not cover all expenses related to use (wear and tear, extra maintenance etc.).  Plus you might end up having to buy another car sooner than you otherwise would.  Iím not saying you shouldnít do it, just make sure you take everything into consideration.  My car is 18 years old and I just bought it back after an accident and hope to get another 5 years out of it.  Donít downplay the value of an old car.

simonsez

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Re: Should I regularly lend a friend my car?
« Reply #9 on: October 20, 2021, 03:42:21 PM »
My policy on that stuff is, that if it breaks when you are using it, you pay for proper repairs at your expense, and get it taken care of right away.  You better have deep enough pockets to repair or replace the vehicle.
If they can live up to that, I'd have no problem.
That seems pretty unfair for a 20-year-old vehicle. If the friend gets in an accident, sure, he should take care of any needed repairs. But the owner of the car should be responsible for any mechanical failures, regardless of who happened to be driving the car at the time.
Also seems unfair to not want to own or rent a vehicle and just use someone else's for a lower cost and expect the costs for a mechanical failure to be passed 100% onto the owner.  If you can't accept those terms, I'd probably find alternative means of transit other than a friend's car or at least have an understanding to cover part of the mechanical costs.  The friend needs the favor, not the owner.

PacificaFog

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Re: Should I regularly lend a friend my car?
« Reply #10 on: October 20, 2021, 07:34:30 PM »
I donít know.  I kind of feel like if a close friend asked to borrow my car that I wasnít really using and offered to pay me something for it, Iíd just say yes. 

Tass

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Re: Should I regularly lend a friend my car?
« Reply #11 on: October 20, 2021, 07:43:44 PM »
How many miles does your friend expect to put on per month?  When I used my car for work, we were payed .43/kilometre and that was almost 6 years ago.  Even that did not cover all expenses related to use (wear and tear, extra maintenance etc.).  Plus you might end up having to buy another car sooner than you otherwise would.  Iím not saying you shouldnít do it, just make sure you take everything into consideration.  My car is 18 years old and I just bought it back after an accident and hope to get another 5 years out of it.  Donít downplay the value of an old car.

AAA and IRS estimates seem to be more like 50-60 cents per mile, but when I dug into it, those averages included full coverage insurance and financing. I came to the 30 cent value with my own data, but I don't have a lot of confidence in my mpg estimates, honestly.

I guess he would put on between 20 and 100 miles per month.

badger1988

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Re: Should I regularly lend a friend my car?
« Reply #12 on: October 20, 2021, 08:05:26 PM »
I had a friend in college who borrowed my car to visit family for the weekend. Car was worth probably $2000 as well. It had a slow coolant leak I hadn't fixed yet, so I asked him to monitor coolant level and top off with a jug I had in the trunk if needed. He forgot. Ran it low on coolant and ended up on the side of the interstate with a cracked cylinder head and seized piston. He paid for the tow to the junkyard. The rest was on me. I figured I'd rather lose some money and preserve our friendship.

If it's a close friend, I'd let him use it for free and just ask him to top it off with gas when he does, with the expectation that you may be out a $2000 car at some point.

iluvzbeach

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Re: Should I regularly lend a friend my car?
« Reply #13 on: October 20, 2021, 10:36:50 PM »
My biggest concern in this situation would be potential liability for you in the event your friend is at fault for a crash that results in major injuries. As the owner of the car you could be sued and held financially responsible. If this friend had his/her own insurance coverage Iíd feel much more comfortable with the risk. Also, can you be absolutely certain this friend will never drink intoxicated or under the influence of illegal drugs or alcohol? I worry more about financial risk vs. damage (or breakdown) to the car itself.

seattlecyclone

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Re: Should I regularly lend a friend my car?
« Reply #14 on: October 21, 2021, 12:45:40 AM »
As the owner of the car you could be sued and held financially responsible.

Is this really a thing? I've always thought that I've been personally liable for my own driving. If it is a risk, how do the big car rental companies get away without paying out every time one of their customers gets in a crash?

Tass

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Re: Should I regularly lend a friend my car?
« Reply #15 on: October 21, 2021, 09:12:49 AM »
My biggest concern in this situation would be potential liability for you in the event your friend is at fault for a crash that results in major injuries. As the owner of the car you could be sued and held financially responsible. If this friend had his/her own insurance coverage Iíd feel much more comfortable with the risk. Also, can you be absolutely certain this friend will never drink intoxicated or under the influence of illegal drugs or alcohol? I worry more about financial risk vs. damage (or breakdown) to the car itself.

I also worry more about the liability than anything else, which is why I'm posting here for more eyes on the plan! As for damage to the car, I mostly just want all expectations clear from the beginning so that we avoid hurting the friendship if anything does happen. Luckily this friend is pretty cool talking money (he was the one who suggested he pitch in financially).

My friend never drinks at all, so I'm very certain he would never drive drunk.
« Last Edit: October 21, 2021, 09:15:46 AM by Tass »

FINate

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Re: Should I regularly lend a friend my car?
« Reply #16 on: October 21, 2021, 10:13:27 AM »
As the owner of the car you could be sued and held financially responsible.

Is this really a thing? I've always thought that I've been personally liable for my own driving. If it is a risk, how do the big car rental companies get away without paying out every time one of their customers gets in a crash?

I'm willing to bet the rental car companies get sued all the time, but they have an army of lawyers and deep pockets and an ability to fight these. Additionally, these lawyers write up bullet proof rental agreements that customers must sign before getting a car. In other words, renting from a big rental company is not the same as informal borrowing/renting from a friend.