Can you Start a Taxi Business with Leased Cars?
We don’t get this question very often, but once in awhile someone does ask about leasing a car. You might be a taxi driver, or getting started as one and noticed how cheap it can be to lease a car. So, is it possible to take advantage of that, and lease a car to use it as a taxi?
The answer is, yes and no. We will be taking a closer look in this article at whether or not a leased car can be used as a taxi.
Can a leased car be used as a taxi?
Yes, in some situations.
There is a good chance you will be unable to get a lease car from a typical vehicle broker. Some companies do specialize in leasing cars to be used as taxis. When I was at the OSV (nearly three years) I only encountered one manufacturer that specifically sent deals for private hire cars.
That doesn’t mean you can’t. You will just need to work with a company that specializes in leasing for taxis.
Am I allowed to use my Personal Contract Purchase for a taxi?
The only time a leased car can be used as a taxi is when you go through a specialized company and have a specialized agreement. But what about a situation where you have a personal contract purchase?
Although the premise behind a personal contract purchase and personal contract hire are the same, when the contract comes to an end there is a difference. You either can:
- Purchase the car at a pre-agreed-on value
- Part-exchange the vehicle
- Or return the car without anything left on it to pay (of course still subject to condition and mileage charges)
So you may be wondering whether or not a car that you have under a personal contract purchase may be used as a taxi.
The answer is, unfortunately, still no. The finance company will basically own the car until the contract ends. You can then purchase the car from them. So if you use the car as a taxi while it is still owned by them, there is too high of a risk of depreciation. They also will not be able to guarantee you that they will purchase it when the contract ends. Some, some individuals do get a vehicle on a personal contract purchase and after they have made the final payment and are the owner of the car use it as a taxi. That is an option that is open to you.
Can a leased car be used as an Uber?
The world has been taken by storm by this ridesharing app – however the answer is still unfortunately no. It is basically a private hire car so you cannot lease it. However, the car company Toyota has made an investment into Uber in order to provide Uber drivers with new leasing options. So, you will be unable to lease it from a typical broker, but the service might be offered by specialist companies.
What is interesting is that Uber has partnered up with a company in the United States for specifically providing lease cars for Uber. However, there isn’t any indication that it will brought to the UK.
Why can’t a lease car be used as a taxi?
In general, the main reason why a leased car can’t be used as a taxi is due to the wear and tear and mileage. It rules out the idea of a BMW on lease and understandably so.
Whenever you lease a car there are always restrictions when it comes to wear and tire and mileage. For a lease car the maximum mileage is 50,000 mils per year, but many financing houses don’t go over 35,000-45,000 miles. Obviously when you have a taxi you will put an excessive number of miles on the vehicle. And the car is worth less the more miles it has on it. So, a finance house will not want to wind up with a car that isn’t worth much once the contract ends.
The same is true with the car’s condition. It more than likely that a taxi will suffer from more wear and tear. So it opens you up to having extra charges and reduces the value of the vehicle as well. Another reason is, the terms and conditions of the contract will state “not for hire or reward.” So that means you cannot earn money off of the actual vehicle.
Basically, a finance house won’t lease a car they can’t sell.
How can I get a lease deal on my taxi?
As previously mention in this article, an average broker will not have lease deals available for taxis.
There are places that do offer lease and finance contract for individuals want to use their cars as taxis. However, you will need to do some research to find them.
We recommend that you speak with your broker. Speak to an established broker if you don’t have one yet, and ask if they know about any types of manufacturer dedicated schemes that might exist.
There are websites like thetaxishop, carloanwarehouse and ethosfinance.co.uk that offer finance and lease deals on taxis. However, we don’t have any experience working with these kinds of companies. Therefore, we are unable to say whether they would be a good fit for you or not. The best thing for you to do would conduct your own research in order to make an informed decision for yourself.
Ultimately, in order to find a leased car that can be used as a taxi you will need to find a company that specializes in taxi leasing. There is a good chance that your everyday, average dealership or broker will not offer that service to you. Therefore, when you are searching for one, it is very important to conduct some serious research into those companies to make sure they are reputable and able to provide just what you need.