Buy or lease a taxi? Read the pros and cons here
31 oktober 2021
If you are self-employed as a taxi driver or if you have just started your taxi company, you naturally want to pick up your customers in a good car: after all, the customer is king. As a taxi driver you can choose to lease a car, but purchasing a suitable car is also an option. You can read about the advantages and disadvantages of these two forms below.
Leasing has become extremely popular over the past few years. There are a number of reasons for this. For example, it is a great choice for a starting entrepreneur, because you do not have to put down a lot of money in one go to be able to drive around in a representative car. This saves you money to invest in other things of your company.
Moreover, as an entrepreneur you have to deal with a number of tax benefits when you lease on the basis of a financial lease . For example, you are entitled to interest deduction, VAT refund and you also have to deal with the investment deduction. In addition, the car is economically yours, so you do not have to return the car to the lease company. When the lease contract has ended, you are also the legal owner of it. With an operational lease , you must return the car to the company after the contract.
For some industries it is difficult to lease a car for business use. This is because it looks at how risky your profession is. A taxi company is considered risky because there is a greater chance of damage to your car. So you have to go through a slightly stricter process before you can conclude a lease contract. With some lease companies you have to make a down payment or you have to provide your annual figures. This of course differs per leasing company and fortunately there are plenty of options with most companies.
Many entrepreneurs who have enough budget for a car prefer to buy it. When you buy a car, you immediately become its economic and legal owner. You do not have to return the car after two years, for example, which is seen by many entrepreneurs as a major advantage. You can therefore sell the car at any time. On average, a taxi car only lasts three years. However, with a financial lease you also become the owner of the car from an economic point of view and after the end of the financial lease contract you also become the legal owner.
If you are going to buy a car as a taxi driver, you have to set aside a lot of money for this. Many starting entrepreneurs in particular do not have sufficient capital to buy a company car. You also have to pay for the maintenance costs, insurance costs and depreciation when you buy a car. In addition, you have no control over these costs: you therefore do not know how much you will spend on average in the month on your car.