This is a question I am often asked and my answer is always the same, if you are going private hire you should rent first buy later. A lot of the time my advice falls on deaf ears for the simple reason that once someone falls in love with the idea of buying their own shiny new car then there is no telling them otherwise.
I will be honest; lot of people go and but their own car and never look back but the main reasons I say you should rent are:
If you are not in a good financial position the last thing you need in more financial commitments, renting will help you build up some cash.
You never know how you will react to driving a taxi, some love it some detest it... You will not know your genuine feelings for weeks or months. It’s much harder to quit with debts hanging over your head.
You have much more flexibility to work if you rent, if you buy a car on finance the bills don’t stop when you have a week off.
Renting often works out at the same cost as buying a new car. My Skoda cost £210 a week to run excluding petrol, to rent the same car from the operator costs £200 so you see there is not much in it. Read more on: Costs of Running a Taxi
If you are convinced you want to buy a car or you have tried rentals and it’s time to move on then I would recommend you buy a second hand car, try to keep below £5000. And either pay cash or spread term of the loan so your repayments are lower, I would aim for no more than £160 per month. After all, this will be deducted from your overall income. Try to avoid hire purchase as its very hard/impossible to get out of the agreement and they will have no sympathy if you struggle to make repayments.
It’s worth remembering that some councils require your car to me no older than 3 years.
Check out my article on 9 Ways to Make Extra Money as a Taxi Driver