Working as a taxi driver makes it relatively easy for car owners to make money. For those who do not have their own car, in order to get this opportunity, you need to rent or purchase it. Since not everyone has the required amount of money, you can use car title loans, designed specifically for taxi drivers.
The advantages of car title loans over car rental
Everyone makes the choice between buying a car on credit and renting it to work as a taxi driver, taking into account their capabilities. The main disadvantage of the first option is the need to pay car title loan installments every month. In addition, the car owner needs to issue a CASCO insurance policy, and only from the insurer cooperating with the banking institution that provided the loan. In this case, the vehicle passport remains with him as a pledge.
And yet, many taxi drivers claim that buying a car on credit is more profitable than renting it. If we compare the cost of servicing a loan and maintaining a car with the cost of renting it, then the figures speak in favor of car title loans. Buying a car using borrowed funds provides the following benefits:
- the possibility of including a number of additional costs in the loan amount;
- relatively low-interest rate;
- loan maturity up to seven years;
- no need to pay an initial installment in some loan programs;
- the opportunity to take advantage of state-subsidized loan programs for Russian cars, providing a 10% discount.
The main ways to buy a car on credit to work as a taxi driver
All officially employed Russian citizens aged from twenty-one to seventy years have the right to purchase a car on credit. To purchase a car on credit, you can use different methods, each of which has its own advantages and disadvantages. Many buyers prefer to take a consumer loan, despite the high-interest rates on it.
The advantages of this method of lending are that the car immediately becomes the property of the buyer (there is no need to issue a pledge), there is a choice of any insurer, and also the ability to rent the purchased car. Disadvantages of consumer lending, in addition to high-interest rates, consist in a short loan term (no more than five years) and in the possibility of refusal to provide borrowed funds due to the borrower’s poor credit history – after all, a consumer loan is issued without collateral. In some cases, the bank may require a guarantor.
Although leasing is commonly used in business, in recent years it has become a fairly common substitute for car title loans. In this case, leasing means renting a car with the right to redeem it. In this case, the owner of the car is the leasing company, which pays the transport tax and can bear the costs of the technical inspection. The lease period is taken for a part of the car’s life (for example, for one to three years), and then the lessee is given the right to buy it out at the residual value. Leasing is predominantly designed for businessmen – for its registration, it is necessary to present a certain package of documents, and in some cases, regular payments may be higher than for a loan.
Yet this scheme is popular. Banking institutions and leasing firms may offer various benefits or discounts as part of ongoing promotions. If necessary, the lease term can be increased, in which case the regular payments for it will be less.
Auto installment was previously offered in almost all car dealerships, but many of them called it simple car title loans. In reality, an installment plan is a payment for the cost of a car in parts, and not in a lump sum. The program can be provided by a car dealership, but usually, this is a loan with special conditions – formally, a discount is provided for interest payments.
But the overpayment for the car is still present due to commission and other fees. In addition, an initial payment must be paid, the value of which is at least half of the cost of the car. The balance is divided by the number of months of maturity, up to thirty-six.
If the buyer, for some reason, is unable to pay the monthly installment, then the car will be taken by the company that provided the installment plan. This method of lending has the following advantages:
- no need to collect a large package of documentation for registration;
- no need to present a certificate of income;
- In some cases, the terms of the installment plan make it possible to change the car for another before its end.
