Car Finance for Taxi Drivers: What You Need to Know

The finance route that keeps your taxi earning

Choosing finance for a taxi is not the same as buying a family car. Most standard car finance excludes commercial use, which means using a vehicle as a licensed taxi without explicit approval can invalidate an agreement. The right approach is to work with specialist UK lenders that offer contracts written for hackney carriage and private hire use, ask for the correct documents, and price the risk fairly. That way your finance supports your business rather than restricting it.

Taxi drivers often value predictable costs, minimal downtime, and options at the end of term. Personal Contract Purchase keeps monthly payments lower, with the choice to pay the balloon and own, hand back, or upgrade at the end. Hire Purchase spreads the full cost with fixed terms and typically allows unlimited mileage - useful for long shifts and airport work. Leasing through Business Contract Hire can simplify budgeting for fleets that prioritise cash flow and do not need ownership. Each path can work, provided the agreement explicitly permits taxi or private hire use.

Specialist providers in the UK will consider applicants with a range of credit profiles. Demonstrable income, a reasonable deposit - often around 10 percent - and proof of licence can move an application forward. If you are aiming for lower running costs in cities with clean air zones, finance for electric, hybrid, and LEVC taxis is widely available and can reduce ULEZ charges while protecting earnings. Refinancing can also free capital tied up in existing vehicles or balloon payments, helping you expand or maintain your fleet without straining day-to-day operations.

Understanding APR is not just about percentages - it is about what you will pay in real terms over the life of the agreement. Use a finance calculator to compare total cost, not just the monthly figure, and check for mileage rules, condition standards, and any commercial-use clauses. When the agreement matches how you work, your taxi keeps earning with fewer surprises.

Commercial approval is non-negotiable. Make sure your agreement explicitly covers taxi or private hire use.

Ready to explore your options? Scroll to the steps and compare the tables, then get a quick pre-approval before you shop for the vehicle.

Who benefits from this guide

If you drive a hackney carriage, private hire vehicle, PCO-licensed car in London, or operate a small fleet for airport transfers or executive hire, this guide is for you. It is also relevant if you are new to taxi driving and want a realistic view of deposits, mileage, and running costs. Whether you are considering a petrol saloon, a spacious hybrid estate, a fully electric LEVC, or a minibus, you will find options that balance affordability with uptime and compliance.

Your finance choices at a glance

1. Hire Purchase (HP) - fixed term, own the taxi at the end, usually unlimited mileage with specialist lenders.

2. Personal Contract Purchase (PCP) - lower monthly payments, end with pay balloon, return, or upgrade. Check commercial-use permission and mileage caps.

3. Business Contract Hire (BCH) - lease the vehicle, fixed rentals, excess mileage charges apply, suits fleets that do not need ownership.

4. Specialist taxi finance - tailored products with commercial approval, often no mileage limits and fixed payments.

5. Bad credit taxi finance - considers steady income, deposit size, and trade history, not just a score.

6. Refinancing - settle existing finance or balloons to release capital and improve cash flow.

What it costs and how it affects your business

Who qualifies and what lenders look for

UK taxi finance requires explicit commercial approval. Expect to provide your taxi or private hire licence details, proof of income or recent earnings, private hire insurance, photo ID, proof of address, and details of any existing finance. Many lenders will ask for a deposit from around 10 percent, though some deals, particularly on approved LEVC or low-emission models, may allow lower upfront costs. New drivers can be approved, but you may need a larger deposit or evidence of training and planned work, while those with 1 to 2 years of trading history may find wider choice and sharper rates.

If you plan to operate in cities with clean air or ultra low emission zones, factor in the benefits of hybrids and EVs. Reduced or zero ULEZ charges, lower fuel costs, and potential warranty coverage can offset higher purchase prices over time. For Uber and other app-based platforms, ensure you have the correct private hire vehicle licence, private hire insurance, and a UK bank account. Above all, check that the agreement clearly states taxi or private hire use is permitted. Kandoo can help introduce you to FCA-regulated lenders and brokers that understand these requirements and will structure terms around your routes, mileage, and council licensing conditions.

Getting finance in simple steps

1. Check your licence, insurance, and council vehicle requirements.

2. Decide HP, PCP, or lease using a total-cost calculator.

3. Set a deposit and preferred term that fits earnings.

4. Get pre-approval from a specialist taxi finance lender.

5. Choose a compliant vehicle - petrol, hybrid, EV, or LEVC.

6. Submit documents and sign commercial-use approved agreement.

7. Collect the taxi and update insurance for immediate work.

8. Review cash flow quarterly and consider refinancing if needed.

Quick comparison of benefits and trade-offs

The best deal is the one that matches your mileage, licence rules, and cash flow.

Read this before you commit

Do not rely on the monthly payment alone. Compare total payable including fees, the balloon on PCP, and any excess mileage or end-of-contract charges. Check council licensing criteria for age limits, emissions, and vehicle type, especially if operating in London, Birmingham, or other clean air zones. For leasing, note warranty coverage and excess mileage rates, and plan for tyre and brake wear typical of taxi use. If you are moving to an EV or hybrid, trial your charging plan and route dwell times to protect uptime. Finally, secure written confirmation that taxi or private hire use is allowed - verbal assurances are not enough.

Alternative routes if the first choice is not a fit

1. Increase deposit to improve approval odds and reduce monthly costs.

2. Consider a nearly new or used taxi with proven reliability.

3. Choose a hybrid over full EV for longer regional work.

4. Refinance an existing vehicle to release working capital.

5. Shorten the term to reduce total interest if cash flow allows.

6. Opt for BCH on fleets to avoid ownership risks and simplify renewals.

Frequently asked questions

Q: Can I use a standard car finance deal for taxi work? A: Typically no. Most consumer agreements exclude commercial use. You need specialist approval that explicitly permits taxi or private hire work.

Q: Is PCP suitable for a high-mileage taxi? A: It can be if the contract allows commercial use and the mileage cap suits your routes. Always price the balloon and any excess mileage charges before committing.

Q: What deposit do taxi finance lenders expect? A: Around 10 percent is common, though some low-emission models may qualify for lower upfront costs. Bigger deposits can reduce monthly payments and support approvals.

Q: Can I get taxi finance with bad credit? A: Yes. Specialist lenders consider income stability, deposit size, and trade history. New drivers may need larger deposits or supporting evidence to proceed.

Q: Do specialist taxi finance products limit mileage? A: Many do not, particularly HP agreements tailored for taxis. PCP and leasing often have mileage caps, so choose based on your typical weekly distances.

Q: Are EV or hybrid taxis cheaper to run? A: Often yes. Electricity and hybrid fuel efficiency can cut running costs, and you may reduce or avoid ULEZ charges. Consider range, charging access, and warranty.

Q: What is a current example of a leasing deal? A: As an illustration, a Mazda CX-60 has been offered around £511.99 plus VAT monthly after an initial rental, over 36 months at 20,000 miles per year. Excess mileage charges apply.

How Kandoo helps you move faster

Kandoo is a UK-based retail finance broker that can introduce you to trusted, FCA-regulated lenders and taxi finance specialists. We help you compare HP, PCP, leasing, and refinancing on clear terms, tailored for hackney, private hire, and fleet operators. Start with a quick online check to see your options, then secure pre-approval so you can choose the right vehicle with confidence.

Next step: Get a no-obligation pre-approval and compare total costs side by side.

Important information

This guide is for general information only and does not constitute financial advice. Eligibility and rates depend on your circumstances and lender criteria. Always read your agreement carefully to confirm commercial-use permissions, mileage terms, and fees before signing.