Getting car finance as a regular driver can be overwhelming due to the application process, waiting to find out whether or not you will be approved, and finding a car you want to finance.
If you're looking to get finance for your own business, whether as an owner looking to get financed vehicles for their employees, or a taxi driver wanting to finance their car, it can be challenging.
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It can be an even more agonising wait as a business owner waiting to see if you'll be approved for finance because, without it, you cannot operate or make money for yourself.
While it can be tricky, it is possible, and in this article, we assess the different finance options available, whether or not it's possible to get finance with bad credit and if you can get finance for your taxi if you already have finance on your personal-use vehicle.
What car finance options are available?
When it comes to business finance, there are a few options that you could consider. You could take out a loan to pay for the taxi outright so that you own it from the get-go.
With any loan, you would be required to make fixed monthly repayments to the lender until the total cost of the taxi is paid off. However, once you have done that, you don't have to pay a penny more.
Another option is Hire Purchase (HP). With HP, you make fixed monthly payments until you have paid off the total amount of the vehicle. Once you've done that, the taxi belongs to you.
What is Halal Finance?
Halal car finance, also known as Islamic car finance, is an option available to help Muslims afford to buy a car on finance. Due to Sharia Law, Muslims are not allowed to pay interest, as per the Quran, meaning that it makes applying for any type of finance more difficult.
As a result, Muslims can take out special finance deals to counteract this. When buying a car, rather than paying interest across the course of the deal, the seller will calculate the amount of interest they should have paid and add it to the total cost of the car.
So while they are paying the same amount that a non-Muslim would pay for the same car, the interest is being absorbed so that on paper, there is no interest rate applied, making the deal Sharia-compliant.
Can I get taxi finance with bad credit?
While it can be more difficult to get finance with bad credit, many lenders specialise in this type of finance. You should research the lenders that offer finance to those with no or poor credit before applying.
Of course, the better credit you have, the more chance you'll have of getting approved. However, even if you have CCJs, have previously been declared bankrupt, or are in a debt management plan, you could still find a great finance deal out there for you.
Can I get taxi finance if I have existing car finance?
If you already have a car finance deal, it doesn't mean you can't get approved for a different one. Provided that you have good credit and can prove that you can make the repayments, there should be no issue with getting a second finance deal.
If you are a considerable way through your existing finance deal, some lenders may even look at that deal as being done because you've already paid over 50% of the finance.
Having an existing car finance deal is also a great way to be approved for a new one because your credit score would have increased as you make your repayments, and you are consistently showing that you can make repayments.
You will need to provide your income and financial details to prove the amount you are taking home per month, and as long as lenders don't believe you are taking too much finance on that it could leave you short, you should have no problems.
Can I get taxi finance with a guarantor?
If you have bad or no credit, a guarantor could be a good way to get approved for a finance loan. With a guarantor, you nominate a family member or someone living at your address with a good credit score to step in to make your repayments if you are unable to.
It assures lenders that you will be able to make your repayments, whether it be yourself or via your guarantor.
However, you and your guarantor should be aware that any missed payments will negatively impact both of you and could result in them not being able to take out future loans.