Taxi and PCO car finance: licensing and hire and reward use come before the credit

Taxi finance: what has to line up first

1. The licence sits on the vehicle as well as the driver. Taxi and private hire licensing in England and Wales is run by the local council, and in London by Transport for London, which licenses both the driver and the vehicle. A licensing authority sets its own limits on vehicle age, emissions, size and condition, so the car has to be one your authority will plate before the finance matters at all. Buying first and checking afterwards is the common and expensive mistake.
2. Declare hire and reward use to the lender. Motor finance is normally written on the basis that the vehicle is for private use, and high mileage commercial work changes the lender's security. Using the car for hire and reward without declaring it can put you in breach of the agreement. Lenders that write private hire business exist and price for the mileage; the ones that do not will not simply overlook it when the car comes back with a plate on it.
3. Insurance is the larger cost, not the finance. Hire and reward cover costs substantially more than ordinary private car insurance and is a separate product. Private hire drivers usually need it in place before the vehicle can be plated. When people compare finance quotes for a taxi and find the numbers do not work, the insurance premium is normally the line that breaks it rather than the monthly payment.
4. Your rights depend on whether the agreement is regulated. Consumer Credit Act protections attach to regulated agreements. Credit taken wholly or predominantly for business purposes can fall outside that regime, and a sole trader signing a business use declaration may be giving up the withdrawal and voluntary termination rights that apply to a consumer agreement. Read which regime the agreement says it is under before you sign, because the two are not interchangeable.

Common questions

Car for taxi on finance: can I use a financed car as a taxi?

Only if the agreement permits hire and reward use. Most private motor finance is written for private use, and undeclared commercial use is a breach.

What is PCO car finance?

Finance for a vehicle licensed as a private hire vehicle by Transport for London. The licensing requirements on the vehicle come first; the finance follows them.

Do I keep voluntary termination rights on a taxi agreement?

Only if the agreement is regulated. Credit taken predominantly for business purposes can fall outside the Consumer Credit Act, and the agreement will say which it is.

Is insurance included in car finance for taxi drivers?

No. Hire and reward cover is a separate policy and is usually the largest running cost of a private hire vehicle.

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