RISK AND REWARD: High interest rates begin hitting taxi drivers forced to buy new taxis

High interest rates are hitting taxi drivers hard as they look to do the right thing and invest in new cleaner cabs says union rep.

Sam Houston, a Licensed Taxi Drivers’ Association (LTDA) Senior Rep, is currently in the position many taxi drivers find themselves. Houston’s current taxi has reached its age limit, which is forcing the driver to source a new black cab to continue working in.

However, rapidly rising interest rates has seen the cost of financing new vehicles skyrocket in recent months. Whilst the unit price of taxis remains in grasp of many, the eye watering finance packages mean many cabbies are seriously weighing up the risk and reward when it comes to buying, renting from a fleet owner or simply walking away from the job altogether.

Houston said in TAXI Newspaper: “In addition to the loss of three years’ working life of my current cab, this time next year I will be required to invest in a new one. Whether I choose to rent or buy, my next cab will certainly cost me a lot more, both in nominal and real terms, than my TX4.

“As I write, the Bank of England has just increased the base rate of interest by 75 basis points to 3%. As I’ve discussed before here, this is not a historically high level, but in the recent context, these rises are eye-watering. Whether you have a mortgage or not, credit is becoming more expensive, and there are not many drivers (or garages) that I know, who can afford to buy new cabs without finance.

“It is reasonable to expect that the cost of finance will increase and stay higher in the medium term. So, I’ll say it again – taxi drivers are investing hugely in the future of London, and we deserve those investments to be recognised and supported, by those who decide where we can and cannot go in the course of carrying out our job.”