Do I lease or hire purchase a vehicle for my Uber business?

A few weeks ago, we wrote extensively on making money by joining Uber as a partner, also covering options on obtaining comprehensive vehicle insurance in Nigeria for this purpose. We have received lots of enquiries from potential partners who need more options for procuring standard vehicles for this venture, so we decided to write this article.

This will help you if  you’re without a car and thinking about driving for Uber, or if you have a regular source of income, need a car and dob’t want to pay upfront for it. We have reviewed two options which you might find quite helpful:

  • Hire purchase
  • Leasing

What is hire purchasing?

Hire purchasing is a contract in which you, (the purchaser), pay a small amount in the beginning and then make the rest of the payment in installments, over an agreed period of time (tenor) just like this Innoson deal. While leasing, is an agreement between you and the vehicle owner in which the lessor (vehicle owner) lets the lessee(user), use the vehicle for a specified time for a specific payment. This is basically a long term rental program.

A hire purchase consists of the following:

Real price of vehicle + Interest rate = Hire Purchase Price

Which in turn includes; HPP = Initial down payments + Monthly installments (Interest + Principal)

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What is leasing?

But if you should decide to lease, it is quite essential that you understand the basic lingo.

  • Capitalized cost is an expense incurred in financing the asset during the term of the lease. You must intend to keep this low, which in turn lowers your monthly lease payment due to low depreciation value. Let me explain why; a relatively expensive car can easily have a lower lease payment than a less expensive one because

Low Cap.cost – High Lease end Residual value + Interest = smallest Depreciation value

  • Residual value is the projected worth of the car at the end of the lease, after depreciation. It is the amount you can buy the car for after leasing.
  • Operating Lease: The lease which covers only a small part of the useful life of the asset. It is usually a short-term lease. In this kind of lease, there is no transfer of risk and rewards nor ownership.
  • Finance Lease: A lease agreement to finance the use of asset for the maximum part of its economic/useful life. The entire risk and rewards incidental to the ownership is transferred to the lessee with the transfer of the asset.

Leasing vs Hire purchase

Think of this as a comparison of the pros and cons of both options.

hire purchase

Requirements

How to get these options for your Uber vehicle

Hire purchase

  • Registered Uber partners: These individuals are already registered in the Uber platform as partners looking for drivers, most of them just want to put their idle cars to use or sell them off. You can find them here
  • Private individuals: These individuals are people with available cars to sell but understand the current economic state or do not want a one-off sale. They can be approached via referrals.

Leasing companies

Most lease companies request for service, preventive and corrective maintenance, extra mileage, insurance, vehicle tracking, and vehicle licensing/papers payments.

  • Fleet partners: They lease out vehicles at the most convenient means of payment through uniquely designed leasing options/ solutions to meet your financial needs. Contact them on: 0806 023 7746, info@fleetpartners.ng
  • C-I leasing: They are in franchise with Hertz Corporation, they are licensed by the Central bank of Nigeria to offer operating and finance leases, with a series of car rental services. For more enquiries: info@c-ileasing.com , 08172007171, 08172007230
  • Avis: this rent-a-car company is an American car rental service with branches in Abuja and Lagos. Visit them at their office address for rentals above 30 days.
  • First choice leasing: is a wholly owned Nigerian Financial Intermediation And Equipment Leasing Firm Incorporated in 2010. For enquiries call or email: +234 1 8839185, +234 802 321 6086, +234 862 360723, info@firstchoiceleasingltd.com, md@firstchoiceleasingltd.com

Although, they weren’t willing to give me information via email or phone, so be sure to carve out time to visit them if you’re interested.

Here’s a list of Uber accepted cars

Do you have any experience or thoughts on leasing or hire purchase, please let us know in the comments section.

Remember, it’s not your car so endeavor to pay your dues and make sure you understand the terms and conditions before you sign that agreement!

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