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Buying a vehicle as a Taxi
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doubletap
#1 Posted : Friday, September 18, 2015 6:04:30 PM
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Joined: 7/17/2014
Posts: 132
Location: Wherethewindblows
A friend is contemplating on getting a loan to buy a car that he will then use as a taxi with expected income of about 30k per month. He says he could repay the loan in two years and end up with the car.

Question, If taking a loan to buy a depreciating asset like a car is a bad idea how would he go about it, and is it a wise decision?

You have to learn the rules of the game. And then you have to play better than anyone else - Albert Einstein
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nakujua
#2 Posted : Friday, September 18, 2015 6:46:02 PM
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Joined: 12/17/2009
Posts: 3,583
Location: Kenya
If the loan is for the taxi business then that should be ok, if he knows how to run such a biashara.

Hata loan ya giru si mbaya, if the same makes you happy - kwani hi pesa hutafutwa ya nini.
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sparkly
#3 Posted : Friday, September 18, 2015 7:06:08 PM
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Joined: 9/23/2009
Posts: 8,083
Location: Enk are Nyirobi
doubletap wrote:
A friend is contemplating on getting a loan to buy a car that he will then use as a taxi with expected income of about 30k per month. He says he could repay the loan in two years and end up with the car.

Question, If taking a loan to buy a depreciating asset like a car is a bad idea how would he go about it, and is it a wise decision?



Depends on what he means by income of 30k. If he is able to fuel the taxi, pay driver, pay insurance, service the car, deduct depreciation, deduct loan interest and still be left with KShs 360k per annum, that looks like a good return assuming the car costs 1m.
Life is short. Live passionately.
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doubletap
#4 Posted : Friday, September 18, 2015 10:16:51 PM
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Joined: 7/17/2014
Posts: 132
Location: Wherethewindblows
sparkly wrote:

Depends on what he means by income of 30k. If he is able to fuel the taxi, pay driver, pay insurance, service the car, deduct depreciation, deduct loan interest and still be left with KShs 360k per annum, that looks like a good return assuming the car costs 1m.


Yes the car was to cost about 1m but the 30k was after fuelling and driver but the rest he would have covered from his pocket. In essence he was looking at it as a way of getting a family car after the loan is all paid out.

Thanks for the insight that you have shared here... Applause
You have to learn the rules of the game. And then you have to play better than anyone else - Albert Einstein
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Impunity
#5 Posted : Sunday, September 20, 2015 7:38:48 PM
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Joined: 3/2/2009
Posts: 26,328
Location: Masada
He better use that loan money to buy a garden snail, place it on tarmac and then sit back and watch it cover the entire Thika road length.
Portfolio: Sold
You know you've made it when you get a parking space for your yatcht.
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Tara
#6 Posted : Monday, September 21, 2015 8:32:07 PM
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Joined: 12/18/2012
Posts: 94
Not to hijack the thread but how is Uber working out in Nairobi versus a regular taxi?
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