Car Hire Business start up advice needed

Discussion in 'General Business Forum' started by apples69, Mar 31, 2012.

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  1. apples69

    apples69 UKBF Newcomer Free Member

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    I am thinking of starting my own car hire business, i need help and advice please.

    i will start off by just having 1 car and then building on that if its a success, the market that i have in mind is the asian market in west yorkshire.

    can anyone tell me, what is the best way to get things started?

    if i went to audi and asked them i want a car on a 2 year lease, will i be able to hire the car out? (this is what the asian hire companies in west yorkshire are doing, but some how they are able to hire these very same cars to are they doing this?)

    how do i go about getting the car hire insurance sorted?

    From the top of my head, i think i would need a rental agreement make it watertight and binding and not breaching any copyrights from the hire company I test rent from.

    all advice appreciated:)
    Last edited: Mar 31, 2012
    Posted: Mar 31, 2012 By: apples69 Member since: Apr 19, 2009
  2. Moneyman

    Moneyman UKBF Legend Free Member

    2,729 787
    What a nightmare idea. I hire a car almost every week.
    The hire companies work on scale and averaging things out over hundreds of cars. With one car you will need an incredible run of luck to get the car hired out regularily. The big boys do free home drops.
    What if the car is not returned on time (as happens 60% of the time) or breaks down. What do you do about your next customer?

    Some people can do this but they are probably cutting corners and not telling the insuarance company.

    car hire companies dont like to hire out things like audis as they are expensive to own and maintain. the margins are made on the VWs and skodas etc.
    Posted: Mar 31, 2012 By: Moneyman Member since: May 3, 2008
  3. businessfunding

    businessfunding Guest

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    How much research have you done into this?

    There may be an angle in the asian market that we aren't aware of, but overall this is a very competitive and capital intensive business.

    Firstly, as a new-start finance will be hard to come by - think 30% deposit, 2 year repayment term.

    Most HPlease contracts specifically forbid hire & reward, as do most insurance policies.

    I'm no insurance expert, but I guess that a single vehicle policy would be disporortionately expensive.

    One pssible angle would be in the 'rent a wreck' market which would distance you from the 'big boys'.
    Posted: Mar 31, 2012 By: businessfunding Member since: Jan 1, 1970
  4. lockyer

    lockyer UKBF Ace Full Member

    1,217 198
    1. Vw Audi finance expressly forbid hiring the cars out, and have been repossessing a lot in Bradford;)
    2. Most of the ones I've seen start up in Bradford never insured the vehicles properly, I know of one that lost an r8 by not doing right.
    3. It is very hard to insure a single vehicle for sdh use. Usually need to be 5 vehicles plus.
    4. A lot of the Bradford guys have been arrested for vat fraud

    Trust me when I say this, run like the wind from this idea. Please!
    Posted: Mar 31, 2012 By: lockyer Member since: Oct 27, 2008
  5. SafeClean

    SafeClean UKBF Newcomer Free Member

    34 7
    Stay well clear, I have a few close friends on the car and van hire sector and the insurance required to run this type of business is one of the main cripling factors. Margins are low enough and when having to compete with so many larger companies making £20 per week off a single hire car is quite normal. As said above its all about numbers £20 a week x 1 car you wont even get off the ground but £20 a week x 100 cars starts to look viable. A lot of dealerships are now offering excellent leasing options so I imagine car hire will soon be the thing of the past.
    Posted: Mar 31, 2012 By: SafeClean Member since: Mar 11, 2012
  6. Talay

    Talay UKBF Big Shot Free Member

    3,930 857
    People do this as fronting, because the person who wants to hire / lease the vehicle cannot pass the credit checks to get it on lease and does not have the cash to buy it outright.

    If nothing goes wrong, then you are in clover. Someone buys you a car over about 3 years and you get decent cashflow. However, they tend to treat the car like rubbish, you end up with a knackered vehicle, they don't always pay and there is little you can do to enforce action against them because you are doing it illegally !

    Don't walk, run away from this idea.
    Posted: Mar 31, 2012 By: Talay Member since: Mar 12, 2012
  7. Mitch3473

    Mitch3473 UKBF Regular Free Member

    1,166 304
    THink long and hard about this....very,very competative,hard work,long hours,mither,trouble,dodgy licences,insurances,whip lash claims,repairs etc etc and come the Muslim holidays every jack the lad will be queing up to hire a sporty model to wheel spin in front of their mates,that's if they dont swap all the decent bits of it before returning really do need to be on your toes.All from experience.
    Posted: Mar 31, 2012 By: Mitch3473 Member since: Aug 25, 2011
  8. TheGuru2010

    TheGuru2010 UKBF Enthusiast Full Member

    929 106
    Hi Op,

    Again like the other posters on here you need to do your homework!, this is not just a 20 min idea & it will work.

    What will you do if that 1 vehicle is involved in a accident, could be a few weeks till you get a payout. That leaves you with no vehicle to hire out.

    Insurance is not cheap, for a annual policy you will need at least £3k is for the first year.

    You could possibly get a PAYG policy (pay each time its hired) I would state that would be around £11 - £12 per day.

    But then you have to actually get this insurance, the self drive market is under alot of pressure from Fraud & the underwriters check every hole you have to make sure you know what your doing. They have been known to request a business plan, run credit checks on all directors, carry out a pre quote survey.

    you REALLY do need to do your homework on this, I have never seen a new venture start with just one vehicle, unless it is a sideline of a existing business (such as a motor trader etc) I am usually about if you have any questions.

    Posted: Apr 3, 2012 By: TheGuru2010 Member since: May 11, 2010
  9. Guest

    0 0
    I had a terrible expereince with car hire about 8 years ago. Major headaches were related to servicing a couple of very different ethnic minorities. Obviously can't elaborate in writing and it is probably illegal to think about it these days.
    The upside of specific groups is recommendation spreads like wildfire but the converse will happen when you start to enfore deposit losses, excesses losses etc etc .
    Proceed with extreme caution....or better still do something else
    Posted: Apr 3, 2012 By: Member since: Jan 1, 1970
  10. FE

    FE UKBF Newcomer Free Member

    424 22
    WHichver finance house you use then you will need to obtain a license to sublet. They will only issue this if you can prove systems, strong processes and you know what you are doing. It is highly unlikely that you will obtain that as a strat up

    Posted: Apr 3, 2012 By: FE Member since: Sep 16, 2005
  11. businessfunding

    businessfunding Guest

    0 0
    The prime market will probably require this. The sub prime market won't, but will look for some strong terms as per my previous post
    Posted: Apr 3, 2012 By: businessfunding Member since: Jan 1, 1970
  12. FE

    FE UKBF Newcomer Free Member

    424 22
    I think you will find ANY finance house standard terms say no sub let. The reason for this is that the renter will enter into a contract with driver / company hiring. If the renting company goes into administration then the bank / finance house need to obtain their asset. The sub-prime are far more likely to have this inserted (which is standard).

    Unless your sub-prime is a private person giving you a vehicle for payment every week with no contract?

    Posted: Apr 4, 2012 By: FE Member since: Sep 16, 2005
  13. FE

    FE UKBF Newcomer Free Member

    424 22
    In answer to some of these:

    Finance - if you are looking for asset finance then you have several options (HP, Finance Lease & Contract Hire depending on what you can afford, on or off balance sheet, WDV, VAT handling and cash flow). The finance is based on the asset and all will have no sub let clauses. Audi are very strict with this and certainly would not offer without revieweing contracts that are being offered to the people renting the vehicle i.e. sub-letting (prime or non prime)

    Insurance - you will need traders insurance to store, deliver and collect (as well as employess liability etc). You will then need to obtain (or put in one policy - self drive insurance so as to underwrite the person renting). If you ask the renter to obtain their own then this is hard as there is a difference between a lease and a rent and then goes to who the V5 or legal owner is. Self Drive insurance is hard to obtain for any fleets under 5

    Rent a wreck is possible and happens a lot - you also attract the clients that go with it and so payment can be hard but biggest problem is the vehcile is used in illegal activiity and impounded etc etc and getting the asset back is hard but if on finance it still needs to be paid for

    Its a market that comes with risks - many risks

    Posted: Apr 4, 2012 By: FE Member since: Sep 16, 2005
  14. businessfunding

    businessfunding Guest

    0 0
    I belive the OP is talking spot hire?

    Thewre are many sub-prime leders who adapt their cotracts to accomodate this, albeit in strong terms.
    Posted: Apr 4, 2012 By: businessfunding Member since: Jan 1, 1970
  15. FE

    FE UKBF Newcomer Free Member

    424 22
    Spot hire is rental i.e. not lease.

    Sub Prime lenders that ''asset based finance'' yes? well will bow to your better knowledge but i would bet my mortgage that without good and accurate rental agreements, process and priocedures they will not allow a sub let. If a personal gurantee where the Director is a home lender and at a rate that would make you cry then sure they have backed all their risk off. If the OP would give a DG and a home owner with equity then do not think he would look at sub prime.

    If you borrow sub prime then it will be very very hard to make a vehicle rental company work there are many examples of this and would advise against it.

    Posted: Apr 5, 2012 By: FE Member since: Sep 16, 2005
  16. businessfunding

    businessfunding Guest

    0 0
    Having established that no prime lender would advance the money, then the only option open to the OP would be sub-prime.

    Assuming he has some intelligence, he could then use that information to assess his costs and decide whether he could create a viable business. (My guess, like yours, is that it won't work as previously mentioned).

    However since he has not returned I also guess that he has moved on from this idea.
    Posted: Apr 5, 2012 By: businessfunding Member since: Jan 1, 1970
  17. jimuk

    jimuk UKBF Newcomer Free Member

    2 0
    Hi apples69,

    I found an article about setting up a vehicle hire business that talks about fleet insurance and PAYG insurance options, so might be relevant to you?

    Good luck!
    Posted: May 16, 2012 By: jimuk Member since: May 16, 2012
  18. The Byre

    The Byre UKBF Legend Full Member

    10,844 4,645
    You make profit in car rental by buying a hundred or more cars of the same type in one order at a massive discount. These will nearly always be simple, small run-abouts that otherwise are not selling, so you get them at a greatly reduced price - sometimes below half sicker-price.

    You then sell them after a few months to the retail market at a profit. The rental covers your staffing and day-to-day costs. You seldom, if ever, buy prestige marques like BMW, Audi, Mercs or VWs that are unreliable and expensive (and do not discount as much as Fiat, Alfa, Kia, etc.)

    Other business models have been tried and they seem to nearly all fail!
    Posted: Aug 20, 2016 By: The Byre Member since: Aug 13, 2013
  19. Mark T Jones

    Mark T Jones UKBF Big Shot Free Member

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    100 year old thread alert!
    Posted: Aug 20, 2016 By: Mark T Jones Member since: Nov 4, 2015
  20. The Byre

    The Byre UKBF Legend Full Member

    10,844 4,645
    Posted: Aug 20, 2016 By: The Byre Member since: Aug 13, 2013
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