Like most partners who joined Uber last 2015, we also bought a brand new car for Uber (ALL-IN, low down) . But as the incentives went away it’s becoming difficult to pay our (very high monthly) amortization. Comment below if you share our dilemma. 🙁
Partner Tips: The ALL-IN low down payment schemes offered by car dealerships usually comes with a high monthly amortization. In-house financing is generally more expensive than a direct auto loan from a bank. Longer amortization periods, for example 5 years is more expensive in the long run than a car amortized for only 3 years. (Of course, car dealers and banks need to make money!)
We’ve learned about a partner, Kuya Ronald, who is building his Uber business in a sustainable way. He pays significantly less than our amortization. The secret is —-how he acquired his Uber vehicle.
Kuya Ronald, didn’t buy a brand new car for Uber. Instead, he bought a 2 year old second hand car for Uber.
REMEMBER: As per LTFRB, TNVS vehicle has to be 3 years old or newer. So don’t buy a model that’s more than 3 years old. If you want to know more about how to be an Uber Partner, refer to this step-by-step guide.
Kuya Ronald shared his reason for buying a second-hand car:
Lower and Cheaper Amortization
Since a second hand car has a lower market value, monthly amortization is lower. This allows him to operate his Uber business with better cashflow. Imagine, we’re paying Php 17,500 per month for our brand new car while a second hand car can be amortized for only about Php 8,000!!
But Kuya Ronald suggests that if you have the capital, it also a good idea to pay the second hand car in CASH than amortize it per month. If you pay in full, you save on bank interest and eliminates monthly car amortization altogether. But if capital is limited, remember that there are also banks that offer financing for second hand cars.
TIP: Lower amortization means he keeps more money from his Uber operation, better cashflow, and ensures a more sustainable Uber business.
Tips in Buying a Second hand Car:
- Buy a second hand car in GOOD CONDITION
Kuya Ronald argued that even if you buy a brand new car, its value depreciates by 30% the moment you drive it out of the dealership. So for him, he controls his risks by buying a well maintained second hand car.
- Buy from a trusted second-hand car dealer/seller
Only buy from trusted sellers. It’s not worth the savings if the car is a stolen vehicle or the car has a lot of defects. Don’t be a victim of a scam!
- Confirm the claims of the seller
You cannot just take the word of the seller that the vehicle is in good condition. You have to confirm for yourself that all the things he/she claims the vehicle to be, is true. You don’t want the air conditioning not working one day after purchasing.
Kuya Ronald shares with us that he bought his second-hand car for Uber with the help of Carmudi [www.carmudi.ph], the biggest buy and sell platform for brand new and second hand cars in the Philippines.
The idea is that the buyer can request the seller in Carmudi to have the vehicle certified via the following steps:
- Rapide specialists check the actual condition of the car. They check everything about the car from the interiors, body, engine, electronics, even accessories.
- The specialists also make recommendations if there are repairs that need to be done on the vehicle and gives you idea on repair costs.
- The results are made available to the buyer for evaluation so the buyer has all the information he/she needs to fully decide on the purchase.
If you’re interested, you can request any vehicle in Carmudi for inspection and certification below:
TIPS: You can check the car listings in Carmudi here. You might find some interesting deals for your Uber vehicle. If you need the list of accepted vehicles and requirements for Uber, refer here.
We hope this article will help you, aspiring Uber Partners, make a sound decision in joining Uber. And just like Kuya Ronald, have a happy and sustainable Uber business. If you want more info on how to be an Uber Partner, just refer to this step-by-step guide.