You know how to teach: but what about the car?
By Mark West, managing director, Hitachi Capital Driving Instructor Centre
ACCORDING to the Driving Standards Agency (DSA), applications to become a trainee driving instructor have almost doubled from the normal 1,600 per month to over 3,000.
This rising trend can be attributed to the number of people out of work due to the recession. As more people find themselves without a job, they look for opportunities to re-train or to start their own business in a completely different field.
But those applying probably haven’t through how to acquire the main tool required to do the job: the car. Traditionally, driving instructors will choose the owner-driver route, rather than contract hire. This either requires a significant outlay of cash up front to fund the acquisition – a significant financial risk for a potential driving instructor who isn’t yet qualified – or the arrangement of a hire purchase deal before the vehicle is owned outright.
Before making any commitment to the ownership route with a deposit, it’s worth asking whether this is the most financially sound option on the market. Funding alternatives such as contract hire could offer driving instructors more flexibility, the ability to manage costs, and the promise of a significant reduction in business downtime when the car is off the road for repair.
Buying your car outright
Ownership is commonly perceived as offering the best value relationship for a driving instructor. When the time comes to sell, there’s a return on the purchase – the car is seen as an asset. However, from the moment it is acquired this asset starts to depreciate, and if the car is to be replaced on a typical three-year cycle, the likelihood is that more finance will be owed on the vehicle than is actually returned by the sale.
The HP route
Driving instructors will often negotiate a hire purchase agreement over a five-year term. This helps spread the cost, but also requires a significant upfront deposit: potentially 25% of the purchase price. And that’s before the business has even made a sale.
The contract hire option
Conversely, contract hire deals can be secured for an administration fee of a few hundred pounds, with capped payments from as little as
