For decades, the yellow cabs seen driving around the streets of New York City have almost become something of a tourist attraction for some people. Seemingly endless amounts of individuals flood the streets looking to pick up passengers and get them to where they need to go. What many people may not know is the massive amounts of debt these drivers take on to get a medallion. Medallions are needed to operate NYC taxi cabs and can be quite pricey to get, with an average value of around $100,000 today, but in years past were over $1 million.
The “Medallion Relief Program +”
An agreement was made between the City of New York, the Taxi Drivers Union, and lenders that say taxi medallion debts for drivers will be capped at $200,000. This was done by restructuring the outstanding loans, even in the face of significant inflation and rising interest rates.
Back in November of 2020, the drivers union went on a 15-day hunger strike, which sparked the initial agreement from the city that relief was coming. After months and months of waiting for the city to get the program up and running, city officials announced on Tuesday that the program will be operational starting September 19th. The deal was finalized by Mayor Adams after working with the New York Taxi Alliance, and Marblegate, which is the largest taxi medallion lender in the city.
“This was nine long months. We wish it had gone much faster,” NYTWA Executive Director Bhairavi Desai told Gothamist. “One of the consequences of it taking so long is that the interest rate, which we had agreed to at 5% back in November, is now going to go up to 7.3% in light of inflation … but overall, it’s a tremendous gain for us.”
Monthly Payments Cut In Half for Some
The original monthly payment cap with this new deal was $1,122 but with the rising inflation rates over the summer that has increased to $1,234. However, this is still a massive weight lifted off some drivers’ shoulders who on average were $550,000 in debt and making monthly payments of $3,000. To offset the added monthly cost the city has agreed to extend the terms of the payments from 20 to 25 years.
Wrap Up
For thousands of drivers across the city, this new deal will be seen as a massive win for them in relieving some of that unbearable debt that most of these drivers live with every day. Medallion owners are encouraged to sign up for free legal representation and financial counseling through TLC’s Owner/Driver Resource Center. And for more information on how this will affect taxes, please give our office a call.