I don't remember the exact numbers, but I think renting a medallion for a year in New York is going to cost you several tens of thousands of dollars a year. With medallions costing 800k, it doesn't really matter whether you're renting by the shift or paying interest on a loan used to purchase the medallion, it's going to be a significant expense.

It makes a huge difference whether you're renting the medallion or paying for a loan for it - only the person in the latter case will ultimately be able to sell the medallion back once they're done with it.

The medallions are a perfect commodity and there's very little risk, and there are banks that specialize in loans for tax medallions, so the interest rates you can get for them is extremely low. Historically you'll very probably make more back on it than you ever paid for it.

Googling found me rates of about 4%-5% for a taxi medallion loan in NYC[1]. For an 800k medallion, that's 30k-40k a year in interest, which should still be giving a lot of wiggle room to a competitor not paying for medallions.

[1]https://www.brfcu.org/rates_loans.asp

The most recent announced average rate at the largest medallion loan bank is 4.06%:

http://www.medallionfinancial.com/news_release_14-11-03.htm

The historical average appreciation rate of medallions is 14%:

http://www.aei.org/publication/chart-of-the-day-nyc-taxi-med...

The differential between the loan rates and appreciation yields may be about as much as you make using it to actually drive the taxi:

http://blogs.reuters.com/felix-salmon/2011/10/21/why-taxi-me...