Over the past few months many readers have asked if it’s a good idea if they should buy a rental car. Before answering this question, let’s take a look at the rental car business in whole.
The major car rental companies buy some two million cars each year. Those cars don’t just magically disappear after 18 to 24 months, they get sold, either at major auctions or directly to the public.
That means roughly one in five cars on the road is either a rental or an ex-rental. You could be sitting in one right now and not even know it!
There are two schools of thought when it comes to buying a rental car. One says it’s a great way to get a good deal, the other says to avoid them at all costs. So which is right?
Unfortunately there’s no simple answer, so here we’ll take you through the pros and cons of buying a rental car. We’ll also explain the processes the major companies follow when selling their used cars and we’ll offer some advice on how to buy a used car wisely.
When you’ve finished reading this article you should know enough to decide if buying a rental car is the right decision for you. (Or maybe that should be buying and ex-rental car.)
About the Rental Car Business
While a Google search will likely throw up many rental companies nearby, the car rental business is dominated by three major players. These are Enterprise, (which owns Alamo and National,) Hertz, (includes Dollar and Thrifty,) and Avis, (Budget, Payless and ZipCar.)
The buying power these companies have lets them negotiate great deals from the vehicle manufacturers, providing the manufacturers want to play that game. Some choose not to. Many of these cars are what’s called “program cars,” meaning they go back to the manufacturer once the rental company is done with them. Others get sold on to wholesalers and a small proportion the companies sell themselves.
Rental cars tend to get driven a lot. (If a car isn’t on the road it’s not earning money for the rental company.) Not so long ago cars were kept for 12-14 months and 25-35,000 miles. In more recent years though, as cars have become more reliable the rental companies have tended to keep them longer. Today it’s not uncommon to get a rental that’s 18 – 24 months old with up to 40,000 miles “on the clock.”
5 Good Reasons To Buy a Rental Car
Let’s start by running through the reasons you might want to buy a car from Enterprise or one of the other companies.
1) Low(ish) Prices
Rental companies buy their cars really cheap, so they can afford to sell them cheap too. They’re not fools though and you’ll find they know the market value. As a result, their cars will be discounted somewhat but perhaps not as much as you might expect. It’s up to you to do some due diligence.
2) Nearly New
As we mentioned above, rental cars tend to be sold after 24 months (sometimes less,) or 40,000 miles, whichever comes first. That means you’re looking at late model cars with all their associated benefits. ( Primarily Safety and fuel economy.)
3) Warranty Coverage
Since almost every new car comes with at least a three year/36,000 mile warranty, your ex-rental may have a year or more of factory coverage remaining. In addition, the “Big 3” include warranty of 12 months/12,000 miles on most, if not all, the cars they sell.
4) Easy Purchasing Process
Enterprise, Hertz and Avis all advertise “no haggle” purchasing. That means you pay the price they’re asking or walk away. However, as the price is probably nearer that asked by private sellers than dealers you’re getting a reasonable deal. In addition, you can do most of the buying process online, making it a fast and easy process.
Other points to note are their flexibility regarding test drives, returns/exchanges and trade-ins. All will let you drive the car you’re considering and exchange it if you’re unhappy with it, but Hertz also offer a “Rent2Buy” program. Effectively an extended test drive, this lets you try the car for an extended period before committing to it.
5) Maintained and Certified
Rental companies look after the rentals because they don’t want them breaking down on their customers. Plus, they know it helps the resale value. So if you decide to buy a rental car you can be sure it’s had regular oil changes and all the scheduled services. They’ll also make sure any recalls are attended to promptly, which can’t necessarily be said for private owners.
Many of their used cars are sold as “Certified.” As with a car dealership, this means the vehicle has been inspected thoroughly and any significant faults corrected. (You should note though that Hertz for one also sells non-certified cars. If being certified is important to you, check this point applies to the vehicle you’re interested in.)
Six Arguments Against Buying a Rental Car
Here are the reasons most commonly presented for avoiding a rental.
1) They Lead a Hard Life
You’ll sometimes hear that rental cars are “abused.” While some drivers may not take good care of a car their renting it’s hard to see that many would deliberately abuse the vehicle. Mostly they just want to get from A to B while avoiding any need for insurance claims.
What’s more likely than outright mistreatment is that a rental car will see a wider range of driving styles than one that’s privately owned. This could conceivably increase the wear and tear suffered, but against that, remember that the vehicle will receive top-notch maintenance.
2) High Mileage
Rental cars have to work, so they’ll almost certainly have done above average mileages. The price should however reflect this. (And as we’ve noted in other articles, high mileage isn’t necessarily a bad thing.)
Use this handy Car Payment Estimator to calculate the payment on any vehicle.
3) Limited Availability of Some Brands
The rental companies buy cars they can get at good prices. You’ll see they have lots of Fords, Chevys, Dodges, Nissans and Hyundais but very few Hondas, BMWs or Audis. If you’re hoping to snag a deeply discounted prestige automobile you may be out of luck.
4) Limited Range of Options and Equipment
Rental companies seldom load up their vehicles with expensive options. Don’t expect sunroofs, high-end audio systems or the most sophisticated active safety equipment. You may find some don’t even get what most buyers would consider essentials like floor mats.
5) Impact on Resale Value
The car you buy today is the one you’ll want to sell tomorrow. If you get it at a discount because it was a rental, the next buyer will probably expect the same. And don’t think you can hide that fact: it’s best to assume information about previous owners will be available.
6) Stigma of Buying a Rental Vehicle
Despite all the maintenance lavished on rentals, there is still a stigma attached to them. Tell your neighbor that your beautiful, new to you, car was a rental and he may suggest you’ve been foolish. Whether you choose to disclose it’s prior history and whether you care what your neighbor thinks is of course up to you.
The Process For Buying a Rental Car
The “Big 3” have gone to great lengths to make it easy, but that doesn’t mean you’re guaranteed a bargain. Here’s some advice from AutoCheatSheet.
How to Buy a Rental Car
- Browse the dedicated sales websites of the big three rental company websites nearby: (enterprise car sales, hertz car sales, and avis cars ales.) Take notes on the used rental vehicle/vehicles you’re interested in buying. Keep in mind, the price you see on these sites are normally a one price, take-it-or-leave prices.
- Compare the prices you see with free used car price quotes from other websites where newer used cars are sold such as Ryde Shopper, Motor Trend and Cars Direct. Make sure you’re doing apples-to-apples comparisons as mileage and trim levels can have a big impact on asking price. It’s even better if you can check both dealer retail and private seller prices.
- Many times you can use the no-haggle price you see on the rental companies website to negotiate a much better deal through a traditional dealership on a vehicle that may have less miles or more equipment. The reason for this is dealers have the ability to be more flexible on pricing as rental car companies have to follow a certain “pricing model” before they can sell the used rental vehicle to the public.
- When you’ve found a car you like at the right price, check the vehicle’s title history report to make sure the vehicle hasn’t been in an accident or flood damaged. (Some of the rental companies and dealerships may provide this for you.) I always recommend you spend the additional money and get your own history report. This will keep unethical dealers from providing you with false information. If everything looks good, it’s time to visit the sales location to inspect the vehicle for yourself.
- If the vehicle looks good and you’re still interested, take the car for a nice long test drive as you would with any other car.
- Still interested? Then get an independent inspection from a third-party certified mechanic (it’s well worth the additional money).
- Finally, once you’ve done your due diligence, you’re ready to move forward on purchasing your “new-to-you” car.
If you have a trade vehicle the usual advice applies: sell it yourself if you can. Hertz does say they have a trade-in process process; and it’s unclear if Enterprise and Avis will do the same.
All three companies will arrange auto financing if you need it, but the same caveats apply as when financing through a dealership: assume they make money on it.
Arm yourself with a pre-approved auto loan before financing with a dealership. For the lowest rates available check out reputable online auto loan lenders.
You can get a free, no-obligation quote from online lending services such as MyAutoloan and LightStream. You can use these quotes to leverage your position when meeting with the finance department. If they can beat the rate you’re already approved for, just go with them. If not, go with your pre-approved auto financing already in place.
Make an Informed Decision Before Buying a Rental Car
Rental cars have a poor reputation, but does that make them a bad buy? The simple answer is, not necessarily. As with buying a used car anywhere else, it’s up to you to do your due diligence to make sure you’re getting a good deal.
What you will almost certainly find though is that the process is easier than working with a used car dealer. That, combined with the low(ish) prices, makes a used rental car attractive for some buyers. The choice is yours, but don’t forget that AutoCheatSheet is here to help.
As we noted several times, the most important thing for you to do before buying a rental car is to do your research before walking into a dealer’s showroom. You want to know what car you want and what you’re willing to pay for it.
Dealerships in general are designed to part you with your money, don’t think rental company dealerships are any different. Being prepared and having already done your research will level the playing field with these car sales professionals, greatly increasing your chances of receiving the best deal possible.
It’s also important to understand the entire car buying process. That’s why this website exists, so please take full advantage of the information we provide.
Use this handy Car Payment Estimator to estimate the payment on any vehicle.
The number one tip for saving the most money when buying a new or used car is to always take your time and “DO YOUR RESEARCH FIRST!”
As always, I recommend using an online referral service such as Ryde Shopper, Cars Direct and Motor Trend before physically walking into a car dealership. Their free online price quotes will automatically help level the playing field with the dealer and let you know right away which dealer’s are willing to be more flexible on price. Please consider them the next time you decide to buy a used car online, they will save you a lot of money.