Buying Rental Cars – Good or Bad Idea?
Rental cars are like political candidates: everyone either loves them or hates them, and many people are too willing to tell you about them. Over the years, rentals have earned the mostly deserved stigma of dreadful penalty boxes with numb steering and questionable maintenance histories. Fortunately, we are no longer stuck with the Chrysler Sebring in all its plastic glory, and the rental lots have dramatically improved. From sports cars to SUVs, rental offerings are surprisingly decent, which makes their retired vehicles an interesting potential purchase for the savvy used car shopper.
Just in case you were born yesterday, rental cars are vehicles that large and small companies buy directly from the manufacturer at a discount. These fleet sales can account for a good chunk of overall sales, if we’re talking a Chevy Impala or Ford F-150. The goal is to rent them out to people that only temporarily need a vehicle. The renter wins by typically only paying a couple hundred dollars for a week rather than a full five year payment plan, and the company wins by making a profit and easily paying off the purchase price.
While it sounds like win/win, the temporary nature of the arrangement leads to some quirks. Since most drivers have to keep their vehicles for several years, they are usually maintained well, or at least not abused. Not so with rentals, where you will often see economy cars going off-roading, and minivans doing neutral drops at every stoplight. While in Las Vegas several years ago, I raced our rented Dodge Caravan against a modified VW GTI for pinks –uh okay, fine, it was just for laughs. A Caravan filled to capacity doing a one tire burnout across the intersection was pretty amusing at the time, but what happened in Vegas did stay in Vegas that time, and the next owner did not get notified about the soon to be slipping transmission.
Eventually, these vehicles are no longer super low mileage, and are sold on the public market. Avis, Enterprise, Hertz, and many others sell cars in their own sales divisions, with the smaller companies selling at auctions. Automotive News reported that just Hertz was looking to sell 50,000 retired rental cars this year. That’s a lot of former rentals out there for sale.
If that Vegas story didn’t make you run screaming from your screen, let’s look at the pros and cons of purchasing a former rental car.
Just a few years old
These aren’t Craigslist cars with 400,000 miles on them and 17 owners. The Wall Street Journal reported that most rental retirees are roughly 18 months old. In most cases, your used car is indistinguishable from the new model rolling out the factory doors.
Being just a year or two old, every single vehicle is available with the full factory warranty. These are almost always transferable to the new owner. If anything at all goes wrong, hit the dealership service bay, and they’re likely to cover it. Extended warranties are usually available too, to further put your mind at ease.
Like police cars, rentals may be driven a lot of miles, but they are meticulously maintained. Customers demand a problem free vehicle for their money, so the slightest issues are usually repaired before they become real problems.
Rental companies buy their vehicles in bulk, and that mass purchasing allows a significant discount compared to what you would pay for a new car at the dealership. This savings means they can resell the vehicle at a lower cost compared to NADA value, and still make a profit. Everyone wins here.
People beat them
The Jackass crew from 15 years back rented a car and entered a local demolition derby. While anything you buy won’t be that destroyed, chances are it has been worked over. Even if there is no history of rallycross or even abusive driving, there’s still all the different drivers that are too hard on the gas or brakes, or just load up their vacation vehicle with too much junk. This causes wear and tear on parts. Sure, the agency repaired the car, and it still has a warranty, but eventually it gets old swapping out ball joints.
This post is here for a reason. Lots of people ask if buying a rental car is a smart decision. Because of all the potential questions and unknowns, some people will play it safe and not even consider a former rental. This means when it is time to sell your used ride, you may also take a depreciation hit for its history. Yeah, you got a deal when you bought it, but the stigma means you might have to pass that deal on to the next guy.
Do your research
What’s it worth? Look at AutoTrader, Mojo Motors, and other large used car sales sites. NADA and Blue Book are great too, but check out the real world prices. Spend some time here so you will know a deal when you see it.
And pay attention. Are there any squeaks or rattles? Does it pull to one side, or the suspension feels sloppy over bumps? Does it smell like all the previous renters were chain smokers? Are there a million scrapes to the paint near the trunk from occupants adding and removing luggage? Like any used car, find and bring up areas of concern before plunking down cash.
Sure, I hate their commercials too, but CARFAX is a great service. Take a look for any accidents or indication of immature shenanigans, and then take a look at that area. Put simply, if CARFAX reports a minor head-on accident, be sure to closely examine everything up front. Like any used car, it’s best to avoid those with fire or flood damage.
Take it to a shop
Do the car history report, but realize it doesn’t catch everything. Rental companies have their own insurance procedures, and not all accidents will produce a claim. If you can get it for a day to “think about it,” take your potential buy to a mechanic you trust, or that is at least are familiar with the model. If it looks good to them, odds are it’s a smart buy.
Finally, there’s one consideration most people won’t talk about, and that’s the type of vehicle rented/sold. The body style usually determines how the car is used. For example, a Toyota Camry probably spent its rental life cruising the right lane of the highway, playing easy listening as it sipped gas. On the other hand, that Ford Shelby GT-H available at Hertz probably spent its life doing donuts, burnouts, and bouncing off the rev limiter. The Camry makes for a good deal. The Mustang, not so much.
While there are real negatives to buying a former rental car, they are usually outweighed by the advantages. Mainly, it’s about the deal. If the cash savings are large enough to overcome any negatives, then odds are you will drive away satisfied with your purchase of a former rental car.
(Full disclosure: We purchased a used rental from Hertz last year. A two year old model with lower than average miles bought for $3,000 below Blue Book, and $2,500 below the average region price. It’s been flawless.)