Rental car companies buy a large number of cars every year to keep their fleets full of nearly new cars. Then, after only a short period of time, these cars are sold to dealers all across the country for a fraction of the price that they were new. This begs the question: is buying a rental car a good idea or should you purchase a different type of vehicle?
Today, we will explore some of the pros and cons of buying a rental car and, if you choose to move forward with the purchase of a rental car, what to look out at the dealership. As always, buying a rental car is just like any other vehicle purchase – and you need to be sure to check the vehicle history, negotiate aggressively with the dealership, and get the best financing rate.
Have you purchased a rental car in the past? Was it a good or bad experience? Be sure to leave a comment below to let me know your thoughts on buying a rental car! As always, I am here to help so contact me with any questions.
Thinking about Buying a Rental Car: Here are the top 4 Reasons that you should
You can save a lot of money from purchasing the same vehicle new
It is not uncommon to see an 18 month ex-rental vehicle being sold for around 50% of its original MSRP! This represents significant savings to you, the second owner. This is what makes buying a rental car such a great deal.
For example, take a look at this Certified Pre-Owned 2018 Nissan Versa Sedan. This vehicle was at least $17,640 when it was new. Now, you can buy it from Hertz for only $9,099. This represents a savings of over 48%. What a deal!
Most are still covered under the factory warranty
One of the main advantages of buying a new vehicle is that you receive a comprehensive warranty. When buying a rental car, you get to take advantage of large savings AND get the remainder of the factory warranty. This is a win-win!
The remaining factory warranty allows you to essentially own the car worry-free because any issues outside of routine maintenance will be taken care of for FREE! This amounts to even more savings for you.
You know that the vehicle was maintained as recommended by the factory
Rental car companies sink a ton of money into keeping their fleets full of new vehicles every year and they want to do everything that they can to protect their investments. That means doing all of the maintenance on these rental vehicles.
Rest assured, when buying a rental car, the factory maintenance schedule has been followed perfectly. This, combined with large savings on a nearly-new vehicle and the fact that the vehicle is still under factory warranty just sweeten the idea of buying a rental car even more.
You can still qualify for many new car financing rates
The purchase price of a vehicle is very important. However, financing is where dealers can really make money. That is why I always recommend bringing in a pre-approval with you and reading up on financing a vehicle at a dealership.
It is no secret that new vehicles get better financing rates than used. Another advantage of buying a rental car is that they commonly still qualify for new car financing rates, even though they are technically used vehicles.
This means you are able to save a ton of money on the purchase price when buying a rental car and then save even more every month on your monthly payment. This allows you to either buy a more expensive car with more features than you originally thought or to simply save money on your car payment every month and save or invest the difference.
Thinking about Buying a Rental Car: Here are the Top 4 Reasons that you should not:
The low miles are often hard miles
Even if the rental car only has 10,000 – 20,000 miles on the odometer, it might have been driven by 150 different people. Often, these people are on vacation or a business trip and are most likely aren’t driving their rental car like they would the vehicle in their driveway.
As a result, the low miles can be deceiving because the car often feels like it has many more miles on it. The good news is that, as we discussed earlier, the rental car companies go to great lengths to maintain their vehicles to the manufacturers specifications.
Above average mileage for the vehicle’s age
While rental cars are in a fleet, they are used A LOT. This means that it is not uncommon for a rental car to have double or even triple the normal amount of miles for a similar year and model. This is not necessarily a bad thing, but something to keep in mind when comparing a rental car with a similar vehicle that was owned by an individual.
Limited colors, options, and equipment
Rental car companies are great customers to the car manufacturers. They buy hundreds of thousands of vehicles each year and the rental car companies get huge discounts as a result. However, rather than building vehicles with many colors and options, rental car companies normally get pretty “standard” vehicles with basic colors.
Although the rare red convertible might exist, the vast majority of rental cars are white, gray, and silver and equipped with mid-range equipment. You are unlikely to find a specific color combination with a sunroof, navigation, rear seat entertainment and other expensive additions.
This is certainly not a bad thing if you are more interested in buying safe and reliable transportation. Also, if you are more concerned with the make/model of your new vehicle than the color and equipment, buying a rental car might be a great idea for you.
The possibility of undisclosed damage
Rental cars tend to live a rough life! As a result, there is a chance that they will have incurred some damage while rented. Legally, all major damage such as frame damage has to be reported. Smaller damage is more of a gray area – with some rental car companies deciding to simply repair the bumper or door ding and sell the vehicle. This damage is often never reported on a CARFAX or AutoCheck history report.
What to look out for when buying a rental car:
Even with all of the possible drawbacks, buying a rental car represents a great value as long as you do your homework. It is possible to save a significant amount of money on a lightly used car and know that it has been maintained according to the manufacturer specifications. With that being said, here are a few things to consider when buying a rental car:
Make sure to ask for a copy of the CarFax or AutoCheck when buying your rental car. This will allow you to confirm that the maintenance on the vehicle was completed and to learn more about where the vehicle was titled and operated. In addition, you can see if any accidents or damage were reported while the vehicle was in the rental car company’s fleet.
If anyone is interested in a used vehicle and the dealership is unwilling or unable to provide a free CarFax, just send me the VIN using this form and I’ll be happy to provide you with one free of charge.
Remaining factory warranty
One of the biggest advantages to buying a late model used vehicle is that some of the factory warranty will still be in effect. Be sure to find out how much of the factory bumper to bumper and powertrain warranties are left before going through with the purchase.
One of the best ways to find out this information is by checking the CarFax. There will often be a section specifically for determining warranty information. If this information isn’t listed, simply subtract the date the vehicle was sold new from the total of warranty coverage to determine how much time is left on any type of warranty.
Below market value purchase price
A rental car will often have more than the market average of miles on it. As a result, be sure that you are getting a good deal on your vehicle when adjusting for the mileage. Sites like Cargurus can give you a good estimate of what similar vehicles are being listed for. Then it is up to you to negotiate well and secure a great deal on your financing when buying a rental car.
Clean body panels & matching tires
We know that rental cars often live a hard life. Be sure to examine each body panel for damage before buying a rental car. Look for dents and dings on the doors, hood, and trunk, and look for evidence of previous damage.
Also, check that all 4 tires are of the same brand. Matching tires show that they are original or were all replaced at the same time. Three tires that match and then 1 random one that doesn’t shows that someone got a flat at some point – and you might want to check that part of the vehicle for possible damage.
Established dealership with a good reputation
Buying a vehicle is one of the largest financial purchases that you will make. Be sure to deal with a reputable dealership when buying any car, especially a rental car. Saving $500 is not worth dealing with a fly-by-night dealership that might be gone 2 months later when you have an issue with your new-to-you-vehicle. My advice: buy from a reputable, longstanding dealer.
Buying a rental car is a great way to save a large amount of money and get a great vehicle that will last you for many years to come. If you watch out for common pitfalls and take your time, you can save money and get the car of your dreams. Have you purchased a rental car? Tell me more about the experience below in the comments section.