If you’ve been near an airport lately, you’ve probably driven by the lots with the retired rental cars being offered for sale by their various agencies. No doubt you’ve looked at those cars and wondered if buying a used rental car is really such a good idea.
The car rental business started back in 1908, just about 20 minutes after Henry Ford sold the first Model T. OK, that’s an exaggeration, but the first rental car was indeed a 1908 Model T with an odometer affixed to the hub of its left front wheel. Joe Saunders, the entrepreneur who came up with the idea, charged customers 10 cents a mile to drive the Ford.
The Hertz company evolved out of Saunders’ original idea and was also the first car rental company to move seriously into retailing their former rentals. The company opened its first showroom in southern California in 1971. By 1974, Hertz had more than 100 retail outlets. Today, practically every major car rental agency offers some portion of its outgoing fleet for sale.
The $10,000 question is, of course, are they worth buying?
We’ve all heard stories of rental car abuse. In fact, the question, “Tell me you got the rental insurance?” is pretty much code for, “We’re about to do some serious damage here.” And yes, it is true, some remarkably immature individuals do rent cars, buy the insurance, and treat the cars let's say—rather indifferently—to put it mildly.
And actually, within the fact car rental agencies offer insurance lies one of the potential minefields for a prospective buyer. Rental agencies self-insure, so they often handle the repair of dents and dings themselves, usually without reporting accidents to the authorities. This means a rental car may have sustained some accident damage that wouldn’t show up on a vehicle history report (VHR).
Another concern of buying an ex-rental is the negative perception most people have of them. This can adversely impact your resale value when it’s time for you to sell it off. When a prospective buyer runs a VHR, it will show up as a former rental car. Of course, this is generally counterbalanced by the fact that you bought the car at a really good price in the first place, so you can afford to sell it for a really good price too—making that one something of a wash.
Also on the con side of the ledger, rental cars, for the most part, have a tendency to be the most basic example of a particular model. Depending upon the type of car you’re after, it might be difficult to find options like sunroofs, leather upholstery, or in-dash GPS.
Buying a rental car is looking like a losing proposition at this point—isn't it?
Still, there’s quite a bit on the plus side of the ledger as well.
The rental companies do all they can to make buying the cars an attractive proposition.
In many ways, buying a rental car is like buying a certified pre-owned used car from a new car dealer. The cars are generally only one or two years old, so they have the balance of the factory warranty remaining on them. Additionally, the agencies throw in a 12-month/12,000 mile powertrain warranty, so if any of the big expensive stuff that makes the car go breaks, you’ll have some recourse.
It’s important to note though, little irritating things like an inoperable power window, or an airbag light that won’t turn off aren’t covered by that powertrain warranty.
Another plus, the major companies give you seven days, or 1000 miles to change your mind. You don’t like it, you can bring it back, generally for a full refund—less cleaning and documentation fees.
The really big plus though is price.
As we said earlier, in many ways buying a used rental car is like buying a certified pre-owned car from a dealer. However, there’s one really big difference—price. A certified pre-owned car typically carries a premium at a dealership. Meanwhile, at rental lots, the cars are generally offered at prices below Kelly Blue Book value.
Also, there are certain standards of maintenance that have to be maintained to reduce the liability of the rental car company. If a major accident occurs in a rental car and it can be proven the accident happened because the company was negligent in terms of ensuring the car’s roadability—that can be a hugely expensive blow. This is why rental agencies have their own mechanics and document their adherence to recommended maintenance schedules rigidly.
Still though, these are used cars we’re talking about here, so as always we’ll leave you with what should be by now a familiar admonition...
Always take your time and inspect any car you’re buying using our guidelines for test-driving a used car.
Further, you should always take any used car you’re considering purchasing to a trusted independent professional mechanic for an inspection before agreeing to the purchase.
Cross all your t’s, dot all your i’s and you could well drive away in a nice, reliable, late model used car—at a really good price.