If you're in the market for a car, you've likely considered two avenues: buying new or buying used. And if you've hunted for former rental cars, you've probably wondered how used the purportedly like-new vehicles will be. Is it really the compromise between new and used that you've been looking for?
Rental cars are available to consumers through rental agencies, dealerships, and auctions when rental agencies expand their fleets with new models and sell off their old stock. You may inadvertently test drive one at your local car dealer, or you can go directly to rental agencies such as Enterprise, Hertz, and Budget to purchase the cars they’re phasing out.
The models they sell are fairly new and well-maintained, and the no-haggle pricing at rental car agencies is attractive for those seeking less hassle, but these pre-owned vehicles also have their drawbacks.
“Be wary of the dings, scratches, and stains that a rental car is more likely to have,” Ian Cogswell of Superior Honda warns. “Rental cars change hands very frequently, and renters are generally less careful than owners.” Buyers might lose heart when they realize many rental cars have racked up mileage and wear and tear from their journeys. Customers drive to get their money’s worth out of rental vehicles during their rental period.
However, rental agencies combat this by charging customers for damages, thoroughly inspecting a rental vehicle after it’s returned. This might deter some renters from indulging in irresponsibility.
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But whatever the condition of the car’s exterior, rental agencies dutifully maintain the vehicle with the help of certified mechanics. Cogswell notes, “Rental car companies perform excellent maintenance on these cars — they have to take care of their assets, right?”
And if you want a car with a detailed vehicle history, buying a rental might be a good option. “They keep detailed maintenance and usage records that you can trace back,” Cogswell explains. “If you see something you don’t particularly like in the car’s history you can move onto the next one.”
Rental agencies might also give you a chance the rent out the used car for test driving. If you went to a dealership, you might have thirty minutes or so to take a car out for a spin. A rental car company might give you a few days, plenty of time to take it to a mechanic to conduct a pre-purchase inspection and drive the car for yourself to see how it handles.
So maybe you’re convinced these pros outweigh the cons. Noah Messing, co-founder of Cloovy, has a word of caution. Cloovy searches Manheim’s auction site and purchases vehicles on behalf of their clients, and they’ve analyzed their findings to present some results on rental car damages: “Our data suggest that the myth that rental cars get abused more than other cars has some truth to it,” Messing explains. “We crunched numbers for roughly 16,500 car and truck sales this spring. We tested whether rental cars are more physically beat up than other cars after the same number of miles on the road. Physical condition isn’t a perfect proxy for mechanical condition, but they’re closely related, especially over big sample sizes.
“Here’s what we found. For cars with 10,000 to 20,000 miles, rental cars had an average condition score of 4.49 (out of 5) versus 4.49 — an identical score — for all other cars. In other words, there was no difference in physical condition.
“For cars with 20,000 to 30,000 miles, rental cars were in slightly better shape than other cars after the same mileage, scoring an average of 4.44 versus 4.42 for all other cars. But these numbers hide a key fact which confirms the conventional wisdom that rental cars get beat up more: the rental cars in this group were, on average, 1.31 years younger than the other cars, meaning that they had fewer days of the sun and rain wearing out the vehicle.
“Thus, if you’re buying a rental car, you should try to get a pretty good discount — approximately the amount that a non-rental car would cost that was one year older.”
If you thought the price tag on a 2017 rental car was a good deal, you might need to reevaluate: it should be priced as if it were a pre-owned, non-rental 2016 vehicle to be competitive.
And even if a rental received those frequent service check-ups at an agency, the rental car company might be selling it because major maintenance was on the horizon. Messing says, “We try to steer customers to off-lease vehicles, mainly because the car’s primary user isn’t acting on, in essence, insider information about when to trade in or sell the car. With an end-of-lease vehicle, the turn-in date is predetermined; with rental cars and typical trade-ins, there’s a heightened risk that some major repair is looming, causing the owner to sell.” This is why a pre-purchase inspection is critical.
So, what do you do with this information? Remember that buying a pre-owned vehicle always involves some risk, but also remember that buying new comes with a hefty price tag, high monthly payments, and faster depreciation. The best thing you can do is conduct thorough research. Read reviews, contact experts, and never be rushed into a decision. Renting a car can come with a barrage of hidden fees; you don’t want a similar barrage when you’re buying one!
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