Rental Cars Are A Great Value In A Tight Used Car Market

by Don Elliott on August 27, 2012

Buying a car is a challenge for most of us. Whether you are an online shopper, prefer to visit dealerships, or would rather buy your neighbor’s car, there is always a certain element of risk. Where can you find a late model car that has been serviced regularly at a competitive price and equipped with the most desirable features?

Contrary to a common misperception, buying a car that had been in rental service might be the way to go when searching for the best deal.

Recent mergers have left us with just three major car rental companies who control the majority of the 1.76 million available rental cars. In the major car rental fleets, cars are kept in service for 1 to 2 years and have 20,000 to 35,000 miles on them before they are sold and replaced by new cars.

The vast majority of the cars in the rental fleets are compact and mid-sized sedans. However, vans, SUVs, and specialty cars are available in some markets. Car rental companies rent the cars that are popular in their rental market, like four-wheel drive vehicles in snow country and convertibles in Los Angeles.

Hertz, Avis and Enterprise use four methods to dispose of their rental cars at the end of service:

  • Direct to Consumers – Consumer-facing websites from the big three rental companies make buying their cars easier than ever before. They offer up to 3 days to test-drive their cars, 12 month/12,000 mile warranties in addition to any remaining manufacturer’s warranties, and a satisfaction guarantee return policy for a week or 1,000 miles. Often, they will provide service histories as part of the deal.
  • Wholesale Auto Auction – About half of all rental cars are sold at car auctions that are for licensed car dealers only. Rental car companies get deep discounts on the cars when they are purchased new. When sold at auction, they provide very desirable inventory for car dealers. In some cases, the manufacturers have arranged to repurchase the rental cars from the car rental companies and then resell them at the wholesale auto auction after providing a complete inspection and reconditioning process. In either case, consumers can get a great used car value by shopping for recent rentals on car dealer’s lots.
  • Car DealersRental car  agencies work closely with car dealers to provide rental cars as loaner vehicles for the dealership’s customers. Dealerships provide service and warranty work for the rental cars. In many cases, car dealers are able to buy the cars directly from the rental car companies with a good knowledge of the service history on the vehicle.
  • Salvage Auctions – More often than not, the rental companies choose not to make many accident related repairs to their cars. It is easier to sell the cars “as is” to auto body repair shops and dismantlers through auctions that specialize in damaged vehicles. Consumers are less likely to find a car that had been badly damaged when buying directly from a car rental company than they might when shopping elsewhere.

Finally, some people are concerned that rental cars might have been abused because they have so many drivers while in rental service. The truth is that rental cars get at least a cosmetic inspection every time they are returned, sometimes a couple of times a week. The cars are washed regularly and serviced according to the manufacturer’s recommendations. Any broken or damaged parts are fixed before the car can be offered to the next renter. For the most part, rental cars offer one of the best buys available for value conscious car shoppers.

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