There is no doubt that buying a second hand car is better value for money even if you can afford a brand new vehicle. The depreciation of that shiny new forecourt car is so severe that it makes any money saving conscious being, scowl at the idea. Cars can depreciate anywhere between 20-40% as soon as you roll it out of the showroom, so rather than waste money or risk it on the open market, why not consider rental cars?
Rental car companies need to rotate stock regularly due to a range of financing, insurance, buy-back and maintenance deals in place, basically meaning newer cars equal less problems for them. A good service history and maintenance completed by approved mechanical professionals could offer you better value for money compared to a random second hand car purchase.
There are stipulations around having a car that has been driven by hundreds of strangers, potentially to the point of damaging the engine, clutch, brakes etc. However, this stigma is dated because whilst the rental market used to be the dumping ground for cheaper entry level cars, now manufacturers have become smarter and are realising the potential of using this market as an extended test drive environment to showcase their latest models, gadgets and engines. Realising that these vehicles also receive maintenance as soon as it’s needed and getting past the stigma could potentially save you save thousands of dollars.
The Toyota Camry along with other vehicles were compared in an independent study to show the price it could be bought for from Hertz, Avis/Budget and Enterprise. The study used the Redbook used car price guide as the benchmark price one would expect to pay a second-hand dealer. A good condition Toyota Camry 2014 LE model with roughly 40,200 km on the clock for sale in April 2016 cost $23,500.
Hertz offering the exact same vehicle with roughly the same amount of distance on the odometer was on sale for as little as $21,200. Avis/Budget were slightly more expensive at $23,350 whilst Enterprise was the most expensive out of the three at $23,800.
Different vehicles were also analysed such as the Hyundai Elantra, Mercedes C250 Sport Sedan, Nissan Rogue and Ford Expedition, with a variety of trim levels. Even amongst these cars, buying from a rental company proved to offer savings both small and large. The largest saving found within the study showed that the Hyundai Elantra from Hertz with 56,000 km on the clock cost 15% less than the recommended price from the Redbook website.
Fiat’s commercial director, Karl Howkins said, “rental cars are typically on the road for no more than nine months.” Once vehicles have finished their rental life and come off-fleet, they face competition from pre-registered cars and nearly-new demonstration vehicles, so rental companies make sure they are in mint condition for getting a good return.
Hertz general manager, Neil Cunningham talked about breakdown cover and recovery call-outs and revealed that most of them were related to lost keys and flat batteries rather than crashes and major accidents. Additionally he claimed that Hertz vehicles oil, water and tyre pressure were checked every six days. If that still doesn’t reassure you, then knowing that rental car companies having buy-back schemes in place when vehicles come off fleet might be more reassuring. Age, condition and mileage of the cars are all agreed in advance by manufacturers who buy them back at a fixed price and Fiat says 95% of its rental stock is dealt with in this way. This along with high excess red tape mean that customers are generally more careful these days which is supported by figures from the insurance market too. Accident Exchange claims that general bodywork repairs accounted for more than 60% of its rental car claims.
A final piece of advise would be knowing the fact that ex-rental vehicles do not depreciate any faster than standard second hand cars, the parameters are still based on age, condition and odometer readings. A recognised used car expert in the UK known as Honest John also states that, “ex-rental cars are better run in than cars from single ownership because of the many different driving styles they have been subject too.”