Used Car Dealer

After rental cars are done with their time in the fleet, those cars get sold (via some method) on the resale market in a process called remarketing. Those on the market for used cars may run into these vehicles -- the best documented may be sold by the manufacturer as a "program car", the rental car company may sell the vehicles through their own affiliates, or used car dealers might purchase them at auction to resell at their lots. However, there's no fluorescent orange sticker on the window that states "former rental car" (well, except maybe in California, although it's not in the "Car Buyer's Bill of Rights"). Consumers who choose to rule out rental cars when purchasing a new car -- even those with extended warranties and price reductions -- need to ask questions and request documentation before purchase.

Buying a Former Rental Car

Two of our team members (AutoSlash founder Jonathan and Eric) have purchased former rental cars directly from the rental companies and raved about the experience. There's a price clearly listed online, the rental car companies tend to sell cars with well-documented service histories themselves (to get maximum revenue on the used car), and most major rental car companies that sell used cars add extended warranties in addition to any remaining manufacturer warranty. So while some renters may have driven less-than-responsibly, the purchaser of the former rental vehicle does have some protection when knowingly purchasing a former rental. And knowing that the cars were former rentals, the prices were priced below the Blue Book value of "single driver" used vehicles. Jonathan and Eric had terrific experiences purchasing a used rental car, finding that they received unexpected discounts. Jonathan even received enough bonus Hertz Gold Plus points for a week's rental as a result of his purchase!

And the rental car companies' used car lots are consistently very clear on disclosing whether a vehicle was a rental or not, such as this example from Enterprise Car Sales.

Enterprise sells both rentals and non-rentals.

Yet our team members' stories are of individuals who intentionally bought a former rental, not an unknowing consumer who purchases a rental car and feels that information was not disclosed. Some individuals simply don't want to purchase a vehicle that had been a rental, regardless of price, warranty, or other inclusions such as roadside protection.

Failure to Disclose Prior Rental History 

In the United States, there's a mandatory sticker when a used car is sold by a dealership. It's called a Buyer's Guide and the rules for this document are mandated by the Federal Trade Commission (FTC). We've all seen the Buyer's Guide before -- every used car on the lot must (by federal law) include that guide; most people focus in on whether a vehicle has a warranty or is sold "as-is". 

Everyone in the U.S. has seen a Buyer's Guide, and there's no vehicle history listed.

If one thinks that previous ownership history and vehicle use (commercial fleet, taxi, or rental) might be included in the Buyer's Guide, that individual would be incorrect. One could read the FTC's documentation intended for consumers and the documentation intended for dealers. In fact, the Federal Trade Commission reminds consumers to be prudent, including guidance such that the potential buyer inspects a vehicle thoroughly, seeks an independent inspection, checks for active recalls (large rental car companies can't get rid of vehicles under recall), and gets an independent vehicle history report. The federal government can't endorse a for-profit company but one such organization -- CarFax -- states in their records whether a vehicle was a former rental.

The FTC urges consumers to be prudent on car purchases (a major decision).

Finally, the FTC also suggests a consumer get any material assertion in writing from the dealer. That's always the key -- if a dealer's assertion on any question is not documented, then there's little possibility for recourse later. That includes the answer to the question "Was this vehicle used as a fleet vehicle, rental or taxi?" Why? If the consumer doesn't want those types of vehicles, doesn't request a vehicle history report, and doesn't get a confirmation in writing, there's little room for dispute after a purchase. If the dealer asserts the answer is "no" in writing and the answer is later discovered to be "yes", there's potential for recourse (if the dealer's still in business). And in addition to the FTC's advice to simply be proactive, a used car dealer refusing to provide a vehicle history report is probably one to avoid!

Reputable dealerships with a vested interest will commit to answers! In my talks with Hertz about the Hertz Shelby GT 50th Anniversary Rent-A-Racers, the staff even told me where each car was previously stationed, helpful for those who would prefer to avoid cars from the Salt Belt! Why did I get such great candor from the company? I simply asked those questions.

The United Kingdom is Facing a Major Test Case

Recently, this has become an issue on the other side of the pond, where CarFax is available for vehicles that had been registered in the United States but not vehicles that had been registered in the United Kingdom. In a story that is relatable anywhere, a small subset of dealers has taken actions such as stating that a vehicle "only had one owner", neglecting to mention that the one owner was a major rental car company. There's also a contention that knowing the previous owner has a name like "ERAC" doesn't help purchasers know that "ERAC" is Enterprise Rent A Car (yet honestly, it's very clear to a thoughtful consumer that an owner named "ERAC" is not a person). There are also cases where In a class action filed in the United Kingdom, it's claimed that selling a used rental car without disclosure may endemically violate consumer protection laws -- one group has been pushing for this interpretation for seven years -- and purchasers are seeking to have the entire purchase price refunded on an estimated million vehicles sold in the U.K. each recent year. And if the class action filing succeeds and that interpretation of UK law is upheld, many consumers will have received free use of cars for an extended period of time, just like in some "failure to disclose" cases from California.  

Our Take

Consumers make decisions every day -- users come to AutoSlash because they want to save money on rental cars! And a car purchase is a major investment anywhere in the world. Purchasing a used rental car is not for everyone -- if purchasing a used rental car (or previously totaled car, or flood-damaged car) is not in your plans, be vigilant. While we might not always agree with actions taken by our government, AutoSlash can agree that the FTC's advice of inspecting the potential purchase, getting an independent inspection, checking for recalls, asking for a vehicle history report, and getting every dealer claim about the car "in writing" is spot-on advice. Reasonable actions in advance can avoid surprises down the (metaphorical and physical) road.

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