One of the realities of the COVID-19 pandemic is that rental car companies are experiencing lower demand than normal and, consequently, they are selling off a significant portion their fleets. What does that mean if you're thinking of buying a used rental car? Deals, deals, deals.
The prices can seem too good to be true—often thousands below the Kelley Blue Book range—and there are valid concerns about how the car was treated by renters during its short life. But rental car companies need smaller fleets these days, so they are selling off surplus to dealerships and directly to consumers.
In our guide to buying a used rental car, we break down the pros and cons, financing, and other concerns.
8 Reasons to Buy a Used Rental Car
- No-Haggle Pricing. Rental companies don't want to waste time negotiating the price of a used car, so they set fixed prices.
- Long Test Drives. A dealership test drive is usually a quick 15 minute trip around the block. The rental companies offer much more comprehensive options. For example, Hertz and Avis offer free two-hour test drives or three-day test drives for a fee as low as $46 per day. If you end up buying the car, that fee is refunded. Enterprise offers a seven-day or 1,000-mile buyback, with no questions asked. If you decide you don't like the car, just give it back and the company will return your money, less a $200 fee.
- Lower Prices. According to NerdWallet, rental companies usually price their vehicles below retail value because they aren't looking to make money on used car sales. They just want to get rid of older vehicles. Always double check the price of the used rental with the Kelley Blue Book value of a comparable used car.
- Younger Cars. The average used car on a car dealership lot is 4 years old. The cars available from rental companies are typically 1 to 2 years old.
- Easy Purchase Process. When you buy from a car dealership, the buying process is mostly on the lot. Buying a used rental is much different. Most of the buying process is done online, and you may only need to go to the rental office for test drives or paperwork.
- Bundled Perks. Rental companies often include their own 12 month/12,000 mile warranties and one year of emergency roadside assistance with a purchase to sweeten the deal. Because the cars tend to be so young, factory issued bumper-to-bumper and powertrain warranties may still be in place.
- No Upsell. Cars are what you see is what you get, so there won't be any upsell for deluxe stereos or tinted windows.
- Good Condition. Rental companies take excellent care of their fleets. Local branches either have technicians on site or at nearby garages and they put their cars through regular maintenance. Because of this, these younger vehicles are usually in very good condition.
5 Reasons Not to Buy a Used Rental Car
- Limited Inventory. Compared to a car dealership, which will have a huge inventory of cars, a rental company may only have select makes and models of certain cars.
- Above Average Mileage. Used rentals tend to have more mileage than other cars of the same age. A two-year-old former rental typically will have about 51,000 miles on it, compared to the average used car at the same age, or 24,000 miles.
- No Upgrades. The flip side of no upsell is no upgrades. Rental cars are bought on an as-is basis, with no option to add a feature like a back-up camera or tinted windows.
- Uncertain Accident Reports. Accident records for rentals aren't as thorough as a private vehicle's because rental companies have their own insurance and may not enter a claim on record for each accident. CARFAX reports for rental cars can sometimes lack reports of accidents.
- Possible Overuse. Good and bad drivers put rental cars through their paces, and many have seen more than their fair share of abrupt starts and stops or other minor abuses. This is the best reason to take your potential car for a long test drive or even keep it for a day or two while you're making a decision.
4 Steps to Take Before Buying a Used Rental Car
- Take an Extended Test Drive. Most direct-to-consumer rental buying programs allow extended test drives. While you've got the car, listen for unusual noises and look for any signs of damage to the body and interior of the car.
- Check History. Ask the rental company for the vehicle history report (VHR) or get one yourself. VHRs provide information on past ownership, liens on the car, title and accident history, mileage, service records, and the car's retail value. If the rental company doesn't provide one, use AutoCheck or CARFAX.
- Check Recalls. Rental companies are required to fix recalled cars in their fleet, and the VHR should show any outstanding recalls. You can also check for recalls on the National Highway Traffic Safety Administration website.
- Pre-Purchase Inspection. Ask a trusted mechanic to do an inspection of the car. It'll likely cost up to $100, but an inspection can reveal hidden problems with the car.
Where to Buy a Used Rental Car
Enterprise, Hertz, and Avis each have direct-to-consumer websites for buying used cars.
When we searched for used cars at these three rental car companies, we found many cars priced $2000 to $5,000 under the listed Kelley Blue Book value.
Financing Options for Used Rental Cars
Enterprise, Avis, and Hertz all offer financing for purchasing rentals.
- Enterprise: Partnered with Chase to provide financing to those buying Enterprise cars. They also prominently advertise a special college graduate financing program.
- Avis: Partnered with Innovative Funding Services to connect buyers with lenders.
- Hertz: Partnered with top vehicle finance lenders like Capital One, Ally, Santander, and TD Bank.
Still, all the regular rules for any car-buying applies. Always do your research. Unless you're getting crazy-low interest rate for an extended period, look into financing offers from your bank or credit union if you don't plan to pay cash.
Where to Buy a Specific Model of a Used Rental Car
The range of choice will vary depending on the rental car companies near where you live.
Enterprise seems to focus on Ford, Hyundai, Jeep, Kia, and Nissan. Avis seems to focus on Chevy, Ford, Hyundai, Jeep, and Nissan. Hertz seems to focus on Chevy, Ford, Hyundai, Kia, Nissan, and Toyota.
You can find every type of vehicle, from vans to sedans and pickups to convertibles, from each company. If you're looking for a particular car, it's best to shop around each site.
Keep your search to within 100 miles or so, so you can avoid relocation costs.
Trade-Ins for Used Rental Cars
Enterprise, Avis, and Hertz all offer trade-ins. You can schedule an appointment or just go to a company car sales lot. Avis will even come to you to do the appraisal. There are reports of lowball appraisals, but most people report that they're fair. The process is very similar to a trade in at a regular used car dealership.
How to Avoid Buying a Former Rental Car
On the other hand, maybe you're dead set against buying a formal rental car. You can usually find out if a used car was a former rental by running a VIN check using CARFAX or AutoCheck.
Check the car's odometer. If it has more mileage than is normal for a car at its age, then it might be a rental car. The average used car has 12,000 miles per year of ownership. Anything over that might be a former rental.
Is the vehicle listed as a "program car"? This may be a clue that the car could be a former rental. A program car is usually one that was owned by the manufacturer and given to employees to use for a short time, a new car that was lightly used in a bunch of test drives, or a former fleet vehicle. In essence, a program car is a new vehicle with low mileage.