The following is a post by MPFJ staff writer, Kevin Mercadante, who is a freelance professional personal finance blogger for hire, and the owner of his own personal finance blog, OutOfYourRut.com. He has backgrounds in both accounting and the mortgage industry.
Most people think that there are two places to buy a used car – a used car dealer or an individual. But there’s actually a third, and that’s a car rental company. They sell thousands of cars each year, offering many of the same advantages that you get in working with a car dealership, except you’ll usually pay thousands of dollars less for the car you want to buy.
We’re going to cover the basics of buying a car from a car rental company. We’re going to use Hertz as an example. Hertz has a dedicated web page for car sales, appropriately titled Hertz Car Sales. From that page, you can browse hundreds of cars in your area that are being offered for sale. Within 100 miles of Boston, Hertz has over 1,400 cars available, but you can pick any large city near you.
Lower Prices than Used Car Dealers
Car rental companies are not car dealers, so they aren’t looking to maximize the profit on the sale of their cars. They also don’t have commissioned sales people who need to be paid out of the proceeds. They mostly want to sell off their large fleets of existing cars to make room for newer models. Car rental companies generally use a car for two or three years, then it’s time to replace it. All of that works to your advantage when it comes to price.
Most of the cars offered for sale on the Hertz Car Sales page are one or two years old, and typically have between 30,000 and 60,000 miles on them.
Some examples of what’s available:
- 2014 Volkswagen Jetta SE with 46,000 miles, $10,375
- 2013 Chevrolet Cruze LT, 56,000 miles, $9,475
- 2015 Chrysler Town and Country Touring Van, 40,000 miles, $21,779
- 2014 Ford Fiesta SE, 41,000 miles, $8,900
- 2014 Honda Accord Sedan LX, 42,000 miles, $14,700
- 2014 Hyundai Elantra SE, 48,000 miles, $10,475
If you click on the link for each vehicle, you’ll be looking at a page that looks very similar to what you will see on a dedicated used car dealership page. They list all of the details of the car, including options, and provide multiple photos of the vehicle. You can also book a three day test rental, ask a question, or apply for financing – all on the same page.
Wider Selection than Used Car Dealers
Used car dealers typically have small numbers of cars of a certain model and make. Selection is limited by what ever type and number of vehicles that come to the lot. Car rental companies however buy fleets of cars. That means that they may have dozens of similar makes and models of the same car, almost the way new car dealers have new cars.
That means you will have more options than you will have with a used car dealer. If you don’t like the color, you can choose another (though admittedly, car rental companies have limited color selection as a general rule). Don’t like the sound system in one car? Move on to the next.
Car rental companies are almost unique in their ability to offer multiple options on used cars within the same make and model. The Hertz Car Sales page conveniently groups similar makes and models in the same place, so you can choose the car you like best.
And if you don’t see the option package in the make and model that you want, you can wait a few days. More inventory is always coming in.
Rent2Buy – A Chance to Test Drive the Car You May Buy
Hertz has a program called Rent2Buy that gives you a three day trial period to test drive the car. You rent the car for three days at the going rate, and if you decide you like the car, you can buy it. The three day rental charge will be waived upon completion of the sale.
This is a big advantage. Test driving a car for 15 or 20 minutes, as is the custom with used car dealers, is not nearly enough time to become familiar with how a car runs and feels. But with three days, you’ll have a much better idea if the car is right for you. You can even use that time to have the car thoroughly checked out by your mechanic to see if there are any hidden flaws. In fact, Hertz recommends that you do just that.
Warranties and Extended Warranties
Just as is the case with used car dealerships, cars sold by car rental companies come with remaining factory warranties. So if a car is two years old and has 40,000 miles on it, and the manufacturer warranty is seven years or 100,000 miles, it will be good for another five years or 60,000 miles, whichever comes first.
With Hertz, all vehicles come with a 12 month/12,000 mile powertrain limited warranty. And you can purchase extended protection plans from the company as well.
Yes, You Can Even Get Financing
Car rental companies don’t extend financing directly, but much like car dealerships, they work to match you with lenders to get the best rate and loan for you. Hertz even has an auto loan calculator tool on the site.
And once again, you can apply for financing directly from the Hertz website. The financing and all the paperwork will be handled online, which will also reduce the tension that often comes from face-to-face negotiations.
Accepting Your Car as a Trade-In
One other point worth mentioning: Hertz will accept your current vehicle as a trade-in toward the purchase of one of their cars. This is one of the primary reasons car buyers go to used car dealers, so that they can trade in their current vehicle hassle-free, or not have to sell it themselves.
The Hertz site doesn’t give details as to the terms of trade-in acceptance. For example, they don’t list any limits as to age, condition or mileage. But if there are any limits, you can always sell the car to CarMax (trust me, they’ll buy a car in any condition, year or mileage!) or a used car dealer in your area that buys cars even if you don’t by one from them.
So there you have the basics on buying a car from a car rental company. We’ve used Hertz as a model, but you can find similar opportunities at other car rental companies. Check them out when it’s time to buy a new car, I think you’ll be pleasantly surprised.
How about you all? Have you or someone you know purchased a car from a car rental company? What other tips do you have for purchasing a car from a car rental company?
Share your experiences by commenting below!
***Photo courtesy https://www.flickr.com/photos/44603071@N00/8135713685/sizes/q/
