Photo: Eddie Hironaka, Photographer's Choice, Getty Images
The ins and outs of buying a former rental
Johnny Knoxville didn't do the rental-car resale business any favours by destroying a perfectly serviceable Ford Contour in the opening moments of his 2002 movie, Jackass. The lily-white sedan was smashed beyond recognition after Knoxville entered the rental car in a demolition derby.
Beyond the entertainment value, the scene confirmed for many consumers the view that rental vehicles suffer almost ungodly abuse in the hands of rental clients, making the eventual buyer of any rental vehicle a hapless victim.
All the more reason to scrutinize a used rental car as thoroughly as any other used-vehicle purchase, advises George Iny, president of the Montreal-based Automobile Protection Association, a consumer watchdog of all things automotive. He says that while rental cars receive regular maintenance under the care of the rental agency, it's unseen collision damage that's the real hazard for shoppers.
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"The primary concern is non-reporting of collision damage on daily rentals," says Iny, noting that dealers are sometimes keen to demonstrate a "clean" car by showing "no claims reported" on a third-party report. "But here's the rub: CarProof doesn't collect collision data from daily rental companies." He recommends taking the vehicle to an independent garage to perform a pre-purchase mechanical check. "A daily rental is a used car and needs used-car precautions," he underscores.
Thousands of used rental cars are sold annually in Canada, since the business model requires agencies to dispose of one- and two-year-old models once they've racked up 30,000 to 50,000 kilometres. Many go to wholesale auctions and on to used-car lots, while especially well-kept cars and trucks are "remarketed" by the rental company or, more likely in Canada, by new-car dealers as part of their used-car operations.
Let's run down the pros and cons of buying an ex-rental car or truck.
Photo: Nick Daly, Digital Vision, Getty Images
The Benefits
Let the rental agency take the initial depreciation hit. It's no secret new cars lose 20-25 per cent of their value in the first year — that's why two-thirds of Canadians favour buying used over new, especially these days. The advantage of buying a rental car is that the vehicle was purchased new at a special fleet price, so it can be resold at a lower price point than a privately purchased model. That's the theory, anyway.
Rental vehicles are maintained better than some private vehicles. Agencies have to take care of their fleet to protect their capital investment. They're also compelled to keep careful maintenance records to protect themselves from lawsuits, since renters get into accidents and sometimes try to blame the car's state of repair. The rental company performs safety inspections and documents maintenance to prove due diligence.
Rental cars are sold at low mileage, typically 40,000 kilometres. This way the agency can maximize its investment by getting a good price for its fleet vehicles before they depreciate too much. Buyers are willing to pay a premium for low-mileage examples. High-mileage rentals go to wholesalers and the cars end up on independent used-car lots — where they're often not identified as former rental vehicles. Look in the glovebox for an emergency roadside assistance sticker from the rental firm.
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Some agencies let you try out the car for a few days before you make the decision to buy. There's usually a rental fee for this, but the time and money is well spent since you can satisfy yourself as to the condition of the automatic transmission and air conditioner, as well as other expensive components you couldn't possibly determine from a five-minute spin around the block. It also provides you with the opportunity to get it inspected by a trusted auto technician.
In addition to getting the balance of the new-car warranty, buyers sometimes get a short-term guarantee to fix problems that become immediately apparent. Or there may be a money-back period if you change your mind, a feature that most used-car lots could not or would not duplicate. Extended warranties may also be offered for purchase at a reasonable price. The intent is to alleviate the concerns of consumers who might be wary of buying an ex-rental car after watching Jackass.
Photo: Tom Merton, OJO Images, Getty Images
The Pitfalls
There's a common notion that rental firms price their ex-rental vehicles aggressively because sales are not their core business. But the reality today is that rental companies have identified fleet disposal as a "profit centre," which is MBA-speak for another way to extract money from consumers. Don't assume rental cars are cheaper than any other used vehicle. Comparison shop carefully. And more bad news: advertised prices are usually "no-haggle" specials, meaning you pay the sticker price, take it or leave it.
Model selection is somewhat limited and rental companies tend to feature two or three brands (in the old days it was often just a single manufacturer represented). While many firms favour domestic vehicles for their heavily discounted fleet pricing, it's not hard to find some import brands for sale today. Most rental vehicles offer basic trim packages (sometimes unique to rental fleets), so if you're looking for cars and trucks loaded down with lots of options, you probably won't find them here.
Buyers have to put up with a fair amount of aesthetic blemishes, such as unsightly paint scratches, door dings and interior scuffs and scratches on plastic panels. Upholstery and carpets may have stubborn stains that may or may not come out during detailing or shampooing. It's really no different than any other used vehicle, though an agency car may not get the same degree of reconditioning that a new-car dealer's used inventory might get. Then again, buying a pre-dented car means no tears when you suffer your first parking lot ding.
Finally, you have to deal with the disquieting reality that while a rental vehicle has had a single owner — the rental agency — it's been driven by a hundred motorists of all abilities and temperaments. Rental-car horror stories abound, though they're vastly outnumbered by the accounts of people who have bought ex-rental cars and have had a great experience with them. Keep in mind new technologies such as GPS tracking and black-box data recorders have mitigated bad behaviours, so abusive renters are increasingly being made to pay for their idiocy.
Treat a rental car like any other used-vehicle purchase by doing your homework, shopping for the best price and getting a mechanical inspection done, and you may very well end up with a great ownership experience. Just resist the temptation to enter any demolition derbies.
