How to buy a used rental car and potentially save thousands as companies like Hertz go bankrupt

Car sit idle at the Hertz Rent-A-Car rental lot at San Francisco International Airport on April 30, 2020 in San Francisco, California.
Car sit idle at the Hertz Rent-A-Car rental lot at San Francisco International Airport on April 30, 2020 in San Francisco, California.

Justin Sullivan/Getty Images

  • Enterprise, Hertz, Avis, and other rental car companies sell used rental cars.

  • A used rental car can be a much cheaper option than other comparable cars.

  • Just make sure to understand your budget, get pre-approved for a loan if you need one, and take advantage of the rent-to-buy feature.

  • Visit Business Insider’s homepage for more stories.

So you’ve seen the news. You know that rental car giant Hertz filed for Chapter 11 bankruptcy in May. You know that, due to the ongoing COVID-19 pandemic, things aren’t great for the other rental car companies, either. 

But you’re also aware that this might be the time to potentially snap up a used rental car, especially if you’re fortunate and have some money to spend. Industry experts, according to CNN Business, estimate rental companies to offload 1.5 million cars in their US fleets over the course of the coming weeks and months, thus inflating the already bloated supply to potentially overwhelm the currently weak demand. Translation: You as the consumer might be about to receive even more buying options.

And despite commonly held public beliefs, Business Insider reported that rental cars aren’t always minefields chock-full of quality and maintenance nightmares. In fact, they might be an option for you to pick up a used car at a discount, provided you do the proper research.

How does one go about actually buying a rental car? Do you just pull up to the desk at your closest airport location and demand to buy something off the lot? How do test drives work? What about financing? 

To find out, Business Insider tapped the expertise of Tom McParland, who owns a service called Automatch Consulting that helps people buy cars.

A Hertz location.
A Hertz location.

Cindy Ord/Getty Images

Here’s how to break down the process.

1. Get online.

To get started, simply go online. Enterprise, Avis, and Hertz all have sites you can visit where you can view inventory by price, bodystyle, and location. 

2. Understand your budget.

This one might seem obvious, but it bears repeating. Before you even start shopping around, take some time to figure out what you can actually afford. Fire up a loan calculator to input your payment range, approximate APR, and loan term. 

“That will give [buyers] a spending limit to start with,” McParland says.

3. Know what kind of car you want and need.

This one might seem obvious too, but it’s much easier to narrow your search down by bodystyle and number of seats when you have an idea to start out with. 

Sale signs lie on vehicles at a General Motors Chevrolet dealership July 6, 2005 in Ferndale, Michigan
Sale signs lie on vehicles at a General Motors Chevrolet dealership July 6, 2005 in Ferndale, Michigan

Bill Pugliano/Getty Images

Do you want a three-row SUV or two? A compact car or a hatchback? A truck? All-wheel drive? Front-wheel drive? Maybe you want a roadster but your family needs something with more room. How much cargo do you realistically haul in the trunk? Do you want something more luxurious or is that not a priority? 

These are useful things to think about before you start shopping.

4. Get pre-approved for your loan.

Typically, rental car companies do offer financing on their own. But, “it is always a good idea to shop your loan around and have a pre-approval before buying a car,” according to McParland. 

This step is particularly important if your credit score maybe isn’t the best and your APR could vary hugely from one bank to another.

5. Get the vehicle history report.

Services such as Carfax provide vehicle history reports, which are a reservoir of all sorts of useful information about cars. You’ll be able to see the car’s previous owners, odometer readings, accidents or repairs, and damage and open recalls. 

Alex Tovstanovsky, owner of used-car dealer Prestige Motor Works, checks on depleted inventory in Naperville
Alex Tovstanovsky, owner of used-car dealer Prestige Motor Works, checks on depleted inventory in Naperville

Reuters

Getting a vehicle history report isn’t mandatory, but it’s highly recommended. From it, you can see if anything serious has happened to the car that might give you pause. And even if you obtain the vehicle history report, you should still perform an independent inspection. More on that in a bit. 

6. Use the rent-to-buy feature.

When you are looking to buy a car normally, you should always get a test drive. Always, always, always. Test drives are where you can really get a feel of the car, see how it makes you feel, and — most importantly — evaluate whether there are any red flags. 

Edmunds has some really great tips on how to test drive a car. It notes that before you even start driving, you should check out stuff like the car’s seating position. Can you move the seat into a comfortable driving position? Can you see out of the car? Do the rear seats have adequate room for passengers? 

During the drive, there are things to be looking out for as well. Does the car make a weird noise as you’re driving it? Are there extra vibrations coming through the steering wheel where there shouldn’t be? Do the brakes feel good? Do the air conditioner and heat work? Do all the windows work? 

Hertz rental cars are seen in a rental lot near Detroit Metropolitan airport in Romulus, Michigan.
Hertz rental cars are seen in a rental lot near Detroit Metropolitan airport in Romulus, Michigan.

REUTERS/Rebecca Cook

Don’t forget to test the car’s tech out as well. Play around with the infotainment screen (if applicable). Is it easy to use or confusing? How easily can you pair your phone with the car? 

Keeping all of that in mind, shopping for a used rental car offers a unique opportunity that you don’t get when you’re shopping with a traditional dealer or used car lot: the rent-to-buy feature.

“It’s always advisable to test drive a car before you buy it, but often rental car agencies will allow you to rent that vehicle for a few days so you can really see if it works for you or not,” McParland advises. 

Hertz has something called a Rent2Buy program. With it, you’re able to test out a car that’s for sale over a three-day rental period for a small fee. If you wind up buying the car, Hertz will waive the fee. Just be sure the program is available in your area.

Avis, too, has a similar program called the Ultimate Test Drive. Customers can choose their cars and test drive location and book everything online. Then, they can go and pick up the car and test drive it for free for two hours. After that, customers can hold onto the car for up to three days for a fee. And again, if you decide to buy the car, Avis will reimburse the rental fee. 

couple buying a car
couple buying a car

Don Mason/Getty Images

“Take it home, put your kids in it, put your gear in there, and make sure everything fits and you are comfortable,” says McParland. “Maybe take it for a road trip.”

An uninterrupted test drive for an extended period of time is ideal because you can take the car home, put it in your driveway, and really get a good chunk of time to sleep on it.

Try and commute to work in it, run your usual errands. Really see what it’s like to live with. You might see the advantages or disadvantages of owning that particular car after the first day of driving it around. You’ll be able to see if it fits in your garage or if you can fit all of your friends and family in it. 

Most importantly, you can do your decision-making on your own time, away from a salesperson who might be too pushy and distracting.

7. Understand the “no-haggle” pricing.

Rental car companies such as Enterprise, Avis, and Hertz all advertise no-haggle pricing for their sales. It means the price you see is the price you pay. Don’t get turned off by the “no haggle” aspect, though. Typically, used rental cars are priced below similar cars on the market.

used car lot
used car lot

Justin Sullivan/Getty Images

“One of the upsides to the [rental car]-buying process is they don’t have any bogus charges like ‘reconditioning fees’ or inflated ‘dealer fees’ as some dealers do,” says McParland. “Usually, it’s just the price of the car, plus your tax rate, and reasonable charge for DMV and paperwork.”

In this case, no-haggle can translate to stress- and negotiation-free.

8. Check out the warranty.

Sometimes the car you’re looking at is new enough that it’s still covered under factory warranty. But, rental car companies also offer their own warranties and special perks, too.

Avis, for example, offers a 12-month/12,000-mile limited powertrain component warranty from the time of the purchase.

Hertz says its cars come standard with a 12-month/12,000-mile limited powertrain warranty as well. It provides for the repair or replacement of covered parts in the event of a mechanical, transmission, or drive-axle breakdown.

All Enterprise cars have a 12-month/12,000-mile limited powertrain warranty, too.

You’ll have to read the fine print for yourself to see the specifics.

9. Get your car inspected.

Okay, so you successfully found a car you like that works for your needs and you bought it at its no-haggle price. Great! What’s next?

Get it inspected.

The tradeoff to that low, no-haggle price and all the other promotional accouterments is that the rental car you’ve just picked up will almost always come with way more miles from many people driving it. Though rental companies do follow strict maintenance schedules, it’s still important to make sure everything is in good working and mechanical condition. 

FILE PHOTO: A Hertz rental car location is pictured in Pasadena
FILE PHOTO: A Hertz rental car location is pictured in Pasadena

Reuters

Enterprise and Hertz, however, both have buyback programs that should also be taken advantage of. 

If, for any reason, you change your mind about your car, you can return to Enterprise within seven days or 1,000 miles. The company will buy it back “no questions asked,” according to the website. Hertz’s buyback guarantee states that customers can return a car to Hertz within seven days or 250 miles, whichever comes first. 

While it’s recommended to get an independent inspection anyway when you’re shopping for a regular used car, you can perform your inspection after you’ve bought the rental car because you get that extra window of time to return it if the results don’t come back the way you’d like. 

“Use this time to take the car to a trusted mechanic to have it looked at,” says McParland. “While most rental cars are well maintained, there have been instances where some rental cars were crashed and fixed without that accident appearing on the vehicle history report.”

If, after that, your car still checks out, then congratulations. You’ve hopefully saved some money on a car that is ideal and safe for you and your family.

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