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Are former rental cars unreliable?

By Claes Bell, CFA · Bankrate.com
Wednesday, July 13, 2011
Posted: 4 pm ET

I received an email this week from a rental car industry insider asking me if I had any figures on the percentage of late-model used cars that were originally owned by rental companies. I didn't have up-to-date numbers for her, but we did eventually get into an interesting discussion about the merits of buying used-cars formerly owned by rental car companies, and it got me thinking.

Usually when you go to buy a late-model used car that's two to three years old, that used car comes from one of three places:

  1. A new-car lover who was willing to trade in their car and take the depreciation hit to own the latest and greatest car model.
  2. A leaser turning in a car coming off a 24-month or 36-month lease.
  3. A rental car company routinely selling off used inventory.

Cars in that last category sometimes raise red flags in car buyers' minds. The conventional wisdom, usually delivered by someone in the act of flogging the engine on their rental car, is that you want to avoid buying former rental cars because they are more beat-up than the average car. Not only that, the thinking goes, but rental car companies don't care about the cars and don't maintain them, because they know they'll just be trading them in after a predetermined amount of time.

Let's tackle the hard-driving renters trope first. One of the problems with buying used is you can never really know how the car was driven by previous owners. It's definitely possible rental-car drivers took the car up to redline at every opportunity and generally beat it senseless, but that possibility is there with all used cars. It's not clear to me that a leaser who knows they're turning in their car after 24 months is going to be any less hard on their car than a renter. And anyway, today's cars are much more reliable than those on the roads when this anti-rental conventional wisdom formed, so any loss in reliability due to hard driving renters is likely going to be less than it was back then.

The idea that somehow off-lease and one-owner cars are necessarily better maintained than rental cars doesn't hold too much water, either. Major rental car companies have staff to perform maintenance according to manufacturer guidelines at specified intervals. Sure, it's possible rental car maintenance personnel aren't doing the maintenance they're claiming to have done. But I think it's more likely a leaser or frequent new-car buyer is going to blow off an oil change than a Fortune 500 company that manages car fleets as one of its core functions. I've personally known more than a few drivers who were apt to do just that.

The bottom line for me is, buying a used car means taking the risk that it was badly treated and maintained by the previous owner, whether that was a rental car company, a leaser or an individual owner. There are ways to minimize that risk -- pulling a Carfax report, reviewing maintenance records or getting it inspected by a mechanic -- but ultimately, the risk remains regardless of the source of the car. So why not save a few bucks on a former rental car that's being undervalued because of conventional wisdom?

What do you think? Are former rental cars inferior to their off-lease and one-owner counterparts?

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5 Comments
Dan
August 19, 2011 at 10:32 am

Whenever I rent a car I treat it like my own. Because I rented it for the travel, I really do not want to break it and if you do break it, its such a hassle.

In 2008 I bought an ex-rental 2005 Cavalier for my daughter. It has been a good reliable car for her and we are very happy with the purchase.

But then I generally buy salvage title cars all the time for myself anyway and have had great luck with those as well. Or as I look at them, recycled cars.

Nathan
July 14, 2011 at 11:51 am

Having worked at Enterprise Rent-A-Car for a brief time after college in the late 90's, I know they didn't maintain the fleet at the location I worked at. Seems like the only time we took cars in for maintenance or an oil change is when a light on the dashboard came on or a customer complained about a problem with the vehicle. I wouldn't think saving a few thousand on a vehicle would be worth taking a chance and reselling the car later would probably be more difficult based on the stigma which will probably mean you receive less money than a car previously owned by private seller.

Josh
July 14, 2011 at 9:40 am

The last two cars I purchased were former rentals. I saved several thousand compared to their one-owner counterparts and have no complaints. Both cars run great and have had no major issues. Though it's certainly a risk to buy used, the savings are significant enough to offset that risk (at least for me).

Keith
July 14, 2011 at 7:14 am

I had no problem whatsoever buying a 2 year old suburban with the thinking that if you can afford to rent a suburban you are going to most likely treat it with respect. For that matter, you are probably going on a trip that is mostly highway miles. I also think a rental car compamy would be more likely to do maintenance in a timely manner.