Want to Save on a Used Car? Consider a Rental

For many car shoppers, buying a vehicle is still expensive even as prices have begun to fall back. Currently, the average listing price for a used car is around $26,000, according to Cox Automotive. If you need to finance, the average rate is over 11 percent on a used car loan, according to Experian.​

For cost-conscious buyers who can’t afford to drop more than $25,000 on a used vehicle, there’s good news. They can save by purchasing from a rental company. Avis, Enterprise and Hertz are among the rental car agencies that sell vehicles from their fleets, often at discounted prices. 

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Hertz made headlines in January when it announced it would sell roughly 20,000 electric vehicles including Tesla sedans just two years after inking a deal with the green vehicle maker. Some of the Tesla Model 3s are going for less than $20,000, close to half the purchase price for the entry-level model of this EV sedan.  It’s not just used Tesla vehicles shoppers can save on. A 2020 Toyota C-HR SUV from Hertz goes for $19,280, a 7 percent savings from the average listing on the CarGurus site with comparable mileage. 

“Rental cars are purchased in bulk by rental agencies,” says Matt Smith, CarGurus’ deputy editor. “They get a discount, and when they sell them at the end of the rental car life they tend to do so at a bit of a discount.”  Often rental agencies will purchase entry-level models for their fleets with basic trims, resulting in lower resale values than models with all the bells and whistles. That presents an opportunity for car shoppers to save even more compared to what they can get from a used-car dealer. 

Getting an entry-level trim has been difficult over the past few years due to supply chain problems during the pandemic, says Joseph Yoon, Edmunds’ consumer insights analyst. Back then, production shifted to mid- and upper-trim vehicles because they have higher margins, he says. “When you went to the dealership, the only cars in stock cost $10,000 more than the base model,” says Yoon.

Peace-of-mind in a car

​Price is a big reason consumers consider buying a used vehicle from a rental agency,  but it isn’t the only factor. There’s also built-in peace of mind, which could appeal to older buyers. The vehicles have been regularly maintained as part of the rental company’s fleet and tend to only be two or three years old. Since the cars are relatively new, the manufacturer warranty may still apply as well.  “They generally tend to have the appropriate amount of miles for a car that age and have been maintained,” says Yoon of rental cars. “They can’t keep cars on the road for customers if they aren’t.”

Buyer beware

There can be some downsides to buying a used car from a rental agency. Wear and tear is one. While the vehicle gets oil changes, tire rotations and new brake pads, the rental cars tend to be exposed to more wear and tear than privately owned cars. “You may find more lived-in parts of the interior, and every rental car has at least one scuff on the body,” says Smith.