There’s not a ton of demand for rental cars right now, and the impact on that industry is starting to show: Hertz, which also runs Dollar and Thrifty, filed for bankruptcy last week.
Even rental agencies that are in better financial situations are still planning for worst-case scenarios by dramatically cutting back on the number of new cars they plan to buy this year.
Their misfortune could mean big bargains for you as rental companies start to unload their fleets to free up cash.
Rental car companies typically sell cars from their fleets already, after a certain period of time or amount of use. And with travel so limited right now and demand for rental cars far lower than average, companies are offering big discounts for their car sales.
Granted, you may not need a 2019 Corvette, but Hertz is selling them for $20,000 off—just to give you an idea how how much rental companies want to get rid of cars that are just gathering dust.
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For instance, I checked the Hertz Car Sales website for Toyota Corollas and found a 2020 LE model with 21,000 miles listed for $14,500—two grand below the lowest end of the fair-market range for the car based on Kelley Blue Book’s data for my region. Hertz advertises no-haggle pricing, which means what you see is basically what you get—no nerve-wracking negotiation required.
With pretty much every rental company trying to sell their excess inventory, it’s likely the influx of new sale listings will push prices down further.
And while there are skeptics who say never to buy a used car that was used as a rental because you can’t guarantee the level of wear and tear put on by previous drivers, you probably don’t need to write off the option completely.
As Jalopnik’s Tom McParland puts it, “The likelihood of getting a beat-up rental car is no greater than buying any other used car from a dealer or private seller.” And the chances are actually far better that routine maintenance has been performed, rather than if you’re buying from a private owner.
Since rental cars tend to be newer models, buying one used could give you an advantage for later maintenance, too. “Depending on when you’re looking to buy a rental car, it might still be covered by the manufacturer’s warranty,” said Greg Kopf, brand ambassador at CariD.com.
While the inner workings of the car may be well maintained, you may need to be a bit more forgiving about how the car looks, Kopf said. “While a rental company will not try to sell you a car with mechanical issues, you might have to overlook cosmetic damage—stains, smells, etc.–from inattentive or careless renters,” he warned.
And although a rental company may offer financing, including some enticing incentives, the regular rule for car-buying applies: Do your research and come with your own financing offer from your bank or credit union if you don’t plan to pay cash.
Kopf said that most of the discounts for new cars are tied into promotional financing rates, while used rental cars may actually drop below market price. “If you aren’t set on a certain make/model and aren’t picky about features, you might find it easier and more cost-effective to shop from a rental company,” he said.
