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Should You Buy a Used Rental Car?

(General Motors)

For rental cars, it turns out, there’s an afterlife. Each year, rental agencies sell portions of their fleet to consumers and dealerships, so it’s possible that if you’re in the market for a used car, you’ve considered buying a former rental. Last year, Hertz sold 27,000 retired rental cars and plans to increase its sales this year by 65 percent, reports Automotive News. Many rental companies have car sales divisions including Enterprise, Budget Rent A Car and Avis. Buying a former rental car is just like buying any other used car. It’s wise to get it inspected by a mechanic you trust and request a vehicle history report so you’re aware of any prior accidents. However, there are a few additional considerations to keep in mind when shopping for a used rental car.

What Can You Expect?

Some rental car companies sell directly to consumers from their own lots. Others sell them at public or dealer-only auctions, where they might be listed as “program cars,” defined by the Federal Trade Commission as “low-mileage, current-model-year vehicles returned from short-term leases or rentals.”

Most of the retired cars Hertz sells have between 25,000 and 40,000 on them, according to its website. If you’re looking for a used car with the lowest possible mileage, it’s worth noting that rental car companies are keeping their fleet vehicles in service longer than they used to. The average age of a Hertz rental vehicle nearly doubled from 10 months in 2006 to 18 months in 2012, The Wall Street Journal reported last year.

Wear and Tear/Warranties

Typically, rental car companies are diligent about keeping their fleet in shape, says Auto Trader, adding that some rental agencies have in-house mechanics, while others take their vehicles to the dealership for maintenance.

However, you’ll never know all the details about a car’s past. Depending on a car’s age and mileage, it may still be covered by the manufacturer’s original warranty, and most bumper-to-bumper warranties will carry over from owner to owner, says Edmunds.com. On the other hand, Edmunds.com points out that most powertrain warranties will not carry over to another owner.

Like you’ll find on many used car lots, cars on rental sales lots might include a limited powertrain warranty or be offered with a service contract or extended warranty, which usually cost extra. The terms of a contract depend on the company, says the FTC, and it’s worth looking into what is covered to make sure it doesn’t overlap with an existing warranty. You should also find out who is responsible for repairs.

Know the Fair Market Value

It’s important to know the fair market value for a used rental car and shop around for the best price before deciding to buy it. Look for a similar used car from a private seller and a used car dealer and compare prices to see if buying a used rental car will save you money or not. Hertz Car Sales lists a 2013 Chevrolet Impala LT in Leesburg, Va. with 36,000 miles for $15,998 ($14,898 with promotions). According to Kelley Blue Book, the same model in good condition with 36,000 miles would cost about $14,307 if you bought it from a private seller. We found a certified pre-owned 2013 Impala LT with similar mileage for sale at a Maryland Chevrolet dealer for $16,500.

Many rental companies offer additional incentives to try to get you to buy one of their used rental cars. With each purchase, Enterprise Car Sales includes CARFAX vehicle history reports, a one-year/12,000-mile powertrain warranty and a year of roadside assistance with the American Automobile Association (AAA). Keep in mind that you can get a CARFAX report at any used car dealer and most dealers offer some kind of extended warranty.

Accident Records

When looking for records of accidents with a retired rental car, buyers should be aware that a rental may not have the same records as a private vehicle, John Nielsen, managing director, AAA Automotive Engineering and Repair, told MSN Autos, adding that because rental companies have their own insurance, not all accidents will have a claim on record. That’s why having the car inspected by a mechanic is especially important, he pointed out.

As with any used car purchase, buying a retired rental means doing your homework, taking it on a test drive and getting a thorough inspection. Would you consider buying a retired rental car?

In the market for a used car? Check out the U.S. News Used Car Rankings. Also, be sure to follow us on Twitter and Facebook.

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