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Struggling rental car companies expected to sell vehicles at deep discounts

By Fabrice Pierre-Toussaint

Staff Writer for Telegraph Local | See my LinkedIn

Rental car companies have taken a huge hit during the coronavirus pandemic. On Friday Hertz, which also operates the Dollar and Thrifty agencies, declared bankruptcy. Industry experts expect the company to sell off a large portion of its fleet.

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And that should bring about some deals car shoppers might very well want to consider, experts say.

Rental car companies routinely sell off cars, usually after a year or two of service. For instance, Enterprise, which also operates the Alamo and National brands, sells a million used cars a year globally, according to a spokeswoman. They often sell these cars online with no-haggle pricing and at a significant discount to other used car sellers.

For example, when Ivan Drury, an auto industry analyst with Edmunds.com, sought to buy a used car last year he purchased a 2018 Ford Fusion Hybrid from Avis.

He had previously done an analysis of used car prices in 2017 for his job and found, to his surprise, that rental car companies were selling their own used cars at much lower prices than other used car dealers. Depending on the specific model, buying directly from a rental company rather than a used car dealer could save anywhere from 5% to 15%, he found.

“In some instances,” he said, “the discounts are just so good, I was kind of floored.”

All of the major car rental companies Hertz, Enterprise, Alamo Avis, Budget and others list their used rental cars for sale on their websites. Shoppers can search inventories and test drives are usually much more simpler than at typical used car dealers. Drury said he was able to take his car out for hours before deciding to buy it. 

Hertz will even bring the car to you for a test drive if you live within 75 miles of one of their rental locations.

Shoppers can also “rent to own” a car. Hertz’s Rent2Buy program offers three-day rentals for prospective buyers who can then buy the car if they like it. Enterprise offers a seven-day buy back period on its used cars. During that week, the car can be returned for the purchase price, minus a $200 restocking fee, according to the company’s website.

Rental car companies have an incentive to maintain the cars well to preserve as much value in them as possible and to make sure their customers don’t have issues with them.

Potential buyers should take advantage of the long try-out periods to get the car inspected by a mechanic and make sure it has no hidden issues, said Jon Linkov, an editor with Consumer Reports magazine. Rental companies do offer “certified” used car programs and promise thorough inspections. But it’s still always better to get an independent inspection, Linkov said.

Shoppers should also research vehicles just as they would before buying any used car, said Linkov. Some used cars are just better and more reliable than others no matter where they’re purchased.

He also recommends buying from one of the major rental car companies rather than a smaller operation. That’s because smaller rental car companies may be selling cars that were already used when they bought them.

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The rental companies often have good financing options for customers with excellent credit Avis, for instance, is offering 0% down and no payments for 45 days but you might do even better on your own working with a bank or credit union.

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