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Used Cars

Drive it like a rental, then buy it, too? Add to ...

Thousands of rental cars and trucks find their way into the used-vehicle market every year, either via rental companies’ sales channels or from auto dealers that’ve snapped them up at auctions.

But it seems so counterintuitive. Consumers shopping for a used car want reliability – and what springs to mind: an ex-rental? Seriously?

Yes, seriously. Ex-rentals fill out the supply of relatively low-mileage, late-model vehicles and there are often bargains to be had. Some have as few as 20,000 kilometres on the odometer and are still under the auto maker’s warranty.

“Given depreciation, you can save quite a lot by buying a rental car that’s only one or two years old,” said Brian Murphy, research and editorial vice-president of Canadian Black Book.

But he warns it’s just as important to do your homework as when buying a used vehicle that was privately owned.

“Don’t get a good price on a bad car,” Murphy said.

Murphy and George Iny, of the Automobile Protection Association, say that when considering an ex-rental, the whole transaction should be looked at. If the vehicle is financed, it might be cheaper to buy new because auto makers may offer incentives and low or zero-per-cent financing.

Most rentals are sold or auctioned to established dealers, usually small independents. Hertz has an app – Hertz Direct – that allows dealers to browse inventories.

But Hertz also owns its own retail lots, selling to consumers at what it says are close to wholesale prices.

“On AutoTrader, we want to make the first page [with a] significantly lower [price] than other people,” said Danielle Garrick, who manages Hertz’s Toronto sales lot.

Dealers mark up the price to cover any reconditioning cost plus profit, she said. “We just try and break even on the car.”

Garrick’s Surrey, B.C., counterpart, Valentin Velicico, estimated savings over comparable used vehicles at between $1,500 and $3,000.

Any required service is done and brake pads and tires are replaced if they have less than 30 per cent of wear left, he said.

“The cars are pretty much in mint condition,” he said. “Now, dings and scratches? It’s a used car, so it might have that.”

Hertz retails only vehicles that are accident-free – outside of minor dings or small insurance claims.

“The ones that have higher declarations or [from] outside the province get wholesaled to ADESA [auctioneers] or to other dealers, Velicico said.

It’s a myth rentals are routinely trashed, according to those in the car-rental business – a view echoed by Shawn Vording, vice-president of automotive sales at CarProof, the auto-history-vetting service.

Vording worked in the rental business for eight years and said the stigma, fostered by things such as Jackass: The Movie’s rental-car demo derby, isn’t justified. The number of vehicles returned with signs of abuse is so low, “I would have [trouble] quantifying it in my memory,” said Vording, whose past three vehicles have been trouble-free ex-rentals.

But while renters may not intentionally abuse their rides, they don’t necessarily exercise the same care they might with their own vehicle, said Jesse Caron, an auto expert and road-test co-ordinator for the Canadian Automobile Association’s Quebec branch.

For example, the lack of care can be as simple as flooring the gas pedal just after starting up on a cold winter’s day, adding to the engine’s wear and tear, he said.

“This can lead to problems that won’t necessarily show when the second buyer leaves the used-car lot with the car,” Caron said.

Service records are also hard to come by, especially if the vehicle is sold at auction. Hertz’s retail managers said vehicles they sell do not come with service paper.

When possible, CarProof obtains records from dealerships that services a rental fleet under contract, but Vording said records weren’t available on the ex-rentals he bought.

Even the fact the vehicle you’re considering was a rental might not be disclosed. Quebec’s consumer-protection law requires sellers to declare a car’s ex-rental status, but not all provinces do, Vording said.

Caron recommends paying for a third-party record search.

“Not everything shows up on these reports, but it’s still a good source of information for, say, accident damage because most insurance companies will declare the losses,” he said.

But Iny said rental and leasing firms have lobbied successfully to be exempted from reporting accidents to agencies such as CarProof.

“As a consequence, the vehicle history search will come out ‘clean’ even when there has been prior collision damage,” he said.

As always, an independent mechanical inspection is recommended, as well as a check whether any safety recalls have been performed.

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