Used Cars From Shrinking Rental Fleets May Not Be the Steal You Expect

Used-car values in some states are nearly back to where they were before the pandemic, he said, and in some — like Florida — are higher. Here are some questions and answers about buying a used rental car: Plus, it’s uncertain how many Hertz cars will end up on the market. Still, Mr. Enterprise offers it in some areas, according to its website.

The company analyzed thousands of cars available in May on, where Hertz sells directly to consumers, and found many models were available at prices considerably lower than expected. But even as some people are buying cars to commute to work, others may be continuing to work at home, which may reduce demand for cars. Hertz’s various outlets, including its Dollar and Thrifty locations, remain open for business. Wholesale prices — what dealers pay for used cars at auction — fell steeply in April, as demand dwindled and auctions were halted because of the pandemic, said Zo Rahim, manager of economics and industry insights at Cox Automotive. (The company’s holdings include Manheim, which runs auctions and tracks the used-car market.) But demand and prices began rebounding in May, as states started to reopen their economies, Mr.

The average interest rate fell to 9.65 percent, from 10.06 percent. So even if the model is relatively new, the time left on the manufacturer’s warranty may be limited. What financing terms are available on used-car loans?

Hertz, for instance, offers 12 months or 12,000 miles, but that warranty is likely to be worthless if Hertz goes out of business, experts said. It’s uncertain how much Hertz’s bankruptcy will affect prices over all. Mr.

But luxury cars, which are less popular rental options because of their expense, often have “significantly” lower mileage than average. Edmunds reported that the average interest rate for used cars in May was 8.3 percent. But the auto market is complex and economic conditions remain in flux, so used-car experts say they can’t predict the size of any discounts shoppers may see. Give this article The rental companies typically include limited warranties with their used vehicles.

For that reason, buying directly from a major rental company may be preferable to buying from smaller outlets, which tend to buy used cars from the big companies and hold on to them for another cycle of rentals, said Jon Linkov, deputy auto editor at Consumer Reports. Linkov suggested having a trustworthy mechanic inspect the car during that time. Auto rentals fell abruptly when the pandemic brought business and leisure travel to a near halt in March. Linkov said.

Avis offers home delivery at 14 sales lots. Mr. The coronavirus and the related drop-off in travel have pummeled the rental car industry. The fate of Hertz’s fleet remains uncertain, but analysts say the company may sell at least part of its holdings. (The company declined to comment on the outlook for its fleet, which is subject to negotiations in bankruptcy court.) Even before the bankruptcy, Hertz said it had accelerated sales of its cars and canceled orders for new ones. Rahim said, but consumers shouldn’t count on fire-sale prices.

Hertz, one of the world’s largest auto rental companies, filed for Chapter 11 bankruptcy protection in May. Hertz’s fleet comprises more than half a million vehicles in the United States, and a big influx of cars at one time would probably affect prices, Mr. Send any friend a story Schuster said.

Used Cars From Shrinking Rental Fleets May Not Be the Steal You Expect


p>While there are good deals to be found, particularly in the wake of Hertz’s bankruptcy filing, buyers shouldn’t count on fire-sale prices, experts say. Anyone can read what you share. As a subscriber, you have 10 gift articles to give each month.

Auto manufacturers cut production in response to the pandemic, and that may push more buyers to used models, buoying demand — and prices. The companies typically offer at least a few days for buyers to drive the car and return it if it doesn’t meet expectations. Caldwell said. Most big rental companies replace their cars when they are one to two years old, but most warranties expire after a certain number of miles, Mr.

But the holdings represent a small fraction of the roughly 40 million used-car transactions that occur each year, Mr. Rahim said. “It isn’t enough to put huge downward pressure on prices,” he said. The major rental companies, including Hertz, Avis and Enterprise, offer websites where customers can search inventory, then visit a lot for a test drive. The average mileage on Hertz cars sold in May was 31 percent higher than on used cars from typical dealerships. On average, vehicles could be found for about $1,400 below market value, up from an average discount of less than $1,000 in April.

The average used-car loan in the first three months of this year was $20,273, up from $20,137 from a year earlier, according to Experian Automotive. How do I buy a car from a rental agency? Rental cars have many drivers, some of whom may not have treated the vehicle as gently as they would their own car. “It’s had a life already,” he said. “Best to stay away from the third life.” Linkov advised approaching the purchase of a used rental car as you would any used car: Line up financing ahead of time so you aren’t forced to use the agency’s financing if your preapproved rate is lower. Also, rental companies may not offer the most feature-laden models, Mr.

Prices on the direct-sale websites are typically fixed, with no haggling, Ms. Rahim said. What are the pros and cons of buying a car from a rental agency? Linkov said, so they may lack desirable safety options like blind-spot monitors and forward-collision warnings.

Chapter 11 proceedings allow companies to reorganize and keep operating, rather than liquidating holdings. But because rental companies have increasingly tried to match their fleets with consumer taste, they may offer for sale models beyond the stereotypical “compact plastic box,” including sport utility vehicles, light trucks and luxury vehicles, said Jessica Caldwell, an analyst with the automotive website Edmunds. Still, Julie Blackley, a spokeswoman for the car research firm iSeeCars, recommended checking rental agencies’ sales websites.

George Chamoun, chief executive of ACV Auctions, which conducts online used-car appraisals and auctions, attributed the rebound in vehicle values to more demand for used cars as people avoided public transportation and ride-hailing services out of concern about the virus. The additional rental cars for sale, along with a steady stream of cars coming off lease agreements, may push down prices for used cars, said Jeff Schuster, president of Americas operations and global forecasting at the research firm LMC Automotive. “It’s good for consumers,” he said. But rental cars, especially smaller models, which are typically less expensive to rent, may have more miles on them than other used cars, iSeeCars reported. Other rental companies did so as well; Avis said it sold 35,000 cars in March, or about 10 percent of its fleet in the United States. That means car shoppers may find deals on used vehicles this summer as the rental companies trim their fleets — but not necessarily bargain-basement discounts.

All of that doesn’t mean there won’t be deals to be had, Mr. Linkov said, it’s wise to register a used car with the manufacturer, if there is any time left on the original warranty, to make sure you get notices of recalls and other updates. Hertz has 90 sales locations and offers home delivery in 21 states; delivery is free within 75 miles, with fees of up to $1,000 for greater distances.

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