Is It Okay To Buy A Used Car From A Rental Company?

As Jalopnik’s resident car buying expert and professional car shopper, I get emails. Lots of emails. I’ve decided to pick a few questions and try to help out. This week we are talking about used rental cars, non-transferable warranties, and the best time of year to buy used.

Is it risky to buy a car from a rental company like Hertz or Avis?

I was just wondering how reliable are cars that come from “loaner” companies like Hertz, Avis or Enterprise?? Long story short I had to use a loaner car for about a week & I really did like it. (My mechanic said that with the car I had the older it gets the more problems it has. Typical) Anyway, I jokingly told the guy when I returned the car that I’d be interested in buying it but it was probably out of my price range at the minute. He said that they do sell the cars after a short while of loaning them out. Sounds suspect to me.

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This isn’t as suspect you may think. Most of the major rental agencies have sales divisions, where once a rental car has reached a certain amount of usage in the rental fleet, it is sold either retail to the public or wholesale in a dealer auction. Now, there are people that will say you should never ever buy a used rental car, because all rental cars are abused by the drivers, but I think it’s a bit overblown.

The vast majority of people renting something like a Nissan Altima aren’t launching it off a ramp or doing burnouts in a parking lot. I mean, you are, but most people aren’t.

So the likelihood of getting a beat-up rental car is no greater than buying any other used car from a dealer or private seller. But what you should know about rental cars is that rental companies usually are doing regular maintenance such as oil changes, brakes, and having tire changes.

If you are looking at buying something affordable under $15,000, it might take a long time to filter through the junk that most used car lots are trying to push, and a rental car could be a good option for something well-maintained at a reasonable price.

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Rental sales also have the advantage of having a straight forward buying process with minimal fees. So the price you see is what you get. If you’re shopping on the cheaper end used rental cars are worth exploring.

Can a dealer say that a warranty is non-transferable?

About 4 years ago I bought a new BMW 328i at a dealer in Southern California. As I was doing the paperwork. The finance guy told me if I sold the car before the factory warranty expired 4 years or 48,000 miles the warranty was non transferable and that the warranty belonged to the dealership. In other words, I could sell the car but the new owner would not get the factory warranty if I sold it prior to owning the car for 4 years or the car accumulating 48,000 miles. I’m almost certain he had me sign a form agreeing to it but I can’t find the form to send you a copy. I had no intention of selling the car early (and I still have the car) so I went along with it but it seemed strange.

My question is, is it legal for a dealer to not allow the factory warranty to be transferable if the car is sold prior to the warranty expiring? I have bought several cars since 1980 and I’ve never had a dealer tell me that.

By the way, the car now has over 110,000 miles and I’ll probably purchase another vehicle but a different make, an SUV, in about a year. If a dealer tells me the same thing I want to know if he can legally do that or if I should walk away and go to another dealer.

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I have to say I’ve heard some crazy lines from dealers trying some slimy stuff, but this is the first time I have heard of a dealer telling a buyer that the factory-backed warranty would not transfer to the buyer.

A dealer cannot put restrictions on a warranty that is set by the automaker. So if you bought a new BMW with a four-year, 48,000-mile bumper-to-bumper warranty and sold that car with two years and 24,000 miles of warranty left, the next owner would get the remainder of that coverage. The warranty does not “belong to the dealer.”

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Is there a best time of year to buy a used car?

Hi Tom, what’s a good time of the year to buy a used car ?

Unlike new cars that have seasonal or monthly sales that tie-in with factory incentives, pre-owned vehicles typically don’t have large price fluctuations from one season to the next. As I’ve said numerous times, the goal of shopping for a new car is to find the best value, not focus on the biggest discount.

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That being said, a lot of folks buy new cars in December hoping to take advantage of the end-of-year sales, and when folks buy new cars often they trade in their old ones. So you may see an increase in the available inventory by visiting the pre-owned market after the holidays.


Got a car buying conundrum that you need some assistance with? Email me at tom.mcparland@jalopnik.com!

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About the author

Tom McParland

Tom is a contributing writer for Jalopnik and runs AutomatchConsulting.com. He saves people money and takes the hassle out of buying or leasing a car. (Facebook.com/AutomatchConsulting)