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Drive off in a rental
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January 26, 2000: 5:25 p.m. ET
Rental cars can be a good buy for cost-conscious, auto-hunting consumers
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NEW YORK - One day, late in the scorching summer of '99, 150 glistening Enterprise rental cars were lined up in the Garden City parking lot of the Automobile Club of New York. They were not for rent. They were for sale.
The American Automobile Association put together the promotion for its members through its New York club, and sold about 80 of the fleet cars. So if the AAA thinks buying a rental or corporate fleet car is OK for its members, why shouldn't you consider one?
"Buying a rental car from a reputable company makes good sense," said Douglas Love, a spokesman for the Automobile Club of New York. "You know they've been well-maintained and they're reasonably priced, for the most part."
In the case of the Enterprise promotion, the rental cars, according to Love, "were attractively priced and had low mileage; there was no reason not to sell them."
If you saw a car you liked, you could get your mechanic to check it out --an important move, says Love, for any prospective rental or fleet car buyer.
If there is one single factor that makes this kind of buying a good deal, it's the fact that you can generally get a detailed history of a former rental or company fleet car, complete with maintenance records.
And that alone, say backers, can remove that gnawing uncertainty that lurks just under the surface in many used car deals.
No sure thing
But there is no magic -- buying these cars requires the same customer vigilance any auto deal demands.
Love said that although fleet cars are often a good deal, just how good a deal it is depends on the type of use it sustained. Was it run into the ground by salesmen on service calls, or just used by cautious renters?
Use some common sense when you look at the car, he said.
"Watch out for those cars owned by salesmen or servicemen," said Love. "Any educated consumer can look at a car and tell whether it's well maintained. Twenty-to-thirty thousand miles are common (for a rental or fleet car). Look at the odometer and the type of vehicle."
Look at the underside, because wear is the best indicator of mileage.
"They steam-clean the engine and put on clear lacquer," he warned.
Be sure to check for mismatched tires and check the transmission, suspension and steering components.
But the most important thing to do is to talk to your state's DMV to get a title report, even though it takes a lot of time and you might miss your buying opportunity. Or you can get in touch with Carfax.com and get title history information over the Internet.
Real miles
According to Love, fleet cars from top companies come without one major worry that is common with a lot of used cars -- fake miles.
"There's a huge problem with odometer tampering, but you usually don't find it with reputable rental or corporate fleet cars," said Love.
He noted that in many other cases, including the sales of old company vehicles, popular fleet cars like Tauruses or Luminas are sold off to auction houses with about 80,000 to 110,000 miles on them. Sometimes swindlers roll back the odometer.
The cars are then re-titled and sold as premium cars, mostly through classifieds and dealerships. They'll commonly end up for sale in another state.
"Be wary if a car shows up in New York from some leasing company in, say, Tennessee, and it came through an auction," Love said. "Exercise great caution, especially with late models. A 'clocked' (tampered odometer) car is very difficult to tell. A car that recently changed hands coming from New Jersey and sold in New York ... well, out-of-state vehicles, watch out for those kind of cars."
That's why fleet cars from respected companies are a plus, Love said. "If you're buying from a reputable rental company or corporation, then you have no need to worry. There's lots of documentation."
You know what you're getting, Love pointed out, and that's worth some heavy peace of mind alone, compared to a car from a neighbor, car lot or classified ad, when you can't get all those details.
Ex-rental car or ex-company car?
"Know the company you're buying from," Love advised. "I would opt for purchasing directly from a Hertz or Enterprise. But I'd be careful of vehicles that come from corporations. They can generate lots of mileage."
Gary Miller, who runs Creative Leasing, a 350-car Roslyn, N.Y.-based company, disagreed.
"I'd rather have a corporate fleet car than a rental car, which had 80,000 different drivers driving it. Someone who rents isn't going to take as much care of their car as your neighbor, who you see outside every morning polishing his car," Miller said.
But Hertz believes otherwise. The company is proud of its maintenance program.
Paula Stister, public affairs manager, said, "We routinely replace our vehicles every eight-to-12 months. We carefully pick the vehicles sold to the public and make sure customers have peace of mind. We offer complete maintenance records for review. We wash the car, change the oil, monitor customer comments and minor repairs are made immediately. We are upfront with our customers. We have regular customers."
Maintenance records are like gold. "Rental cars from established companies are very highly maintained," said Howard Gmora, an insurance appraiser who works for a major national carrier. "Rental companies take extremely good care of their cars. The biggest indication of how proud they are of their maintenance record is that they sell (the cars). They would take a chance turning off repeat customers if the cars weren't in great shape."
Corporations also generally take very good care of the cars they eventually sell off. The Professional Golfers' Association, for example, publishes a detailed handbook on management of fleet cars, including daily, weekly, monthly and annual maintenance tasks. They tell their affiliates to keep accurate records of all inspections and work.
Joe buys one
It's that kind of consideration that brought Joe Hillesum, a New York financial investor, to buy a corporate fleet car. He did a lot of research before he bought his year-old Mercury Sable, once owned by IBM.
"I thought it would have been maintained well," he said, although he never saw any official maintenance records. "They had it for a short period and I felt IBM knows what they're doing. It's the kind
of culture that would take good care of a car -- they're mechanical, engineer-type people who wouldn't let things slide. It might have been driven by a lot of people, but my feeling was that it was a small amount. I've found that my evaluation of the car was right; the car is in good condition."
Hillesum twice rented a car to drive from New York to Tennessee. When asked if he took care of the rental car the same way he took care of his own car, there was a deafening silence.
And that's the heart of the matter to Miller. "You can never really know how much abuse a rental car has gone through," he asserted. But, he acknowledged, "Knowing the maintenance history is the most important thing."
Miller said that at present an oversupply of used cars exists, including ex-fleet models, and prices are going down. Conventional wisdom would suggest banks and insurance companies might look negatively at a fleet purchase, but banks like North Carolina-based First Union Bank say there is no penalty.
Gmora agreed, and said the same holds true with insurance companies; they regard these types of buys as they would any other.
"While there are really no better or worse rates from banks or insurance," said Miller, "rental or corporate fleet companies might work out better arrangements with their in-house financing."
Timing is everything
If you're looking for a new used car, now might be a good time to go looking for a rental car to buy.
"Right now the used car market is depressed," Miller said, "a backlash to the new economy. Funding sources are over-residualized; cars are being returned to the funding source. There is a glut of used cars on the market. This could have a serious impact on the whole economy.
"Manufacturers, banks, corporations and rental companies are sitting with a tremendous amount of used cars. And that's good for consumers," Miller pointed out.
These used cars can be found through advertisements, at used car dealerships or in some cases directly from the company.
While Hertz and Enterprise have their own pages on their Web sites, you can contact other car-rental companies for further information via their Web sites: Budget, Alamo, Avis, National, Thrifty or Dollar.
And remember, if you do buy one, you don't have to fill the gas tank before you roll it into your driveway.
--by Bank Rate Monitor for CNNfn 
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