If you are looking for a great deal on a used car, check out the inventory at a local car rental agency.
Rental car dealers typically offer vehicles at 1.6% below their market value, a better deal than you will find at dealerships, according to an analysis from iSeeCars. On average, buying from a rental agency will drop your purchase price by $303.
In compiling its numbers, iSeeCars looked at more than 8.5 million used car sales across three dealer types:
- Traditional brick-and-mortar dealerships
- Virtual dealerships
- Rental car companies
The car search engine found that you actually will pay 0.2% more — about $31 — at a traditional local dealership, and a whopping 2.4% more — or $444 — at online dealerships than you would at a rental car agency.
Karl Brauer, executive analyst at iSeeCars, says there are a couple of reasons why rental car agencies tend to offer better deals:
“Because rental car companies buy their cars at a high volume and at a discounted rate, they’re able to sell these vehicles for less to consumers, and they price the vehicles to sell in order to move their inventory quickly. Additionally, rental car companies are also more likely to discount their vehicles given the financial hardships they are facing from the COVID-19 pandemic.”
In fact, rental car agencies offer the biggest savings on 13 of the 25 most popular vehicle models. However, as iSeeCars notes, more than 98% of the inventory at rental car companies is no more than 3 years old. So, if you are shopping for an older model, you will have to look elsewhere.
Getting a great deal on a used car
Shopping for used cars is usually a good idea, as you avoid the nasty depreciation that occurs in the first few years of a new car’s lifespan.
However, simply buying used does not guarantee you a great deal. As with any major purchase, you must do your homework and avoid key mistakes.
For example, many buyers fail to zero in on a car’s total cost. As we have reported:
“One of the most serious errors car buyers make is to concentrate on monthly loan payments instead of the total cost of the car. It’s possible to negotiate your monthly payment to suit your budget and still end up spending more than you had planned — or could afford — to pay.”
For more on preparing to buy, check out “5 Steps You Must Take Before Buying a Used Car.”
Once you have purchased a vehicle, increase your savings by getting a deal on auto insurance. Third-party sites such as Gabi or The Zebra can find the best rates for you if you don’t have time or patience to call around to insurers for quotes.
Money Talks News founder Stacy Johnson details his own experience using Gabi in “How I Found $546 in Car Insurance Savings in Under 10 Minutes.”