Renting a car instead of driving your own is often a great deal. Thanks to some big changes in the auto industry, it could be an even bigger deal, saving you hundreds of dollars.
The auto industry has noticed—Americans are changing tastes in vehicles. Basically, SUVs, crossovers and pickups are gaining in popularity, while sedans are much less popular. Auto makers aren’t just turning out fewer sedans; they’re cutting whole lines of cars. Ford, for example, is cutting Focus, Fusion and Taurus production, at least in North America. Relax, though—Ford will keep making the Mustang here. But say goodbye to the venerable Volkswagen Beetle and other auto icons.
The switch away from sedans has been a trend for years, but it’s accelerating faster than the automakers calculated. They’re responding by pushing more cars to rental companies. That means deals on rental cars are exceptionally sweet, making now a particularly good time to consider renting a car instead of driving your own on long trips.
Here’s a real-life example: one of my family members recently had to make a 4-day, 1,200-mile trip. Yes, she could have taken our SUV, but why not rent a Toyota Camry with 40 mpg on the highway (!) for $139? That’s the best price we found on a couple of travel sites, such as Expedia and Kayak. If you figure the depreciation on your own car at 50 cents a mile—which is cheap, especially if you drive a car that needs more costly repairs and guzzles more gas—the amount you need to beat is $600 (1,200 miles divided by 50 cents a mile).
Bottom line, she “saved” about $365.
Here’s how to calculate the savings. A Camry gets about 40 mpg highway and has a 16-gallon gas tank. The tank was filled twice—once on the trip, and once before returning the car.
$3 per gallon of gas x 32 gallons used = $96
$96 (cost of gas) + $139 (rental cost) = $235
$600 (the depreciation) – $235 = $365 in savings
By renting a car for long trips, especially, you can significantly extend the life of your car. And, the more miles you put on your personal vehicle, the less you’ll have in value when the time comes to trade it in. I figure that through rentals, we kept about 15,000 miles off our old Honda Odyssey minivan. That not only bought us an extra year of use, but it also saved us thousands of dollars in repair bills. It was especially economical when we rented a car that got much better gas mileage than the Odyssey.
My rule of thumb is to consider renting if I’m averaging 300 miles on a vehicle per day.
This strategy may not be for you if you trade in your car frequently or if you lease your car—unless you’re in danger of going over the maximum miles for your contract.
Another advantage to renting is getting to check out the latest technology available. I love driving, and I love seeing what new technology is going into cars, so this is a big plus for me. Recently, I drove rental cars with features that prevented me from getting too close to the car in front of me and alerted me (with a little wheel jiggle) when I changed lanes without signaling.
For my next car, I’m definitely going to look for those safety measures.
So the next time you’re planning a road trip, check out rental rates and do the math to see if it’s right for you.
About the Author: Robert Frick is the corporate economist for Navy Federal Credit Union. He holds a B.A. (Journalism) and an M.B.A. from the Pennsylvania State University, and was a financial and business journalist, including working as a newspaper business editor and senior editor for Kiplinger’s Personal Finance magazine. He was also editorial director of a financial publishing firm and is an expert in behavioral economics, having published more than 50 articles on the subject, and having worked as a researcher, writer and speaker for the Allianz Center for Behavioral Finance.