Note: Here’s some tips you can use to figure out if a car used to be a rental.

1) How long are you going to keep it?

Just like we talked about in Questions You Should Ask Before Buying Used, it’s important for you to know how long you’re going to keep the car you buy. Used rental cars tend to have more general wear, so they don’t hold up as well 5 to 10 years down the road as a privately owned used car. If you’re looking to buy something that will last forever, you probably shouldn’t consider a used rental car.

2) Do stains, smells, scratches, and dents really bother you?

While no one likes stains, smells, scratches, etc., most of us are willing to live with one or two. But the thing about used rental cars is that they almost always have more stains, more smells, more scratches, and more dents than you’d find on a non-rental used. Don’t get me wrong here - some used rental cars are in excellent shape (particularly those commonly rented by retirees). But if you’re sensitive to certain smells (like cigarette smoke, for instance), if you’re a neat freak, or if you’re just picky (which is OK as far as I’m concerned), a used rental car isn’t a good choice.

3) Are you simply looking for basic transportation?

If you’re not going to be emotionally attached to your car, a used rental car is an excellent idea. They often qualify for factory backed “certified used programs”, which include upgraded warranty coverage and special financing rates that often compare to new vehicle financing rates. Here’s a good example of what I’m talking about - I had a customer who was a traveling salesman. He spent most of his life in his car, driving from place to place. He needed a car that was fairly new in order to keep up appearances, as well as something that was very reliable (preferably with a warranty). But he didn’t really care about wear and tear, and he wanted to spend as little money as possible. For him, a used rental car was the perfect choice.

4) Are you credit-challenged?

If your credit is less than perfect, a used rental car is a good way to buy a fairly new car while keeping your monthly payments down. Used rental cars often qualify for factory backed “certified used” programs, which usually have aggressive financing available for people with bad credit. Used rental cars also tend to be easier to qualify for (credit wise) than other used cars because of the way they’re valued by the bank. If you’re credit challenged, make sure you investigate this option.

5) Rental cars are well maintained and tend to have few mechanical problems.

It may sound crazy, but rental cars are usually better maintained than cars owned by a private individual. Rental car companies don’t actually buy new cars from the manufacturers — they lease them. A company like Hertz will lease a new Toyota Corolla from Toyota, returning the vehicle to Toyota once it reaches a certain age or mileage (hence the terms “fleet vehicle” and “program car”). One of the terms of the lease is that the rental car company must perform all the manufacturer’s suggested maintenance, and must retain proof of doing so. Rental companies also tend to do a nice job of getting things fixed or adjusted under warranty.

As always, take your time when buying a used car. Do your used car research, get multiple used car financing quotes, and feel free to contact us with your questions.

1. Complete an Inspection.

We can’t emphasize this enough - inspecting a used vehicle is the best way to make sure you don’t buy a bad car. Luckily, you have lots of options when it comes to completing this step. You can use our Used Car Checklist — We give you a complete list of items to inspect, and we’ve got a complete step-by-step breakdown of every item on the checklist. You can also hire a local professional inspection service. Either way, this step is crucial. If you don’t inspect the car, you may come to regret it later.

2. Does The Car’s “Story” Make Sense?

When you’re looking at a used car, you always have to think “Why would someone sell this car?” Often times, the answer you get from the seller will make sense — the owner is moving, the car is too small, the car is too big, it’s no longer needed, etc. While these stories are often true, it’s important to remember that the seller could be lying to you. For example, a person selling a one-year-old car may tell you they’re getting rid of it because it’s too expensive. However, there’s a chance the owner is selling their car because it has some sort of incurable mechanical problem (in other words, it might be a lemon). Don’t get me wrong — you don’t have to doubt every person you talk to. Just remember to be a little skeptical when you find out why someone is getting rid of their car. If you have doubts about the seller’s motivations, feel free to walk away.

3. Generally speaking, there are a handful of features and options that reduce a car’s long-term reliability. Here’s a quick list:

a. Manual transmissions are always less reliable than automatics, simply because they’re certain to require a new clutch at some point in the future. If you choose to buy a used car with a manual transmission, make sure you can afford to replace the clutch at some point in the near future (just in case).

b. Vehicles with either Turbochargers or Superchargers are usually less reliable than vehicles without. Most likely, the person that owned the car when it was new drove it hard and fast. Turbochargers and superchargers also tend to be more maintenance intensive, so buy with care.

c. With the exception of some basic equipment, any vehicle with after-market parts and accessories is more likely to be less reliable than a standard vehicle. After-market (or non-factory) options like custom body parts, air intakes, suspension kits, performance chips, alarm systems, or expensive interior electronics could indicate the previous owner was harder on their vehicle than most people. If you see evidence of poor installation (like loose wires or missing pieces), it’s probably a good indicator that the parts weren’t installed professionally. Amateur installations are MUCH more likely to damage a vehicle.

4. Get a Vehicle History Report.
Before buying a used car, it’s important to purchase either a CarFax or AutoCheck vehicle history report. You only need one of these reports (they’re about $20), and you can use them to make sure the car you’re looking at wasn’t a “Manufacturer Buyback” vehicle (also known as a “lemon”), that it’s not a salvage title, see if the vehicle has any accident reports, open recalls, etc. While these reports aren’t completely accurate (sometimes I’ve found them to be missing data), they’re very good and easily worth the $20 you spend on them.

5. Hire a Professional Inspector

While our Used Car Checklist is very good for finding obvious problems with a vehicle, it’s no substitute for a professional inspection. A professional inspector (usually a former mechanic) will crawl under a vehicle, poke, prod, check fluids, etc. until he or she is satisfied the car is OK to buy. Professional inspections can cost anywhere from $75 to $200, but they often will travel to the vehicle to complete the inspection, and they’re almost always worth the expense. Unless the used car you’re looking at is almost brand new (say, less than 20k miles AND less than 2 years old), hiring an inspector is a good idea.

1. Edmunds.com

The internet is full of free and accurate reliability information. While there are hundreds of places you can go, we think the best free site on the internet for researching a vehicle is Edmunds.com. Edmunds provides great new and used car research tools, including a nice combination of editor’s ratings and user ratings (see below).

While we really like the simple and easy to use rating system, there are a couple of problems. First of all, we’ve noticed that consumer ratings are always “off” - in our opinion, they never really seem to reflect the quality, value, and reliability of the car. It’s best not to put too much stock into the “Consumer Rating” number shown on Edmunds.com. However, that doesn’t mean you shouldn’t read through the individual consumer reviews. There are usually some good ones worth reading, and you know the information is legit.

We really like Edmunds.com’s “Editor’s Rating” - it seems to be accurate almost all the time. As we’ve said, Edmunds.com is easily the best free resource on the internet. However, there is one drawback to the Edmunds site — they don’t offer many details when it comes to actual reliability. You’ll have to go elsewhere for that…

2. Consumer Reports

Consumer Reports provides quality reliability ratings for just about every vehicle, and when you subscribe to their website you get access to all their ratings (even if you only subscribe for one month). If you don’t want to subscribe online, you can go to your local bookstore and buy their annual Automobile Buying Guide in print (most bookstores stock them all year). The information we’re going to describe can be found in either place.

Consumer Reports has a fairly simple system for showing how reliable a car is predicted to be. The system is backwards, but basically RED = GOOD and BLACK = BAD. If you look at a rating and it’s blank (no color), that means the rating is “average”. Take a look:

Consumer Reports is dedicated to giving you a great deal of information, and they do a lot of polling and testing to come up with their data. If you don’t mind spending a few dollars, it’s a good investment.

The reliability reports show data for each major system of the vehicle from the transmission to the fuel system, but we don’t think all that information is very important to most people. Just take a look at the rating for “Used Car Prediction” in the bottom row. If a vehicle scores average or higher in the “prediction” category, it’s worth considering. If it scores below average, then you may want to rule it out (or at least look at the ratings for each item to see if you can figure out why the overall rating is low).

There is one thing we’d like to point out - in our opinion, Consumer Reports tends to be a little biased towards imports. If you’re considering purchasing a domestic vehicle, we think the Consumer Reports rating is a little lower than it should be. This isn’t based on a specific instance - it’s just that in our years of experience in the auto industry, Consumer Reports tends to favor foreign auto makers. None the less, they provide some great information, and they are also highly recommended. When you combine the Consumer Reports and Edmunds ratings, you should have a good idea of how reliable a car is going to be.

So you know where to go to get information. What do you do with it? We recommend you make a list of vehicles you’re considering and then look up the ratings for each vehicle. If any of the vehicles on your list score poorly on either Edmunds.com or Consumer Reports, you should consider scratching them off your list.

One more thing — Consumer Reports offers a “Price Report” for new or used cars for a small charge. While we’re sure it’s good information, don’t buy the Consumer Reports “Price Reports“, Edmunds.com has the same information for free. Edmunds offers “True Market Value” pricing free on their website and it’s very accurate and useful.

Here are some different methods for figuring out your budget (If you like, you can skip all this reading and just get pre-qualified now, but what’s the fun in that?):

1. Are you paying cash, or do you want to finance?

If you’re paying cash, it should be simple for you to figure out what you can afford — just make sure to leave yourself enough cash for emergencies. If you’re financing, the first step is to figure out how much of a monthly payment is affordable. The quickest (5 minutes or less), and easiest way to do this is to grab a pen, a blank sheet of paper, your last pay stub, and a calculator. Go ahead — we’ll wait for you. Got it? OK.

Now, start writing down your monthly expenses in a column from top to bottom. Make sure you include rent/mortgage, other car payments (if you have another car), student loans, home equity loans, 2nd mortgages, etc. These are all of your big, fixed expenses. Don’t include your current car payment — leave it off the page. Next you should write down child care expenses, credit card payments, cable, phone, utilities, and any other regular monthly bills. You also need to write down your monthly food, entertainment, and other expenses. If you don’t know how much these are, you should go through your checkbook or online bank statement and add them up from the last full month. Finally, make sure you write down how much money you want to save every month, as well as how much you want to use for making extra payments to pay bills off early.

Once you’ve written it all down, add it up. Compare the total to your monthly income after taxes — if you’re not sure how much that is, you can figure it out from your pay stub. Subtract your expenses from your monthly income and you end up with the most payment that you can afford. (If it’s is a negative number, you either did the math wrong or you spend more than you make each month.)

2. How banks figure out how much payment you can afford.

Most banks don’t have any idea what your expenses are, so they use an average to figure out what you can afford. To figure it out like a bank would, you take your gross monthly income (that’s the amount of money you get paid before taxes), and multiply it by 15%(you can use our Payment To Income Budget Calculator and skip the rest of this explanation if you want to). According to just about every bank in the US, that amount is the most you can afford to spend each month on all of your cars combined. So, for example, let’s say you earn $3k a month before taxes. 15% of $3k, is $450 dollars. According to most banks, the most you can afford to pay for a car is $450 a month. Keep in mind that number includes all your car payments, so if you have a motorcycle, an ATV, a boat, etc., the amount of that payment is subtracted from the total. This method, called the payment to income method, is a good way to figure out the most you can afford. However, method one is still the best way to make sure you get it right. If you take the time to figure out your budget now you’ll be happy in the long run.

3. How to figure out how much you can afford to finance.

Using the smaller number from methods 1 and 2, you should come up with your ideal monthly payment. Once you know how much of a monthly payment you can afford, it’s pretty ease to figure out how expensive of a car you can afford to buy (you can use our Price Range Calculator and skip the rest of this explanation if you want to). Take the amount of your ideal monthly payment, and using your calculator, divide it by 25. Then, multiply by 1000. That amount is the bottom end of your spending range. Now, clear the calculator and repeat the same step, but this time divide the ideal monthly payment by 20 (instead of 25). That’s the top end of your spending range. For instance, a $300 ideal payment gives you a spending range of $12-$15k dollars. You should only look at vehicles with an asking price of $15k or less if you want your payment to be $300 a month. As long as your credit is good and your sales tax is normal, this method works pretty well. Of course, the easiest way to figure all this out is to…

4. Get Pre-Qualified.

We can’t emphasize this one enough — regardless of your credit situation, regardless of your financial circumstance, there’s absolutely no good reason NOT to get pre-qualified. You can call your bank, your credit union, or you can use our recommended online quote services to find out what you can afford, what interest rate you’ll get, etc. We suggest everyone get pre-qualified as early in the process as possible. This way, you won’t waste time looking at the wrong vehicles, and you don’t have to feel nervous about your financing while you shop. Filling out an online quote form is easy and fast, and we highly recommend it. If you don’t want to do it online, call your local credit union or your local bank. They have people their that will ask you some questions, check your credit, and give you a good estimate. Going online is the fastest method, and you can also get multiple quotes online fairly quickly. Calling multiple banks on the phone takes much longer.

1. 2 door or 4 door? Car, truck, or SUV? How many seats do you need? Automatic or manual transmission? Light or dark colors? DVD player?

Do you need 5 seats all the time (because your family is five people), some of the time (just when you car pool), or almost none of the time (just when relatives visit once a year)? Do you need a pickup bed because your work requires it, or because a few times a year you need to haul some equipment? If you can honestly and objectively evaluate your needs, you can save yourself a lot of money. I’ve met lots of people who told me they needed a particular feature because they had a special circumstance (relatives visiting, hauling a boat, etc.). However, when I asked how often this special circumstance actually occurred, I found out it was only once or twice a year. When I pointed out it was cheaper to rent a car that filled this need once or twice a year that it was to buy one, I ended-up saving the people hundreds of dollars a month. Don’t let that one extreme circumstance convince you to buy a feature you don’t really need, or at least one that you won’t use very often. You can almost always rent a big SUV, a truck, or anything else you need for that one time a year when you have relatives visit, haul something, tow something, etc. When you’ve figured out what you really need, make a list.

2. What do you like the most about your current vehicle? What do you like the least?

This question will help you figure out if you’re using all the features you have. Here’s an example — I knew a couple that would lease a new SUV every two years. Because they were so busy, they would usually come into the dealership separately. The husband would always make sure the SUV had a sunroof, and the wife would always make sure the SUV had the nicest stereo. Here’s the funny part — the husband asked for the sunroof because he thought his wife used it, and the wife asked for the stereo because she thought her husband used it. We finally figured this whole thing out when we had a chance to talk to both of them together, and they realized neither of them were using these features! Needless to say, the next SUV they got didn’t have a sunroof or the upgraded stereo.

The other reason you should evaluate your current vehicle is that it’s a good way to figure out if you don’t have a feature you really need. For instance, if your favorite feature on your current vehicle is the engine power, but your most hated feature is the poor gas mileage, you can use your experiences to figure out which is more important. Just like above, make a list of the things you like and the things you could live without.

3. Are there any new features or options that you absolutely must have? Any that you can’t stand?

Next time you’re in a parking lot, take 5 minutes and look at some other kinds of cars. Even if you’re not interested in owning a big Chevy SUV, you might like the idea of having a folding row of seats. Or maybe you want a hatchback because they’re so easy to load. Maybe you’re interested in a vehicle that has an upright sitting position, or maybe you’d like to have 4wd or AWD for the winter months. Make a list of the features you might be interested in and the features you don’t want — that’s a good way to help you figure out what’s most important to you.

By now you should have three lists — 1. The features you need; 2. The things you like about your current car and the things you could live without; 3. The new features you want and the ones you can’t stand. Looking at all three of your lists, you should be able to figure out pretty quickly if a car is going to work for you. With your lists in mind, it’s time to go window shopping. Take a look at cars and decide if they meet your criteria — if they do, test drive them. If they don’t, look at something else. When you find one you like, check out our new car buying guide or used car buying guide for advice on getting the best deal.