My friend David asked me about his recent car rental experience and whether I thought it helped him save money on his cross-country trip vs using his own ride.
Here are his comments:
“I actually did rent a vehicle. Whether my reasons for renting from Hertz vs. driving my own vehicle resulted in a wise spending decision or not, I couldn’t tell you. Maybe you, or one of your readers, can make a determination for me. Here are the details of my “excursion” (such a kidder, I know):
- My alternative to renting was driving my ’00 Ford Excursion half way across the US. Although still dependable with only 75k miles on the V10 gas engine, it’s still 9 years old. The last thing I needed to be dealing with on my vacation was a blown transmission, a broken a/c system, or something else that would take time away from our week at the beach. So, I’d call that the “cost of peace of mind,” (probably worth something).
- I rented a 2009 Toyota Sienna with 10k miles on it. I payed $556 for an 11 day rental period.
- Overall miles; I put 2,571 miles on the rental car; there is one oil change that I saved on 🙂
- I don’t know what the average cost per mile to drive my own vehicle before gas (cost, depreciation, routine maintenance, repairs, etc.), but let’s say it’s $0.20/mile. That would mean it would have cost me $514 before I put any gas in it ($0.20/mi. x 2,571miles = $514). Not an exact science, but I bet I’m not too far off.
- In my case, I think I saved some fuel costs too; the Ford Excursion has never won any awards for fuel economy 🙂
Not sure if any of that is useful, but you are welcome to use any of it on your blog.”
So what do you think? Did David save money? Is there ever a simple, cost-savings justification for renting vs driving your own car?
I asked some friends on Twitter and here were their thoughts:
The “Should I Rent?” Equation
Let’s look at the main elements to what I’ll call the “should I rent?” equation. The way I see it, it comes down to:
price of the rental [VS] (difference in MPG + wear and tear)
Price of the Rental
David listed his price above as $556 for an 11 day rental period. Not bad. Although I see that car rental prices have actually gone up. All you darn stay-cation-ers.
Difference in MPG
David’s Excursion gets approximately 13/15 mpg (14 avg). The Sienna he rented gets approximately 17/23 mpg (19 avg). Therefore, on his trip of 2,571 miles, his gallons used were 135.3. Had he taken his own ride, it would have been 183.6. At $2.50 per gallon. He spent $338.25 vs $459.00 for a savings of $120.75.
Wear and Tear Costs
Okay, now the factor that’s most difficult to calculate. What kind of wear and tear would David’s Excursion receive had he taken it? You can’t really use the IRS business mileage deduction, normally around .50 cents per mile because that includes gas (already factored in) and insurance (a sunk cost for David).
So that leaves things like car tires, oil changes, and other maintenance, as well as general depreciation. I’d say David is pretty close with his .20 cents a mile estimate. But let’s back into that number:
- Oil Changes – I’ll give David the $25 for the one oil change.
- Tires – I priced it out at Discount Tire, and a new set of 40k tires for the Excursion would cost around $500. That’s a per mile cost of 0.0125. Therefore, David’s trip cost him $33 in tires.
- Depreciation – To calculate this I went really conservative and went to Edmunds.com and did a True Market Value search. I compared a ’00 Excursion with 75,000 miles (current mileage) vs one with 77,500 miles (mileage had he taken it) to see how the mileage would affect the resale value. The difference in resale of the two vehicles was $44. Not as much as I would have thought.
- Repairs – I thought it was only fair to throw in some estimated repair costs from those miles. The best way I knew to estimate this was to get a quote for an extended warranty to cover repairs. The quote I requested was for this specific vehicle and covered 3 years or 50,000 (I figure the Excursion will be just about done at that point). The quote totaled $1,300, or .026 per mile. Using that rate, this trip would have cost David $67 in future repair costs.
That brings the total wear and tear cost to $169. That’s closer to a .07 cent per mile cost vs David’s .20 cent estimate.
Using our formula above here’s how the total numbers look:
$556 [VS] $289.75 (120.75 + 169)
Based on that formula, it looks like David, by renting, spent $266.25 more than it would have ultimately cost him by taking his Excursion. What do you think? Was I too conservative on my costs? Did I leave anything out?
It would be remiss of me not to discuss some of the non-monetary factors involved here. As David mentioned, he had a “piece of mind” taking a new car across country vs chancing it with his ’00. I agree that is worth something. Other non-monetary reasons to rent:
A Better Fit – Certain rental cars may be a better fit for the type of trip your taking. For instance, you would need to downsize to a smaller vehicle if you’re going to be maneuvering in and around a tight city.
Extended Test Drive – It might be a good idea to use a rental as an extended test drive. There’s a definite value in being able to check out a particular model over a week vs a 10 minute drive.
The Cool Factor – It’s just fun to rent a new car. It adds to the experience of the trip. And new cars often come with the bells and whistles we aren’t experiencing with our used cars.
Tips for Saving On Your Rental
Finally, here are a few tips to keep handy next time you decide to rent vs buy.
Shop Around – Visit all the big sites like Expedia and Orbitz. But also go direct to the rental car websites. And don’t be afraid of the smaller rental car companies.
Rent on Tuesday or Wednesday – This is the best time of the week to rent a car. Business travelers are usually on the road Sunday night or Monday morning, while rentals for vacation peak Thursday through Saturday. So take advantage of the slow time and rent your car midweek.
Apply Discounts – Take advantage of any memberships you might have, look for deals through your insurance company, apply airline miles, and even ask your hotel concierge.
Stay Away from Airports – I didn’t realize this, but apparently car rental shops near the airport are more expensive.
So what are your thoughts? Would you ever consider renting a car to try and save money on your trip?