Should You Rent or Buy a Car?

Buying a second car can be a stressful and costly task. However, depending on your reasoning for needing a second car, renting a car from a rental company may be better than buying another car. Of course, a rental car is never truly yours, but how often do you really use that second car anyway? Here are a few things to consider when you are wondering whether you should buy a second car or rent.

Do You Need a Car?

Do you really need that second car? Some people like the convenience of having a second car, but if you’re not going to be using it every single day, then it goes to waste. If you want a second car for occasional errands or trips, you’re better off renting a car instead of buying a second one. There’s no need to spend the money on a second car if you don’t truly need it every day.

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Lowered Insurance Costs

Depending on the insurance plan you have for your first car, you might be covered if you rent a second car. Some insurance plans make you register a second car, which drives up your yearly rate. However, some insurance plans cover a rental car under the original plan. Additionally, most credit card companies also cover car insurance on rental cars. By renting a second car, you’re saving money that you might have spent insuring another car.

Maintenance Costs on a New Car

Depending where you rent your car, the rental car agency might cover any maintenance costs. Maintaining a car is very expensive, especially if your car is prone to breaking down or needing new parts. If you’re already paying for the upkeep on one car, why pay for a second? If you decide to rent, make sure you rent from an agency or dealer that cover the cost of maintenance. It could save you hundreds or thousands of dollars.

The Fuel Costs With a New Car

Many rental agencies only have newer car models. While a used car might seem like a good second option to buy, you’re going to be paying a lot of gas. Most newer car models are fuel efficient. So renting a newer car with a better gas mileage is a great benefit. No one likes paying for gas, especially when it seems to be rising higher and higher each year. So why wouldn’t you choose to rent a cheaper, newer car that has better fuel efficiency?

Free Gas With Rental Cars

If you’re only using your second car temporarily, renting might be the better option, especially if you rent from a company that offers free gas. For instance, when you rent a car from ZipCar, the cost of gas is included in the price. So, if you’re renting a car for $8 an hour for half the day, you don’t need to worry about how far you’re driving or how much you’ll need to budget for gas. All you have to do is use their prepaid gas card and you’re good to go.

Change Your Car With Rental Company

Depending on the car rental agency or your contract with them, renting a second car instead of buying one might allow you the opportunity to change car styles. Say you need to rent a sedan for a family trip one month, but you need a truck for a construction project the next month. By renting a car, you’re able to make that change. Buying a second car means you’re stuck with that model and might be forced to temporarily rent an additional vehicle to suit your needs. Renting affords more opportunity and is more beneficial for those with ever changing lifestyles.

Renting is Flexible

If you sign a one or two year rental agreement, you have the flexibility to use a different car once the rental agreement expires. If you buy a car, especially if you buy it under a loan, you’re stuck with it until you finish paying it off. Some people buy second cars and then decide a year later that they don’t actually need them. With a rental car, if you don’t need that second car, you won’t be stuck paying for it after your agreement is up.

Rental Cars Can Be More Cost Effective

Renting a car might be more cost effective overall, and you probably won’t have to take out a loan to afford it. If you were thinking of refinancing or taking out a loan to pay for a second car, you’re heading for financial trouble. Shop around and see what car rental agencies offer in terms of price. You might find that the prices are reasonable, and then you won’t have to consider the loan you would have taken out to purchase that second car.

Upfront Cost is Lower With Rental

By renting a second car, you’ll end up paying less money upfront. If you decide to buy a new car – or even a used car from a dealership – you generally have to pay a large down payment. With a rental car, your down payment will be significantly less since you’re not permanently purchasing it. Additionally, your monthly fees will be less than if you had bought the car.

Business Cars Can Be Tax Deductible

If you’re thinking of buying a second car for business reasons, renting one will allow you to claim it as a business expense. Buying a car would be considered owning an asset and as the years go by, the asset depreciates in value, meaning less money for the owner.

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Photo: Flickr: Atomic Taco