Earlier this week we saw how owning a new car can cost close to $1,000 per month. That cost is part of the reasoning behind car sharing services such as ZipCar and ReachNow, which offer inexpensive and convenient short-term car rentals.
Car sharing can be a perfect money-saving solution for people in urban areas who don’t need a car every day, but do require occasional personal transportation.
What about the other end of things, though? What about the guy or gal who did purchase that new car and is watching the costs pile up while the bank account slims down?
There’s a new solution for those people, too, but it might be a good idea to resist temptation and avoid it, at least for now.
Personal car rental is a relatively new trend that’s gaining popularity in the United States. There are numerous companies now offering to hook car owners up with people who are looking to rent a car. The pitch goes like this:
You have a newer car and would like to reduce your cost of ownership. Rent out your car instead of letting it sit unused and make extra money each month.
Sounds tempting, doesn’t it?
A calculator on one site estimates that a car with a $24,000 market value rented out for 10 days each month will net just over $5,000 a year, or a little more than $400 per month. That would essentially take care of the payment, but the renting can come at a much higher overall cost.
One reason to avoid renting out your car is the same as not purchasing a car that was once in a rental fleet. People tend to abuse rentals because they have no ownership stake in them. They drive the rental cars harder and take less care for their overall well-being. Even a good insurance policy can’t negate a couple days of hard drag racing.
Even if a driver chooses to take the risk of potential damage to a car, he or she could be at a far greater liability risk.
A Forbes article said,
Insurers and regulators complain that some subscription car-sharing outfits provide renters with only the minimum state requirement for liability insurance, which is often far below the level needed to be completely protected against million-dollar liability verdicts. Liability insurance is the part of an auto policy that pays for bodily injury and property damage to others in an accident.
Theoretically, the owner of a rented car could be liable for injuries and damages should the renter cause an accident. If you do plan on signing up to offer your car for rent, be sure to contact your insurance company first and get all the details.
Would you trust a stranger behind the wheel of your car, even if they’re paying you for it?