- A record number of Americans are expected to take a road trip during the July Fourth holiday week, according to AAA.
- In some instances, opting to rent a car could prove to be more economically prudent than utilizing your personal vehicle for a journey.
- There are many things to consider: vehicle health, rental and insurance rates, fuel efficiency, depreciation and lease contract details.
The summertime is when people tend to go on car journeys.
A record 70.9 million Americans are expected to travel By vehicle during just the Independence Day week, according to AAA.
According to experts, renting a vehicle for a road trip could be a more economically prudent choice for certain car owners instead of using their personal cars.
"Several elements will significantly influence this decision," stated Greg Brannon, who serves as the director of automotive engineering research at AAA.
Those factors include According to Toyota, factors such as your present car’s fuel efficiency, the length of the trip, the duration of your absence, whether you lease or own the vehicle, and the size of your automobile are all considerations.
Below are several important factors to consider.
The car's specs
When it comes to deciding whether to rent, vehicle capacity is an obvious factor, according to Brian Moody, the executive editor of Autotrader, a car shopping website.
Moody explained, "The simplest way to put it is: 'My car seats only five people, but we're nine heading out for this trip.'"
Motorists might also have to compare features like whether they require a two-wheel drive or a four-wheel drive vehicle, along with assessing the available storage space for belongings and equipment.
Operating costs
Here is where things get more complex from a mathematical standpoint. Various financial expenses come into play; these include both clear-cut costs as well as those that might be harder to spot initially.
Drivers would need to compare total rental costs — the daily rental rate and potential add-ons like insurance — versus those of operating their own car.
Brannon stated that many individuals would be astonished by the actual expenses associated with owning and maintaining a vehicle.
Filling up costs, including gas or electric charging, represent a monetary factor for both those who rent cars and vehicle owners.
It could be feasible to lease a vehicle with better gas mileage to reduce expenses. As an example, leasing a car that achieves 40 miles per gallon compared to your current model which only gets 20 mpg would, assuming all other factors remain constant, halve your fuel expenditures.
"Should your vehicle be an older model with poor fuel efficiency, renting could be a sensible option," Moody suggested.
Rental costs
The average rental cost $42 a day In the second quarter of 2024, based on data from the travel website Hopper, most travelers opted for rental periods lasting four days.
The price per day may vary depending on factors such as the rental agency, vehicle model, and where you pick up and return the car.
The price for renting a car may increase by $30 to $61 per day due to the cost of insurance, as stated by Allianz Travel referencing MarketWatch information.
More from Personal Finance: Is inflation due to Biden or Trump?
Romance scams cost consumers $1.14 billion in 2023
FAFSA problems lead to tough decisions for students.
Tenants looking for car insurance might not require purchasing extra coverage from the rental agency.
Motorists might already be entitled to comprehensive coverage for rentals under their personal auto insurance plans, or they could have partial coverage thanks to their credit card perks, according to Brannon.
He advised, 'Reach out to your insurance agent and verify your coverage. You could end up saving a significant amount of money by avoiding duplicate insurance for the car if it’s unnecessary.'
Depreciation and limits on miles for lease agreements
Moreover, individuals leasing a car ought to consider aspects such as mileage limits prior to embarking on an extended journey. For instance, standard leases imposes financial penalties on drivers who put more than 12,000 miles a year on their vehicle, according to Kelley Blue Book.
According to KBB, the charge for surpassing that threshold typically ranges from 20 to 30 cents per mile. (If the rate were set at 30 cents, a driver would incur an additional expense of $300 for each 1,000 miles beyond the allowed limit.)
Additionally, you have to account for depreciation expenses.
Depreciation leads to a reduction in a car’s worth over time. As soon as the vehicle is driven away from the dealership, it can lose between 10% and 15% of its value, according to Brannon.
The largest cost associated with car ownership is depreciation, according to Brannon. This is why it's crucial to consider for road trips, as he explains.
"As you accumulate more mileage on a vehicle, its value decreases," Brannon stated.
Each mile causes additional strain on the engine, tires, and various components, as stated by Allianz.
Different cars experience depreciation in varying ways. According to Toyota, the typical vehicle loses value at an approximate rate of 20 cents per mile driven.
For brief road trips covering around 1,000 to 1,500 miles annually, depreciation may not significantly impact costs compared to renting, according to Autotrader's Moody.
Generally, depreciation primarily concerns those who intend to sell or trade in their vehicle at some point down the line.
State of the vehicle
Unexpected maintenance expenses can add up: According to Brannon, referencing AAA statistics, typical repair bills often surpass $500 when not including the cost for transporting your vehicle.
Moody mentioned that the likelihood of experiencing a malfunction is reduced with rental vehicles, as they typically consist of more recent models. He pointed out that the typical age of pre-owned cars currently on the roads is around 12 years.
Although a mechanical problem could be bothersome for anybody embarking on a road trip, renters wouldn't face financial repercussions (provided they aren't responsible), according to Moody.
Brannon highlights several queries motorists ought to consider: Am I keeping my vehicle well-maintained? Will it handle extended journeys efficiently? Do the tires remain in decent condition? Does it operate without mechanical issues? How many years has it been around? Which safety features come with this automobile?
Post a Comment