To rent a car and to turn it into a source of income is a popular business. At first glance, the case is profitable: the car remains in your property, and also brings money. However, there are a lot of pitfalls and renting a car, you need to take into account a large number of factors.
The main thing is to ensure the legal side of the issue by drawing up a contract and purchasing a full insurance policy. The careless attitude in this case can result not only in financial costs, but the loss of the car also.
To whom to rent a car
- The most common category is the ordinary people who constantly need a vehicle. Own car is at the service station, and public transport for some criteria or circumstances is not suitable. Or, the person went on vacation / business trip and needs to move freely. In any case, it’s much more comfortable and financially more profitable to rent a car than to spend money on the taxi services.
- The second option - companies and legal entities that need a car during the work, and there are no funds or conditions for maintaining a vehicle fleet.
- If you are an owner of a high-end car, businessmen or public people will be interested in such services. For them, renting a luxury car first of all is the status and underlining the level of income at events and meetings.
- It’s also common to provide cars to large car rental companies that take risks and offer an accurate amount. But here is necessary to be careful, and you should not count on a huge profit.
What are the risks and how to protect yourself
Renting a car, the owner risks to get a broken vehicle back, or the car can be involved in fraudsters. In order not to get into such situations, before you start renting a car, use the following recommendations:
- Sign a lease agreement, where possible insurance risks will be stated in case of theft or damage of the car.
- Get full auto insurance.
- Take care of appropriateness and comfort of the rented vehicle.
- Consider the requirements for the future tenant, including age, driving category, driving experience and so on.
- Don’t rent a car without a receipt, which contains all the information about the tenant.
By adhering to these recommendations, you can save not only the car, but also earn.
Possible costs and profits
When compiling a business plan, consider all types of investments, which include initial, annual and monthly:
- Initial investment. If you are going to rent a previously used car, take care of the repair of components, replacement of consumable items and lubricants. If to neglect these, there is a big chance of a breakdown on the road caused not by the driver's fault, and even a complete refusal of the vehicle with a refund. Besides the car maintenance, you will have to pay money for business registration.
- Annual investments. Even a serviceable car needs a complete diagnosis at least once a year and the repair of the slightest damages. In addition, if you are not going to stop at a single car and want to open a car rental, invest money in the development and expansion of the vehicle fleet. Part of the funds will go to advertising: ads on specialized sites, creation of the website and other methods of promoting the service. Also annually you need to renew your insurance policy.
- Monthly investment. This includes the running costs that will be needed for repairs, car maintenance, oil change and other auto chemical goods. Also, money will be needed to maintain the attractive appearance of the car, washing and dry cleaning of the salon. If you do not have your own parking, you will have to pay for it.
These are basic costs only that faced by those who wish to rent a car.
Incomes and profits, the difference between them and what they depend on
Properly organized car rental business will surely pay off. Time of the profit occurrence and its size depend on the following factors:
- Class and condition of the car. The cost of renting a cheap car is much lower than the premium models.
- Amount of the cars in a vehicle fleet. Renting a single car you will not cover the number of customer needs, as if you had several cars of different classes and purposes.
- The area where you offer services. A town which is situated outside of the resort area will not give as many tenants as a megapolis or an area with a large number of tourists.
- Specificity of the proposal. You can rent the average car, also you can provide additional decoration for celebrations or equipment for traveling.
If to talk about the difference between income and profit, it’s significant. Income includes all financial investments during the working process of the company, and profits - only the amount that remains after the deduction of taxes, expenses and fees.
How to simplify the organization of car rental
In order to improve the car owner's interaction with customers, there is a special web service RentSyst. The tenant goes there, chooses the car he likes and the desired date. Such software allows the car owner to control orders, to see the necessary information and statistics.
With car rental solutions of RentSyst, you will be able not only to track orders, but to see new ones separately. Also, with the help of calendar it is easy to see when and which car was reserved. Here will be also displayed the information about the car, who is the tenant, reviews and rates. RentSyst - car rental software makes easy to do bookkeeping and make forecasts for future income.
Not everyone can afford own transport, but it often happens that it’s necessary. Then people contact car rental companies. Opening a company in this area requires a detailed analysis of the market, competitors and the preparation of a competent business plan. Using our advice, you can easily overcome the difficulties that will meet on the way, creating a prosperous business.