How to Start a Rental Car Business

by Nicole LaMarco; Updated September 26, 2017
Start a Rental Car Business

With airline prices soaring through the roof, more people than ever are turning to the rental car industry to help with their transportation needs. That means this could be a very lucrative area for a would-be entrepreneur. However, you can't just wake up one morning and open up such a business. You need to do some careful planning and preparing. The nicest part of such a business is that you don't necessarily need a lot of capital to get started. With just a couple of cars, a website and a phone number, you can get your business off the ground, especially if you follow these steps.

Decide on the type of car rental business you want. While that may seem like a silly first step, there are several options to choose from. You could be mostly interested in the travel market where you would rent cars to travelers who don't want to add mileage to their own vehicles. Another option is to become an event rental car business, meaning you would rent out your fleet for weddings, prom nights and other special events. A more recent entry is the exotic car business. As the name suggests, you rent cars that most people would never otherwise be able to afford.

Create your fleet. As mentioned earlier, you don't need a lot of vehicles to get started. Just remember that the more you have, the more potential earnings you have. Additionally, you need to select cars that will be appropriate for your type of rental business. Hummer SUVs are popular with event rentals while vans and sedans would be better choices for travel rentals. Because your clients are going to expect a nice vehicle for their money, you should always purchase new vehicles and keep them well-maintained.

Purchase insurance. All of the cars need to be covered by insurance. You can discuss with your agent the specifics of the policy, but you want to have sufficient coverage to pay for any damages to the vehicles and to the drivers if the cause of an accident is mechanical. Generally, you'll also want to be able to offer drivers optional insurance coverage. Remember that this is going to be one of your primary expenses--it's not something you want to skimp on.

Budget for maintenance. Another important part of running a car rental business is keeping those cars up and running. When one is out of commission, you are going to lose money. If you can't afford to have your own maintenance staff yet, consider working out an arrangement with a repair shop you trust. Because you may be bringing them a lot of business in the future, they may be willing to reduce your labor costs on repair jobs. Regardless, you have to set aside a decent sum of money so that you can cover the maintenance costs, including oil changes, tire replacement and tuneups.

Choose a safe parking area. Whether your business is beginning from your home or a small office, the cars in your fleet need a safe parking area. Consider renting space in a guarded parking garage if you don't have an area of your own. You should also think about investing in cameras and alarm systems to protect your vehicle investments.

About the Author

Nicole LaMarco is a copywriter and content marketing strategist with more than 15 years of experience. See her website at

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