Investing 10 dollars a day rental car

investing 10 dollars a day rental car

Having one rental property or $, in shares in one dividend-paying company traditionally relies on having money to invest or allocate from day one. Are you wondering how much a rental car is going to cost you? the type of car you want to rent, your pickup location, the day of the. The company also lined up access to nearly $10 billion in loans, credit lines In some cities, cars can rent for more than $ a day. ANDREI MALKOV FOREX BROKER

For several years, that was an active, though theoretical, discussion. Recently, as you know, it became real. And it played out for car rental just as car rental people said it would; namely, manufacturers honored their repurchase agreements and continued to sell to car rental fleets. Car rental is and remains an important customer for automakers.

Car rental is really a kind of finance business and rental service combined. It has nothing to do with manufacturing, unions or foreign competition. In fact, I "go big" early in the discussion-car rental is an essential service and a key part of the transportation network. It enjoys a "utility-like quality" of predictable and recurring revenues. You can't outsource it to a developing country, nor disintermediate it with the Internet. It is here to stay.

You first have to deduct the costs of the fleet. Vehicle depreciation and interest is "cost of goods sold" for a car rental company. It's the cash flow that can be spent at management's discretion after fleet costs have been paid. Finally, depreciation of the fleet is a cash expense, not a non-cash expense as it is in a business with longer-lived assets, so you don't add it back when determining cash flow.

I go right at it: the used car market is huge, efficient, liquid and the same for everybody. Car rental companies monitor their monthly depreciation charges constantly and make changes as needed. In fact, major car rental companies, over time, average a gain on sale of a few hundred dollars per risk car.

What's more, they are all impacted equally and can instantly adjust by tweaking depreciation schedules, raising prices or cutting costs. Who says? In fact, one can argue it's not capital intensive at all-the fleet is financed largely by debt, and non-fleet capital expenditure capex is relatively small. A dollar of debt is matched against more than a dollar of car and cash. I explain that it's hard to go bankrupt, so long as you don't incur non-vehicle debt.

Too much non-vehicle debt combined with a downturn in demand or pricing has led to a couple of bankruptcies. On the other hand, Dollar Thrifty demonstrated the terrific credit quality of a properly capitalized car rental company during the recent downturn. You shrink fleet and staffing levels so that diminished revenue can continue to cover costs. Car rental companies enjoy a proven ability to de-fleet in a downturn.

They benefit from a "highly variable cost structure"; that is, it's relatively straightforward to match costs to revenue. This is stating the obvious to someone who's taken accounting. After all, net income is what's left over after all the bills are paid. It's sort of like a first principle.

But I find I need to point it out because financial models of car rental companies often lead the modelers to conclude that there's no free cash flow which, if true, would make bankers and owners nervous. In fact, properly modeled and demonstrated by decades of performance, car rental companies generally produce net income margins of 5 to 10 percent.

Fleet growth can be accommodated by new debt and a growing Owners' Equity account. In fact, well over 90 percent of market share in the U. The stability of these brands and market shares over decades is remarkable. On the other hand, it's not as if nothing ever changes, or you can't invent a better mouse trap.

But compared to many industries, car rental exudes stability. Market shares do move around, but the established brands attract the business. But I've looked at decades of detailed pricing data by brand, and long-term price trends among the brands are consistent with the brand images.

What causes spot discrepancies? Roughly speaking, half the pricing decision on any given rental is based on competitive factors, and half on the need to "move the metal. Because of the many variables, it's a good idea to take the time to comparison shop among several different car rental companies. Keep in mind that renting a car is a lot like shopping for an airline ticket in many respects.

Prices are constantly changing, even from minute to minute, so if you happen to catch an extra-low price, don't hesitate to book the offer, because you probably won't see it again even an hour later. When You Book Generally speaking, the earlier you start looking, the better the car rental deal you are going to get.

Three to six months in advance is the best time frame. If you need to book a car for the next day, you are going to pay a lot more money than if you allow more time to shop around before you need to drive. As such, you are likely to get a better rate if you are renting a car for weekend travel than if you need it for weekday travel. Where You Pick Up Renting a car at the airport is incredibly convenient—and significantly more expensive.

If you are flying into a large city that has easily accessible public transportation options, ride share services, or taxis, consider looking for rental car deals outside the airport. You might save much more than the taxi fare. Part of the greater expense of an in-airport car rental is a concession fee that some companies charge to cover the amount they must pay to the airport for having a rental counter there. For example, Thrifty may charge you that concession fee, and Budget may charge both concession and facility fees at airports.

That's true whether you're doing a cross-country trip or staying within the same town. National Car Rental refers to this situation as a one-way car rental and the extra charge as an inter-city fee or drop charge. And if you're planning a long trip, you may be better off renting for an entire week. An economy vehicle—a rather small car that is typically very fuel-efficient—is almost always your cheapest option.

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