We chose to rent a car during our 2 months in Europe, as we thought it would be the best way to go off-the-beaten-path and maintain a flexible schedule. This meant we'd need a car from mid-June to mid-August - 56 days to be exact - picking up the car in one city and dropping it in another.
One way to do this was to simply rent a car.
Another option was a short-term lease. This is a program run by both of the large French car manufacturers - Renault and Peugeot/Citroen. I believe they receive some sort of subsidy from the government for the program as it helps to drive tourism. The manufacturers like it because they get to book a few additional sales. Here is the deal:
The manufacturers claim that this is typically the best deal for those who need a car for at least 17 days. So of course, we decided to crunch the numbers.
Car Rental:
First, we broke down the car rental costs:
As it turned out, the drop fees associated with the back-to-back rentals made that option totally cost prohibitive. And the collision insurance effectively doubled the cost of the car rental.
French Manufacturer Lease Program:
We next priced out the Renault and Peugeot/Citroen, lease programs for the same car class we had been quoted for the rental.
Interestingly, our quote came out very close to the cost of the one way rental plus the insurance. The cost was essentially a wash. We had read great reviews of the lease programs and how hassle and worry-free they are, so decided to go that route since we'd have a new car and everything was included in one package before we left.
Our date and time of pickup were confirmed, and when we arrived in Montpellier, the entire pickup process was fast and efficient. Here is what we ended up with:
One way to do this was to simply rent a car.
Another option was a short-term lease. This is a program run by both of the large French car manufacturers - Renault and Peugeot/Citroen. I believe they receive some sort of subsidy from the government for the program as it helps to drive tourism. The manufacturers like it because they get to book a few additional sales. Here is the deal:
- Technically, when you sign up for one of these 'leases', you are actually buying the car. The manufacturer guarantees they will buy it back from you at a set time and place, for a set price.
- The manufacturer registers the car in your name and provides full insurance for liability and collision, which is valid throughout Europe.
- You are allowed unlimited mileage.
- You pay only one price, which is the equivalent of the purchase price minus the buy back price plus the registration and insurance costs.
The manufacturers claim that this is typically the best deal for those who need a car for at least 17 days. So of course, we decided to crunch the numbers.
Car Rental:
First, we broke down the car rental costs:
- Base cost to rent the car
- Drop Fee: In addition to the rental cost itself, rental companies will also charge you a one-way or drop fee, which can be quite a lot depending on the beginning and ending cities you select. In our case, beginning in Montpellier and ending in Amsterdam, the fee was actually pretty reasonable. If we had chosen to drop it in, say, Rome, however, it would have been exorbitant.
- Insurance: On top of the rental cost, you have to decide if you want to purchase extra insurance for collision coverage, which is very pricey. Most of the time, we do not purchase this coverage, as it comes with our credit card. However, most credit card policies do not cover rentals over 30 days. This meant we'd either need to do two separate back-to-back rentals of under 30 days, or buy the insurance.
As it turned out, the drop fees associated with the back-to-back rentals made that option totally cost prohibitive. And the collision insurance effectively doubled the cost of the car rental.
French Manufacturer Lease Program:
We next priced out the Renault and Peugeot/Citroen, lease programs for the same car class we had been quoted for the rental.
- With these programs, you can pick out the exact car and options that you want, and the car is delivered to you brand new from the factory. The only thing you can't pick is the color!
- There are extra charges if you choose to pick up or drop off the car outside of France. The charges vary based on the city you choose.
- In addition, your family members are allowed to drive the car, something for which car rental companies would charge extra.
Interestingly, our quote came out very close to the cost of the one way rental plus the insurance. The cost was essentially a wash. We had read great reviews of the lease programs and how hassle and worry-free they are, so decided to go that route since we'd have a new car and everything was included in one package before we left.
Our date and time of pickup were confirmed, and when we arrived in Montpellier, the entire pickup process was fast and efficient. Here is what we ended up with:
Citroen C4
This is a Citroen, which had 4km on the odometer when we picked it up. It gets about 60 mpg, has good legroom, and a navigation system, which has already proven invaluable. We are almost half way through our time in Europe and so far, so good!
In conclusion, it turns out that 17 days is not necessarily the break-even point at which buybacks become more cost effective than renting. In our case, the break-even point was 29 days because our credit card covers car rental collision insurance for rentals under 30 days. Since we needed the car for 56 days, the need to buy the collision coverage is what ultimately changed the economics for us in favor of leasing. However, each situation is different, so it's always good to spend some time comparing all the options.
One final tip. The lease programs are booked through a small number of agents in the US, which you can find online. Here are a few of them:
http://ideamerge.com/
http://www.autoeurope.com/go/peugeot/peugeot-overview/
http://www.renaultusa.com/
It doesn't really matter which one you choose, but there is definitely some negotiating room built into their pricing. Once you figure out which car you want and get your quote from their website, you can contact them to ask for a further discount. You can then play the agents off one another until you end up with the lowest price. We did this successfully and saved a bit of money.
In conclusion, it turns out that 17 days is not necessarily the break-even point at which buybacks become more cost effective than renting. In our case, the break-even point was 29 days because our credit card covers car rental collision insurance for rentals under 30 days. Since we needed the car for 56 days, the need to buy the collision coverage is what ultimately changed the economics for us in favor of leasing. However, each situation is different, so it's always good to spend some time comparing all the options.
One final tip. The lease programs are booked through a small number of agents in the US, which you can find online. Here are a few of them:
http://ideamerge.com/
http://www.autoeurope.com/go/peugeot/peugeot-overview/
http://www.renaultusa.com/
It doesn't really matter which one you choose, but there is definitely some negotiating room built into their pricing. Once you figure out which car you want and get your quote from their website, you can contact them to ask for a further discount. You can then play the agents off one another until you end up with the lowest price. We did this successfully and saved a bit of money.
RSS Feed
