How Much Money Can You Make Renting Out Your Car?
One of the biggest questions we hear: Is it worth renting out my car? Most of the time it’s a yes! Whether you’re buying a car with an aim to rent it out, or you’ve noticed the usage of your own car decrease and wondered whether you can make some money from it, then this blog is for you.
We’ll provide guidance on purchasing a car you’ll soon be renting out, what to do if you already have one, and why we believe it’s worth doing.
Buying a car
When it comes to buying a car to make money from rentals & resale value, the goal is to minimise depreciation, keep running costs low, and protect your resale value when it’s time to sell. By being strategic with what you buy, from age and mileage to emissions and service history, you can increase your returns. See our tips below that could help you make a smarter investment.
Focus on used cars
As the first year sees the highest depreciation, ranging from 15% to 35%, avoid getting a brand new car to rent it out. Aim for cars between 2 and 5 years old with less than 50k miles, where a large amount of the initial value drop has already happened. By purchasing your car at a good price, you’ll also be able to keep your daily rental rate competitive.
ULEZ & Low emissions
Make sure your vehicle is ULEZ-compliant to avoid having to pay the ULEZ charge. The Ultra Low Emission Zone (ULEZ) is a clean air initiative designed to reduce harmful vehicle emissions in major cities, including London.
Try to focus on a car with lower CO2 figures as it will help you pay less tax and get cheaper resident parking permits. This could also appeal to sustainability-minded renters, which could broaden your audience.
Price, age & mileage
We would recommend buying a car that’s under 5 years old and has less than 50k miles to boost your resale potential. You should aim for a car that is under £10k, so you don’t have to price your car too high to recover the cost of the purchase. For example, if you buy a 3-year-old car for £8,000, rent it out at £30/day for 100 days/year, that’s £3,000/year gross
Choose Models that have already passed their depreciation period
Some makes and models retain their value better than others. For instance, a Volkswagen Polo typically only loses about 9% of its value after 3 years. Conversely, an Audi A6 can lose over 50% of its value. Alternatively, some models depreciate vastly in the first years but then plateau in price. You can also select models that are getting discontinued. This way, their resale price remains stable. Be discerning in your choices, and don’t hesitate to ask for our opinion before buying!
Opt for Affordable Spare Parts
After renting, some refurbishment may be needed before selling due to wear and tear over time. That’s why you should go for a common car make with readily available and reasonably priced spare parts. Toyota and Vauxhall are known for their accessible network and supply of affordable components, as opposed to luxury brands that are usually much harder to find parts for.
Make sure cars have a Comprehensive Service History
Make sure the car you pick has a traceable record of services and V5c logs. This significantly boosts your resale value because you have proof that the car has been properly maintained, and you know that the car has been looked after. We recommend looking for cars that have been bought new, with one owner and a full service history.
Select a Car with a Low Insurance Group
This makes your vehicle more appealing to renters, as they’ll face lower insurance premiums. For example, a 2021 Kia Stonic will likely cost less to drivers than a 2020 Peugeot 208, even if the driving experience is similar.
In the UK, cars are placed into insurance groups from 1 to 50, based on factors such as repair costs, safety features, performance, and theft risk. Cars in lower groups typically have cheaper parts, strong safety ratings, and lower repair costs, making them less risky to insure.
Renting your car
Now you’ve got your vehicle ready to be listed, now it’s time to get set up with its availability, price and more. When it comes to renting out your car, there are a number of things you can do to maximise the attractiveness of your listing. Here are some top tips:
Enable instant book
You’re able to allow renters to book instantly, then you could increase the chances of your car being hired. Sometimes, people need a car there and then, and if yours is not available for a few hours or maybe even the next day, they’ll choose another. It’s about being there and available when people require.
Expand your availability
The more your car is available, the higher the chance that your car will get chosen, because it opens up more opportunities for people to book it. Maybe consider putting your daily price low to get a maximum of day hires through the week, and then increasing them over the weekend.
Set a competitive price
Pricing can be the difference between whether somebody chooses to rent your car or somebody else’s. Research similar vehicles in your area to understand the local rate and price your vehicle with this in mind. Don’t forget, you can always adjust prices for weekends or holidays.
Use high-quality photos
First impressions matter. Clear, well-lit photos of both the outside and inside of your car can help your listing stand out. This helps potential renters to see exactly what they’ll be driving and all its features, meaning they can see everything they need to see with the car.
Respond quickly to enquiries
If you’re quick to respond to enquiries, it could improve your chances of securing a booking. Fast responses can help to build the renters’ trust in you, and being there to answer questions and messages can create a smoother rental experience and lead to better ratings.
Keep your car maintained
A clean, well-looked-after car leads to better reviews and repeat bookings. Regular checks between rentals can help you catch minor issues before they become a bigger issue. As we’ve mentioned, this can result in people leaving you fantastic reviews, which could all contribute to improving your car’s visibility and bookings.
Selling your car
We recommend renting your vehicle out for 2 to 3 years before selling it. Keep an eye on mileage, as it’s a crucial factor in determining the optimal selling point. Don’t neglect your MOTs and keep a clear, traceable record of services and V5c logs. This significantly boosts your resale value.
After the 2-3 year mark, the resale value remains attractive. With rental revenues, you’ll have covered the depreciation multiple times over. It’s not just about renting cars; it’s about smartly buying and selling used vehicles, while generating income during the depreciation period through rentals.
How much money can I rent my car for?
By following all of these tips, and depending on the make, model and location of your car, you can earn £2000-4000 annually. Now this is with consistent renting. But, if you’re just looking to make some extra income from your main car, then the amount you earn depends on the price you set for rental, and how often you’re able to rent it out.
Is it worth renting out my car?
For many car owners, renting out their car is absolutely worth it, especially if the car would otherwise sit unused time after time. Renting allows you to turn your car into income, helping to offset ownership costs.
Here are some of the great benefits of renting out your car:
- Earn passive income from a car that would otherwise be parked
- Offset depreciation, road tax, insurance, and maintenance costs
- Flexible control over availability (rent it out only when it suits you)
- Maximise resale value by earning during the depreciation period
- High demand in urban areas, where many people need short-term access to vehicles
Rent out your car with Hiyacar today!
If you’ve been weighing up your options and asking yourself is it worth renting out my car, now is the perfect time to take the next step. With the right vehicle, smart pricing, and a little planning, renting out your car can be a simple way to turn everyday ownership into reliable extra income.
Ready to get started? You can list your car in no time and start earning. If you’d like some advice before you begin or have any questions, our team is always happy to help — just contact us today!
