How to make money by renting your car

How to make money by renting your car

At Hiyacar, we’ve been helping car owners turn their cars into assets since 2016. In 2020, we started our own car club, which hasn’t been without complexities. We initially struggled to make decent margins… this led us to ponder: how do major players like Zipcar (owned by Avis), and Enterprise succeed where we struggled? We delved deep into the car rental model, uncovering where their revenue truly stems from. It turns out that rental income  is only one part of the equation - and doesn’t make as much sense without the reselling income!  The good news? You, as a car owner, can replicate this. Here’s how. 

Buying a car

When it comes to buying a car to make money from rentals & resell value, here’s our top tips:

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 to 5 years old with less than 50k miles.

ULEZ & Low emissions

Make sure your vehicle is ULEZ compliant to avoid having to pay the ULEZ charge. Try to focus on a car with lower Co2 figures as it will help you pay less tax and get cheaper resident parking permits.

Price, age & mileage

We would recommend buying a car that’s under 5 years old and has less than 50k miles. 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.

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 resell 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. 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.

Make sure cars with 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 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.

Renting your car

Once you have your vehicle, dedicate it entirely to rentals on Hiyacar. Your vehicle is covered by our insurance throughout the hire when it is on hire. To maximise the attractiveness of your listing, here are some top tips:

  • Enable Instant Book: Having instant book takes your listing up the search rankings, as our members expect fast replies. 

  • Install our keyless tech Quickstart (make sure that your model is compatible): 75% of hires on Hiyacar are on keyless vehicles. Members and owners alike enjoy the convenience of not having to meet to hand over the keys. Moreover, Quickstart adds extra security on your vehicle with GPS and remote immobiliser technology. 

  • Purchase the AA breakdown & recovery policy for multi-drivers at our trade discount - we will then reduce our commission from 40 to 30%. 

  • Expand your availability to 24/7: By default your car will be available from 6 AM to 10 PM, but you can expand that to 24-7. We only recommend this if you have the keyless technology installed

  • Install branding on your car with Hiyacar stickers: This is the most effective form of marketing!

  • Limit your mileage: Aim to keep your rental mileage under 10k per year of rental - so that you can maximise your resale value. 

  • Put your daily price low to get a maximum of day hires through the week, and use the Peak pricing functionality to get more income over the weekend. 

  • Keep  a comprehensive Service History: and don’t neglect your MOTs and keep a clear, traceable record of services and V5c logs. This significantly boosts your resale value.

By following all of these tips, and depending on the make and model and location of your car, you can earn £2000-4000 annually, which means your car will have paid for itself in a couple of years.

Selling your car

We recommend renting your vehicle out for 2 to 3 years on Hiyacar before selling it. 

Keep an eye on mileage, as it’s a crucial factor in determining the optimal selling point.

After the 2-3 year mark, the resale value remains attractive. With rental revenues, you’ll have covered the depreciation multiple times over. This, in essence, is the key to a successful car rental business. 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.

What about electric cars?

As for electric cars, the jury is still out on used rental EVs. While they’ve seen an increase in resale value in 2023, uncertainties remain regarding battery life, battery rental and replacement costs of spare parts. If you’re set on acquiring an EV, sharing it can certainly help offset expenses, but we advise proceeding with caution until more data is available.

Eléonore Kuentz

Eléonore Kuentz

Chief Operating Officer at Hiyacar

Have something to add? Discuss in our community forum.