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When to Rent a Car vs. Drive Your Own on Business Trips
Today I’m answering the question of whether or not you should rent a car to take business trips. Many of you are probably like me, and are very comfortable in your own car. But when does it make sense to rent a car instead of driving your own? I will outline some of the considerations that will help make your decision easier.
Age of your vehicle
If your car or truck is old, it may be easy to decide to rent a vehicle for a business trip. You may be concerned with breaking down, or it is just not very efficient. It may get poor gas mileage, it may burn oil, or the tires may need to be replaced.
Cost of operation/maintenance of your vehicle
There are many factors that go into operating your vehicle, some of which you probably don’t think about every day. These include:
Gas. This is the obvious one. The cost of a gallon of gas varies across the country. Where I live, the cost for a gallon of gas in my area runs somewhere around $1.95 per gallon up to about $2.30 per gallon. Assuming your car gets 30 miles per gallon, at $2.25 per gallon the fuel cost works out to about 7.5 cents per mile.
Tires. When you travel for business, or even pleasure, you probably don’t think about the wear on your tires. A set of four good quality tires that should last up to about 40,000 miles will cost anywhere from about $1,000 to $2,000 or more, plus tax. Average the cost of new tires at about $1,500 and they will cost you about 4 cents per mile.
Oil. Oil changes add up fairly quickly. An inexpensive oil change will probably cost you $50 or more, unless you change your own oil. You may have to add in disposal fees or other charges. Most manufacturers still recommend changing your oil every 3,000 to 5,000 miles. Assuming you hold out, like I do, to about 4,000 miles between oil changes, it still works out to about to $1.25 per mile.
Filters. Air filters, both for the cabin and the engine, need regular replacement. New air filters run from approximately $10.00 to $300.00 for after-market replacement. Assuming you replace both of the filters about every 10,000 miles, at a cost of $50.00 per filter, you pay $0.01 per mile to the operation cost.
Insurance. Good drivers in inexpensive locations with reasonably priced vehicles will probably pay about $1,000 per year, minimum. Assuming an average cost of $2,500 per year for someone who drives approximately 15,000 miles per year, this adds another $0.17 per mile.
Additional miscellaneous costs. Additional costs which will vary by make, model, year, and location will include: license plates, brakes, radiator fluid, belts, battery, brake fluid, and windshield wipers, among others. The expenses for these items will vary significantly based on how and where you drive.
Using these estimates, the cost of operation, including major expenses only, is $0.31 per mile. The federal government estimates the average cost of operating a vehicle at $0.54 per mile. This may be a little generous for some locations but is low or fair for others.
Getting back to the average cost to operate a vehicle for business or pleasure, we will use the government cost of $0.54 per mile. This is the reimbursement amount you should receive if you drive your car for business and keep records. We will also use some of the costs we noted above for a comparison. We will assume the cost of gas is $2.25 per gallon and your car gets 30 miles per gallon. We will also assume the cost of an average rental car will be about $40 per day, with unlimited mileage, including taxes and fees. This would not include the cost of gas to refuel prior to returning the car.
Let’s assume you have a 100 mile round trip for business coming up. Should you rent or should you drive your own car? Using the reimbursement specified by the federal government, you would have $54.00 worth of wear and tear on your car. If the trip takes 1 day, your rental cost is approximately $47.50. You would save $6.50. While it doesn’t seem like much, all those relatively short trips add up. They can save you and your clients money, making you more competitive in the marketplace.
For comparison’s sake, my wife and I are about to take a trip from Cleveland to Long Island to Connecticut and back to Cleveland. If we go only from point A to point B to point C and back to point A, the distance is approximately 1,300 miles. At $0.54 per mile, that would total $700 in expenses and wear and tear on our own car. With the distance we are travelling, we’ve decided to rent a car.
The car we are renting is the same size as ours. It is considered a full size vehicle by the rental agencies. We estimate we will spend approximately $100 in gas at $2.25 per gallon and 30 miles per gallon. Our rental cost for a week for two drivers, including taxes and fees, is $200. Our total cost will be $300. Compared to the $700 it would cost to operate our car on the trip, I think it is a bargain to rent a car on any trip over 200 miles, maybe less. Sometimes the time spent on getting the car will be offset by the money saved, especially for a short trip.
Hopefully this will open your eyes to the possibility of renting a car for your next business trip. It may even save you money and help you land that next project.
Good luck in your future endeavors. Until next time, I’m Dave Huffman. Thank you for reading.
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