The average active owner renting out their car on Turo brings in an extra $300 per month in income. Depending on the type and make of the car being rented, many owners are making even more (the top-earning owner in September 2014 made a whopping $6,690!). So, it’s no surprise that owners looking to buy a new car often ask which cars make the best investment — what purchase would return the amount of money invested the quickest?
Turo team members Marc and Jérôme were up to the challenge, and they found the cars and classes that give you the best return on your investment for your peer-to-peer car rental business.
What vehicle type will earn you the most?
If you’re deciding on a style of car that will earn you back your investment the fastest when renting out on a peer-to-peer car rental marketplace, you might be surprised at which style of vehicle has the best average return on investment: minivans!
The average yearly return for an active owner renting out a minivan on a peer-to-peer marketplace is 11% of the car’s value, compared with the overall average of 5%. That means just by renting out your car on a peer-to-peer car rental marketplace a few times a month, you could pay off the entire cost of your minivan in nine years or less. Some van owners did quite a bit better than that.
While they may not be the hottest ride for a date, minivans are in demand and, on a peer-to-peer car rental marketplace, quite a good value. So while they don’t rock on the “cool factor”, they make a ton of economic sense.
Which new cars are best?
Cars with the very best ROI are going to rely on two main factors: the cost of the car and how much it can be rented for.
For folks in the market for a newer car, we took a look at which new models offered the best return. Because newer cars are more expensive (relative to their rental rates), they require a longer time to pay off. The cars with the highest earning potential are the Buick Verano, Scion iQ, and BMW 4 Series. They earn back 13 to 17 percent of their value (based on Edmunds data) per year, assuming the cars are rented a few times a month.
What about used cars?
Looking to get a used or slightly older car instead? Our top performing cars from an ROI standpoint are the Kia Spectra and Saturn S-Series. These cars typically earn back 33% of their value per year on Turo. That means you could pay off the entire cost of the car in three years! Beyond that, you are just raking in profits.
Up next are the Chrysler Town & Country and Dodge Caravan at 19% yearly repayment of vehicle market value, with a payback period of about five years.
Can you do even better?
Yes, this is just a starting point! For each car listed above, after taking out outliers, half of owners did better and half did worse. Want to be in the best half? Here are some tips to get you making the best possible return.
- Buy a used car — These numbers were based on the average cost for a new car. If you spend less by buying a recent model used car, you might be able to lower the payback period significantly.
- Follow best practices — Several clear, high-quality images will make your car stand out from the rest. A well-written description will lead to more inquiries than a poorly written one. And always make sure to respond to requests right away. If you wait a few hours, the renter might have already found another car.
- Keep your car well maintained — Not only will a clean, functioning car lead to a better renter experience and better reviews, a well-maintained car costs less to maintain. Many expensive repairs can be averted with regular maintenance and checkups.
How did we measure which cars are the best investments?
To determine the cost of a car, we used the Edmunds estimate. We only used car models with at least 20 cars listed on Turo to eliminate any misleading or rare results and used the average revenue while eliminating any extreme outliers. When looking for the best new cars, we looked at the performance of cars from 2013 and 2014.