For the vast majority of people, the cost of buying a car constitutes the second biggest purchase we’ll make in our lives behind buying a home. Moreover, the purchase price is just the tip of the iceberg when you also factor in the costs of running a vehicle.

If you’re thinking of buying a new car, below are a few reasons why you might be better looking at long-term rental instead. These days, it’s becoming increasingly common for car rental companies like Mercury rent-a-car to offer flexible rental deals that might prove a better option than buying.

The effect of depreciation

While depreciation varies from model to model, as an average guide, you can strike around 10-15% off the value of a new car when you drive it out of the dealership. This loss in value continues through the first year with a further 15% reduction by the end of the first year, eventually slowing by the end of the third year when a car will typically be worth around 40% of its initial purchase price. With a rental car, these costs are absorbed by the hiring company, meaning you don’t need to worry about the considerable depreciation involved in car ownership.

Loan payments vs rental fees

Very often, you’ll find the cost of renting a car can be less than the monthly payments of a motor loan, making car rental a far more attractive prospect for many prospective buyers.

The more miles you do, the lower the value of your car

The two main contributing factors to the reducing value of a car are its age and mileage. If you own a car, every journey you make will, in effect, result in a drop in value. However, by renting a car, these concerns are passed to the hire company.

More miles increase the likelihood of more repairs and maintenance

Every mile you do in a car increases the general wear and tear on the vehicle, increasing the likelihood of repairs being needed. If you own a car, these repairs will be your responsibility - whereas, when you rent, you pass this onus onto the rental dealer (in most cases).

Trading up to a newer model

As mentioned above, cars depreciate horrendously, meaning you will almost inevitably lose money when you come to sell - yet, as an owner, you will eventually want to trade up to a newer model. Aside from avoiding the hassles and costs involved in buying and selling a car, you can simply return the car to the dealer and ask for an upgrade with a rental vehicle.

Personal circumstances that could make rental better than owning

Your own personal circumstances might make car rental a more viable option than owning. For example, if you live in a city with an excellent transport network, there simply might be no need for you to own a car full-time, and you could instead rent a vehicle as and when you need one. Alternatively, if you only need a car for specific trips (e.g. the weekly shop), many hire companies now offer car rental by the hour.