How to set up a car rental company

Written by caryn kelly
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How to set up a car rental company
Starting a rental car business with a fleet can be expensive. (cars parking in parking area image by L. Shat from

A car rental business could be a lucrative venture, especially if you set it up near an airport or in a tourist destination. There are certainly costs involved in starting a car rental business, but how much will depend on the size of your establishment. Whether you decide to start from scratch, buy an existing business, or go the franchise route, a new business needs to be set up properly and legally.

Skill level:

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Things you need

  • Lawyer
  • Accountant
  • Book-keeper
  • Business licenses
  • Car dealership license
  • Zoning permits
  • Capital
  • Rental cars
  • Insurance agent
  • Liability insurance
  • Auto insurance
  • Computer
  • Software
  • Security camera
  • Maps
  • Brochures
  • Website
  • Auto cleaning supplies

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  1. 1

    Hire a lawyer to advise and assist in setting up your car rental business. Apply for state, local and municipal licenses and zoning permits required in your locale. Check whether you need to get a car dealership license. Hire an accountant or a book-keeper to take care of your books.

  2. 2

    Decide whether you want to set up a car rental business from scratch, buy an existing one, or purchase a franchise. You'll need significant capital to buy a franchise, but you'll get plenty of expert advice and support.

  3. 3

    Determine what hours your rental car business will operate. If your business is near an airport, a tourist destination or a busy commercial district, demand may be high. Consider opening early in the morning and closing late at night, or even staying open around the clock.

  4. 4

    Stock your business with enough cars to meet demand during the set-up phase of your business, and decide on the makes and models of the cars you will rent. If starting small, two or three cars may suffice. If you are going large-scale, you'll need a fleet of cars.

  5. 5

    Appoint an insurance agent to set up insurance coverage for your business. Give your rental car customers the option to buy third-party insurance to protect them. Make sure you have plenty of liability and auto insurance policies in case of loss.

  6. 6

    Arm your rental car business with computer and office equipment. Buy the latest software and equipment to process credit- and debit-card payments, verify a customer's driving history, and to keep accurate financial records to comply with state insurance commissioner laws.

  7. 7

    Interview and hire staff to clean, maintain and repair rental cars; take reservations; run the dispatch counter; do general office work; and to perform security. Secure your business with surveillance cameras to monitor daily activities in case of crime or other types of loss.

  8. 8

    Get a supply of maps, pamphlets and brochures about the area to display on your customer counter or in the waiting area. Obtain these at no cost from your local Chamber of Commerce or tourism office.

Tips and warnings

  • Enter into a contract with a nearby car dealership to provide rental cars for their service department.
  • Offer free pickup and drop-off service to your customers.
  • Arm your business with cleaning supplies to keep your fleet maintained.
  • Build a website to give customers the ability to reserve a rental car online.
  • If your car rental business is at an airport, you'll have to pay concession fees.
  • A fleet of cars could cost you a lot of money up front.
  • Consider monthly expenses, such as wages, lot rental, insurance, security, marketing, utilities and vehicle maintenance.

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