How to Start a Car Rental Business in 2021

How to Start a Car Rental Business in 2021


The world is constantly changing, and when we talk about change, we are not necessarily talking about the changes brought about by the corona virus pandemic, but rather, we are talking about the changes in business and economic models, which to say the least has turned hitherto business models heads upside down, as some business models are daily becoming obsolete.

From gig economy to work from home moms, to mom and pop shops, to internet millionaires and the new rich, new business opportunities are springing up on a daily basis, and so many people are taking advantage of these opportunities and are starting their own businesses, becoming their own bosses, attaining financial freedom and gradually moving away from the grind of the popular traditional, and now becoming outdated and obsolete 9-5 business model.

In this practical guide, we will not be focusing our attention on the different types of business models, either the traditional or modern, but rather we will be providing an in-depth research back information on how you can start a car rental business of your own and profit from it.

There is no doubt that the pandemic inspired lock-down has changed how people commute or work, but the biggest advantage that came with the lock-downs, is that because of the social distancing guidelines for instance, more and more people are moving away from using public transport systems and are becoming more comfortable in enjoying personal and personalised rides and services.

If you are discerning enough, you will understand that one of next biggest and fastest growing economic model, will be the car rental business model. Will you sit back and watch this business model unfold and pass you by? Will you take advantage of this new opportunity? Will you be willing to follow a simple guide that will teach you how to start a car rental business?


If you have the willingness and resources to start your own car rental business, you have definitely come to the right page, as we will be laying bare everything you need to start your own car rental business and profit from it.

Just follow through with the step by step process below:


There are basically four models available to you in starting a car rental business model, which is that you can either buy a franchise, build your own brand from the scratch or buy an existing business or even work with an existing car dealership.

Each type of car rental business models, have its own pros and cons, you just have to find the model that is right for you. So let’s take a closer look at some of your options, as you get started with your car rental business.

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Buying a franchise is you purchasing a right in an existing business model, which simply means you will have the right to use the brand name and business model of an existing car rental business to start your own car rental business. There are many known brands like Hertz, Enterprise, Budget, etc.

You can reach out to any of the car rental business franchise owners, find out about the terms and conditions of franchise partnership and decide if it fits in rightly with you.

Buying a franchise gives you the advantage of starting a business with a known brand name and also the needed support you need to get started in your car rental business will be provided by the franchise owners.


You can enter an agreement with a car dealership, and depending on the terms of the agreement, you can decide to offer rental service to their customers for instance, whose cars are under repair. The only advantage of this model is that you don’t need large fleet of cars to start, with the customer base you will serve will be very limited.

Start your own brand

You may decide to start your own car rental business from the scratch and have absolute control of your business. You can start with as many cars as you can afford and build your brand. Starting your own car rental brand will give you the power to take all decisions, but you may not have the name recognition that a franchise would have given, but you can build and scale up.

If you have the commitment to find new customers and contend with competition, then nothing should stop you from building your own car rental business from the scratch.

Buy an existing Business

Buying an existing business will take away the burden and hassles of building your own car rental business from the ground. The benefit of buying an existing rental car business is that many of the basic business structures are already in place and there will likely be a loyal customer base in place as well.



After choosing the business model you will adopt from any of the above, the next stage will be for you to choose the niche you will serve. Knowing your niche from the start, will help you to focus your time and resources and scale up your business, as you will not be expending your resources on different fronts at the same time.

The following niche is open for you to choose from or a combination of some, depending on your available resources and country of operation.

  • Transport and logistical services – for example, providing vans for removals or otherwise transporting heavy goods, renting cars for trips to and from airports, leasing fleet cars to companies whose workers need them, and more.
  • Leisure services – for example, providing cars to tourists who are visiting your area and may want to explore the area or holidaymakers who plan to drive the car to their destination and use it throughout their trip. Or, you could start a luxury car dealership and lease/rent premium brand cars or super-cars to people who would like to drive them for fun.
  • Events services – providing vehicles for transport to and from events, such as luxury wedding cars, limousines, and more.
  • Corporate services – providing cars to workers for long commutes from city to city or for business trips, renting cars for transporting business personnel from meeting to meeting or to and from airports and stations, etc.
  • Individual services – providing every-day-use cars for people who would rather lease or rent a vehicle than buy their own.

From the above niches, you should research the customer base and see which of them will be profitable or with enough customer base and make a decision. As it will not make any business sense if you choose a niche that does not have enough customer base that will make your business sustainable.


Your car rental business should be treated as any other professional business setup. It is then expected that you write a business plan for your business, as it will give you the direction your business will be going. More so, the business plan is what you will be using to pitch investors, bankers and partners, as the business plan will give in-depth overview of what your business is about and how you intend to achieve the objectives of the business.

Your business plan will for instance detail the type of car rental business you are starting, services you will offer, fees you will charge, how you will raise funds, how you will get new customers and the financial projection for the business.

The beauty of writing a business plan is that it gives you the opportunity to think through the whole process of starting and running a successful car rental business.

All business plans are not necessarily the same, as factors such, as if the business is seeking for investors, or the structure of the business accounts for the slight differences in business plans.

Basically however, all business plans have the following components:

  • Executive summary
  • Contents page
  • Business model and products/services
  • Customer, market and competition
  • Marketing and sales
  • Finances and projections
  • Team
  • Business plan summary


With your business plan in place, it is then expected that you get your business registered. The legal structure you choose for your business will depend on the state or the country you will be operating from. However, you have the option of either registering your business as either as a sole proprietor, limited liability partnership or a limited liability company.

You may have to seek the advice of a lawyer to guide you properly on the type of legal structure that will be suitable for your business. When you have settled on the legal structure, contact the company house of your state or country and get your company registered, choosing a name that will make your car rental business stand out. We will however, recommend that you choose limited liability company as your legal structure as this will save you from personal losses if the car rental business runs into troubled waters in the future.

Registering with tax authorities is part of your business registration process, as you would not want to run a business, where the authorities will always be after you for failing to remit taxes. You should also apply and obtain Employer Identification Number (EIN)

After the registration of your business, it is very imperative that you also get all necessary permits and licenses for your car rental business. All states or countries have different operational guidelines, so contact your local authorities and get all required permits and licenses.

A non-negotiable in the entire registration process, is the obtaining of insurance cover for your business. Every business comes with lots of uncertainties, so you should not thrust your entire business to fate. It is recommended that you seek the advice of an insurance broker to know the best insurance cover that is best suited for your car rental business.

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The mental and physical strength required to raise funds for any business makes the process exciting and annoying at the same time. If you have not inherited any cash or have some pile of cash stashed away somewhere, then there is the likelihood that you will need to raise funds for your car rental business.

The capital you will need will depend on the business model you have adopted, your country of operation and how many fleets you want to start your business with.  Aside from starting your car rental business with your personal savings or getting a loan from family and friends, the followings options can be used to get funding for your business.

Business credit card

You may be able to access business credit card as a form of funding for your business. But it is required that you open a business bank account, before you can qualify for a credit card. Simply check with your bank or other credit card companies and see if you qualify for a business credit card.

If you applied for Employer Identification Number during the process of your business registration, it will help to facilitate the process of you opening a business account and applying for a business credit card.


You may have to apply for a loan from your local bank. There are different options available, like lines of credit, short term or long term loans. So do an analysis of what is suitable for your business needs at the moment and make a choice, but bear in mind that bank loans require collateral, and approval will be subject to your credit history and every other parameters as will be set up by the bank.

Equipment loan

The difference between bank loans and equipment loan is that the equipment serves as collateral, so you might just go ahead and apply for equipment loan, you might just get approved for one. Your car rental business does not only need cars but other equipment to operate.


Grants are free money. But not all types of businesses are eligible for grants, you could as well do a search to see if your car rental business might qualify for any form of grant and apply accordingly.


There is no doubt that you can run your car rental business online, however, you will still need a location where the cars will be parked. So you have to look for a location that will serve as the storefront for your business. The location you will choose will depend on the type of customer you will be serving. For instance, if you want to serve business travellers, the natural location should be one that is as close as possible to the airport.


It is expected that you develop a rental contract which will be an agreement between your company and the prospective clients. As stated earlier, business ventures comes with many uncertainties, it then implies that there may be possibilities of accidents or other eventualities, the rental contract will therefore protect you from any liabilities in a case of such occurrences.

It is then advised that you get the help of professionals like a lawyer to help you in creating the rental contract.


A car rental business cannot be run solely, so you will need employees and partners. Once you have secured the location, from where you will be operating from, it is now time to get some employees.

It is very important to state that the types of employees you get will make or mar your business. So ensure, you only select the best candidates during your interview process.

Beyond finding the right people, you will also need to understand your responsibilities as an employer, and ensure you meet your obligations to the employees.


No matter the amount of money you used to set up your business and how beautifully designed your locations are, if no one knows about your business, they will not patronise your business. So you need to develop and implement a creative and innovative marketing strategy.

One of the creative ways you can use to market your car rental business is to establish massive online presence, so customers can discover your business. You should for instance, try using Instagram, Facebook, Pinterest (especially if you’re providing cars for weddings and events), and Twitter to reach out to new customers. You can share photos of your cars and details of all special offers, ensuring that your contacts are in all contents shared.

In addition to a business website and social media accounts, as every business needs her own website to appear credible and give potential customers a place to explore what they offer, learn about their prices and find out how to get in touch with them, you should also consider setting up pages on business review sites such as Yelp and Google, as well as social media pages where customers can contact your business with questions and leave reviews for other potential customers to see.

Another option available to you to market your business is the use of targeted advertising online. For example, you can use Google AdWords and Facebook Advertisements, which will instantly create massive traction for your business and pull in lots of customers.

More so, if you have the skills you should write a blog or get a freelancer to write one for you as part of your marketing efforts. Blog posts are effective ways of increasing exposure for your car rental business.

The blog posts will help you achieve the followings:

  • Highlights the benefits of your services
  • Discusses industry news, hot topics and popular conversation points
  • Features regular case studies and stories from your customers

Your blog posts when optimised using SEO services will help you get massive traffic from people doing searches online, hence bringing in new customers to your business.

Remember that despite all you will do online, traditional forms of marketing can still be extremely beneficial for your car rental business. You can adopt strategies like sticking flyers through letterboxes and having an ad printed in a newspaper for instance, or participating in car trade shows or networking events, as all are mediums and channels you can use to get the word out about your car rental business.

No matter the medium or channel you decide to adopt, always bear in mind that when marketing your business there are two key things to remember:

– Target your messages to your target audience. Prioritise using the channels your target customer are most likely to use or see, and tailor your tone of voice, imagery and messaging style to ensure it resonates with them.

– Capitalise on what works for you. You can try all the marketing techniques you want, but it’s unwise to keep spending money and time on those that are not very effective for you. Monitor the results of your marketing efforts, and do away with the techniques that are not working and invest more in the ones that are working. Simply test, twerk and deploy and repeat.


All of your planning and preparation may be behind you, but your work is far from over. In order to make your business profitable you need to attract and retain customers. To do this, you’ll want to provide your customers with a high-quality product, stellar customer service, and build a strong relationship with your local community.

If you provide an exceptional service that people can trust, word will soon spread and you will be turning a profit in no time.


When you are just learning how to start a car rental business, the number of steps that you need to take and details that must be accounted for can feel overwhelming. But with some passion, patience and attention to each, there is no doubt that you will have your car rental business up and running and profitable in no time.

In conclusion, starting a car rental or car leasing business can be difficult because it is such a competitive industry – but by following the in-depth research backed advice in this guide you can tap into the huge demand that is placed on car hire today.

The ball is now in your courts, as reading millions of practical guide like this without the willingness to take action will eventually become a fruitless effort. So do you have what it takes to make the move? Are you ready to take that all important step? Do it now.

What are your thoughts with regards to this guide and do you have any business idea you want us to write about? Let us know in the comment section.



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