On Monday, I had the pleasure of renting a car. The insurance company was paying–the pleasure came courtesy of the 81-year-old woman who rear-ended my wife and son as they sat at a stop sign–but I learned a lot about rental company tactics.The insurance company was paying $24 a day, which would put you in a mid-sized car–roughly the size of a Toyota Camry or Honda Accord. So the rental company tried to upsell me. Enterprise stuck me in a Buick LeSabre once when the Dodge Neon I initially tried to rent had a flat tire. I hated the thing. It was comfortable, but it was huge, I couldn’t park it, the brakes were mushy, and the steering was mushy. I felt like I was stuck in a big bowl of oatmeal.
But they didn’t want to put me in a LeSabre. They wanted to put me in an SUV or a minivan. Completely impractical. Besides, I wanted fuel economy. I pointed to a Ford Focus. “How’s that gas mileage compare to my Honda Civic?” I asked.
“It has to be pretty close,” he said.
“I’ll take one.”
Once inside, he said he also had a Toyota Corolla. I lit up. “I’ll take the Corolla.” He said the last person who rented it got 38 MPG out of it. I like 38 MPG.
Then he took me outside to see the car. It was cleaner than my car, had fewer scratches on my car, when he put the key in the ignition and turned it, the engine started. It promised to cost less per mile to drive than a Civic, and someone else was paying the bill. What’s not to like?
Then he tried to sell me insurance. By then I was getting frustrated because all this upselling was making me even later for work, and I was plenty late enough. They had primo insurance for $23.99 a day, which was more than the daily cost of renting a Corolla. He said it would give me a million dollars in liability. I don’t remember what else. I probably rolled my eyes. I think he sensed there was no way, no how he was going to sell that to me, so he turned to the “cheap” $13.99 insurance.
“I don’t think I need insurance because American Family said they’d cover me since I have full coverage.”
“What’s your deductible?” he asked.
“I don’t know. I’ve never had to use it.” (Remember that second sentence.)
“It’s probably $500. So for $13.99 a day, we can save you the hassle of having to deal with American Family if anything happens.” Then he went over the things it would cover.
I started to get antsy, knowing how late for work I was getting. I tuned him out, which was the best thing to do. Otherwise I’d get even more irritated.
“So for just $39, we can take care of you for three days.”
I ignored the mathematical fact that $13.99 times 3 is $41.97, not $39. Any sixth grader should know that.
“$39 is a lot of money,” I said. That’s true, isn’t it? That’s about how much it costs to fill a Corolla’s gas tank in Missouri right now.
He laughed. “So’s $500!”
“Yeah, but I’ve never had to use that deductible, so the chances of me having to use any insurance this week on this car are about zero. So it really doesn’t make any sense to pay $39 for something I’m not going to use.”
“Suit yourself,” he said.
It suited me fine. The car was in our possession from roughly 9 AM on Monday until about 5 PM today (Wednesday). I guess that’s about 56 hours. My wife ran errands for a couple of hours each day and went to the doctor on Wednesday, but I think it’s safe to say that the car spent at least 41.97 hours sitting in our driveway.
Nothing bad happened in our driveway. I’m sure the dog sniffed it a few times.
I’m guessing the salesman who was helping me was probably 24 or 25, and in all fairness, when I was his age I didn’t think $39 was a lot of money either, even if it was really $41.97. Let’s face it. When I was 19, I was making about six bucks an hour. When I was 24, I was making a shade over $12 an hour, and after $6 per hour, that seemed like a lot of money. That was 9 years ago. Let’s guess this whippersnapper makes $15 an hour and made $8 an hour selling dishwashers at Best Buy five years ago. When you go from making $160 a week to $2400 a month, $41.97 seems like nothing. I’m sure he’ll spend more than that on dinner and drinks on Friday.
And I’m sure he and thousands of others like him manage to convince a lot of people every day that $41.97 is really $39, and $39 is nothing, so they sign on the line. All those nothings pile up really quick, and the next thing you know, you’ve got a $9 billion company.
But that “only” tactic doesn’t work on me anymore. Quote me $41.97, and I can tell you it takes me an hour and a half to make that, pre-tax. Factor in taxes, and it takes me more than two hours to make that. That’s a quarter of my day! If I’m going to waste $41.97, I can think of a number of things I’d much rather waste $41.97 on. Maybe a full tank of gas. Or half a week’s worth of groceries. Or 288 diapers, if I shop at Dollar General. That might last my son a month.
But I spared him the Dr. Walter Johnson Economics 51 lesson on Opportunity Cost ($101 per credit hour in 1994 at Mizzou). Like I said, I was already late for work. I’d probably already blown $28 worth of vacation time and I didn’t want to make it $41.97.