Car rental business or known as car rental is considered to be very popular and profitable in Indonesia. How can it not be, there are many people out there who are always looking for this kind of rental service.

However, this car rental business is not without risks. As a car rental owner, you can face huge losses in this business. Apart from this, it is important to use vehicle insurance services so that various risks are transferred to the insurance company.

There are several reasons why you need to use insurance services when running a car rental business, some of which are explained below by Qoala.

A look at the car rental business

A glimpse into the car rental business
Photo Source: Patcharanan Via Shutterstock

The car rental business is still a breath of fresh air, especially for those living in tourist areas. Apart from this, he hopes to try the car rental business because the opportunities are vast.

how come? You see, nowadays some Indonesians prefer to rent vehicles when they travel. This is because the cost of renting a car is very affordable, especially for cars, even if you have to bring several family members.

When running a car rental business, you must first understand the pros and cons. You need to understand not only the pros and cons of the car rental business, but almost any business you are involved in. Because knowing the pros and cons of the car rental business will definitely make it easier for you to consider different things, before you finally dare to try your luck in this field.

Advantages of car rental business

Here are some benefits of owning a car rental business, such as:

1. Small capital

The first advantage of a car rental business that is proven to be accurate is in terms of capital for the business. Perhaps many people think that this car rental business requires a lot of money, the business actor should be able to offer different types of vehicles for rent.

In fact, this assumption is not true. Of course, starting a car rental business can be attempted with little or no capital at all. how come? Because there are two options that try to reduce the capital when pursuing this business. First, you can take the route of partnering with other vehicle rentals. This way, you don't need to own a car anymore and just connect the renter to your business partner rental.

Please, in the partnership system, you should set rules that are beneficial not only for your business, but also for your partner. For example, by implementing a profit sharing system or a monthly contract system.

Second, you can use car loan services. This may seem unnatural because you have to pay in the last part. However, for a modest down payment of around ten million, you can get a rental car.

Then, you can implement a cash cycle, which means you can use your credit car rental profits to pay off the payments.

2. The target market is wide

Who says car rental business market share is only for tourists? In fact, the market reach of this business is much wider than you think. That's why many people think about the advantages of the car rental business when talking about the target market.

Because, in addition to being aimed at checking tourists, this car rental is also based on various companies that normally require official vehicles. Not only this, you can also make a profit from this car rental business even if you market to customers who book some events. How, isn't the market too wide?

3. The rotation is exciting.

The next benefit of a car rental business is in terms of profit or net income from the business.

If you run a car rental business by renting out a wide variety of cars, either as a sole proprietorship or as a result of a partnership, your monthly net profit can be 3 million or more for each car.

However, that's just an estimate, and may be higher or farther than expected. It all depends on how to implement the right business strategy based on the target audience and the rental packages offered.

4. Easy to manage

Another advantage of the car rental business is that this business is easy to manage. You can do it independently or rely on partnerships. Messi, you need to take care of your customers or partners to avoid the risk of fraud.

Generally, when you want to rent a car, ask for proof of identity of the user, starting with the KTP, a photocopy of the SIM A, an agreement containing the rules for using the vehicle.

If something untoward happens, you can at least sue the car rental company for compensation or take the matter to legal action.

Car rental business loss

Talking about the advantages, there are also disadvantages. Disadvantages of the car rental business include:

1. Vulnerable to injury

A car rental business loss that every business owner cannot avoid is if the rental car breaks down. This risk of injury can occur for a variety of reasons, but is often caused by an accident or driver negligence.

If this happens, the condition of the car will definitely not be the same even if it is serviced. If the accident you've had is still relatively minor, maybe the damage isn't serious, and what if it isn't?

Therefore, it is important to have vehicle insurance to protect every car you rent. In this way, all the risks of loss can be reduced during the claim process to the insurance company.

2. Poor hygiene

This is a simple problem that every car rental business owner will surely face. Although in reality not all customers are careless when it comes to cleanliness.

Therefore, before handing over the keys to the tenant, it is best to first instruct them to keep the interior and exterior of the car clean. Don't ignore it, if you don't want to feel the guilt in the end.

Because if the car comes back dirty, you'll eventually have to pay to have it cleaned again, right?

3. Customers do not pay rent.

Another disadvantage that a car rental business sometimes faces is that customers or partners do not pay the vehicle expenses associated with the rental. This is the most common risk you may face in the future.

For this, you need proper preliminary measures, for example, by issuing rules for paying the advance payment on the rent or a detailed cooperation agreement with a seal to be formalized.

4. Vulnerable to theft issues

Another disadvantage of the car rental business is that it is prone to theft issues. This is sometimes difficult to avoid, especially if an irresponsible person is skilled at deceiving their victims.

However, you can try other options to reduce this risk. From taking preventative measures like installing a tracker on the rental car to arming every rental car with vehicle insurance.

5. Difficult to compete

The ultimate disadvantage of a car rental business that you may face is the problem of competition. It can be said that this car rental business has many competitors, not only in big cities.

However, as long as you implement the right business strategy, including promotional methods, taking care of rental cars and expanding your network, it will be difficult for you to experience the risks mentioned above. Because automatically, you have your own brand image in the eyes of consumers, especially your loyal customers.

The importance of insurance for car rental businesses

At first glance, buying rental car loss insurance is an option for car owners because they need to provide more capital to pay the premium. If you're still in doubt, here's a list of reasons why car rental insurance is important.

1. Unable to control the tenant while using the car

In the rental car business, you lend your assets to different people. Of course, you don't know what kind of character that person is and whether he has the discipline to drive your car. Therefore, you cannot control and predict what condition the car will be in when it returns.

2. There are other risks beyond driver and tenant carelessness.

Second, even if you have chosen the renters strictly, there is still the risk of accidents caused by other people's carelessness, thereby damaging your car. Apart from this, natural disasters cannot be avoided.

3. Rental car insurance premiums are lower than the risk of loss.

Usually, the annual car insurance premium is less than 5% of the value of the car. So rather than spending a lot on maintenance or even buying a replacement car, it is better to set aside a little money to pay the premium.

As a rental car entrepreneur, you need to know the amount of premium that needs to be paid to protect the car against unforeseen events. There are three regional categories for determining car premium costs as follows.

  • Region 1: Covers Sumatra and its surroundings.
  • Region 2: DKI includes Jakarta, West Java and Banten.
  • Region 3: Includes more than 1 and 2 regions.

For TLO insurance, the percentage...