In this detailed article, we have tried to cover every aspect of starting car rental business. Also, you will get to know how new business models are replacing traditional rental business.

Step 1: Evaluate Your Business Idea:

Carry out research about your car rental business strategy. Because the market you are going to invest in is laden with multiple competitors. You must evaluate their target market, their existing audience, the geographical location they are targeting, monetization strategy, and most importantly their app’s features.

It would be tough for you to survive if you are reinventing the wheel and making the same product that has already been established. You must build a platform that provides a better user experience and state of the art features. For that, you must understand your potential customers-their psychology and their inclination. You should understand your customers’ pain points.

In the past, there were many start-ups who tried to copy Uber or other apps but failed miserably. On the other hand, Lyft, a car-hailing giant implemented its own business model and got a toehold in the cab riding industry.

Step 2: Decide on Business Models for Car Rental Business:

1. B2C Approach: In this approach, you can build a business in which you directly deal with the customers. Customers can book a car from the pool of available cars you have. They can book the car they want for their one-way trip or two-way trip, do some required paperwork, and get the key for their commute. Enterprise Rent-a-car and Hertz are the popular example of this kind of business model.

2. P2P Car Rental Marketplace: This one is one of the trending and flexible business models for starting your car rental business. Mobile applications are the heart and soul of these kinds of businesses. Interestingly, in this business idea, you don’t own any vehicle. And that’s what makes this business model so appealing for a new start-up. Turo and Get round are the most popular car rental start-ups in the USA that are earning a massive revenue with its business model.

Since we have been a part of some successful car rental business app project, we know them inside out of it. Moreover, the popularity of these services among its users and their growing interest in the on-demand economy is also encouraging for new start-ups to invest in this idea.

We will only be discussing how to start your car rental business like peer to peer marketplace. Let’s know what you will need to start it in your city?

Starting a car rental business in your city requires a clear-cut business plan, strategy, resources, license, and marketing strategy. And for that, you have to follow these steps.

Step 3: Decide on Car Type Segment:

You might want to provide your customers with multiple option for car. For example, some auto rental businesses provide wedding and special events cars and luxurious rental cars. Where some businesses provide exotic cars, muscle cars, sports cars, or more.

You can also go for only one dedicated car model type for targeting a special section of the audience. For example, a car rental company called sliver car app has the only provision of Audi cars for the users. Or you can allow any car type in your marketplace.

Generally, most start-ups prefer to go with this option because it would be beneficial for their business if they allow more car owners to register in their marketplace. It will help you increase the fleet of cars which leads to better options for customers.

Step 4: Getting License:

License problems are taken care of by the local level authority. Each country has its own rules and regulation for providing rental license. You can hire an insurer who can take care of your car insurance and payment for license fees.

Once the process is done, the local authorities will provide you the license and you can start the business. Usually the license renewal is done annually but It depends on the country’s rules and regulation. So, make sure that you get all the necessary license and start your car rental business.

Step 5: Build an MVP of the Car Rental App:

Once you decide which type of car rental business you want to start, you should then pay attention to the technical aspects of the business.  People today prefer mobility in everything. So, it becomes imperative to have a mobile application for your business.

Whether you are going to the B2C approach or a P2P car renting marketplace model you need to have an application for both. It is not necessary that you go with the full feature list but initially you can go with MVP (minimum viable product), It consists of the most essential features in any car rental mobile app. You can create an website with MVP and make changes as per the requirements.

For the B2C approach, you need to have only a customer app from which they could locate your car station, book the car, and start their journey.

While for P2P car rental business consists of two mobile application, one for the customers who want the car on rent and other for the owner who wants to put his car on rent to generate an extra income.

Step 6: Provide insurance:

Every car rental business provide insurance for their customers as well as their owner. You should also provide them with insurance and for that you need to collaborate with a reliable insurance company.

You must have a policy that covers any physical damage theft or major collision up to its cash value for the car owners. On the flip side, you should also provide different packages that cover the traveler’s for various damages that might occur on their trip.

Features for your car rental business:

Now that Now that you have decided to start the car rental business and to go at it with a digital platform, you need to decide the feature list of the application. We have mentioned the list of the features which one should have in their car rental application.

Features for car rental app owner:

Car owners play the most vital role in the car rental business and hence you must include all the necessary features that attract the new car owners to enroll in your marketplace.

Here are the most valuable features that one must add in their car rental business app:

1. Car Owner Verification: The app must have a feature that lets car owners update their details like name, phone number, email, license number, car photos, insurance number, license expiry date, and other details.

2. User-Friendly Dashboard: You must include a dashboard for the car owners so that they could oversee their listed cars, their transaction history, messages from the renters, etc.

3. Car listing Option: An unlimited car listing option will help your user to list multiple car models for earning more.

4. Car Booking Management: The feature will help owners to know the status of their booked vehicles and its details like a renter, payment figure, and payment status.

5. Availability Management: You must incorporate a feature that allows car owners to choose their availability. A leading car rental marketplace Turo asks owners availability options for weekdays, weekends, and every day.

6. Discounted Price: To make your app unique among competitors, you should implement this feature. Car owners should be able to set a special price offer for renters on a special occasion.

7. Booking Cancellation: You should provide a feature that facilitates owners to cancel the rent request under the cancellation policies.

8. Reservation History: By including this feature in the car owner app, you allow them to view their past, current reservations and related details.

Features for the Car-renters:

Here is the list of features which one must include in their car rental application:

1. Easy Sign up/ Registration: Riders look for instant rental car options. So, you must create a signup form that can be filled speedily. For that, you can provide sign up options through Google, Facebook, and Email.

2. Filters: You don’t know which kind of riders will be using your app. Hence, you should provide filters that lets renters select their preferred car option. You could include filters such as price, car type, fuel, car company, etc to choose from their favorite car.

3. Dashboard: A dashboard for car renters helps them to monitor and manage their booking, transaction history, messages, activities, profile, and their account.

4. Renter Verification: For a safety purpose, you should include a detailed form for the car riders which includes their identity, license information, email, and more.

5. Location-Based Rental: The user must be able to search for the nearby location and hire a car through the app.

6. Booking Options: Provide your users with options that allow them to book their dream car through prior booking or instant booking option. Do not forget to integrate an option for per hour or per day hiring.

7. Calendar Option: Provide a calendar option through a car renter can see the dates when the car is available or unavailable.

8. Cancellation: There could be some last-minute plan and change from the rider side. Hence, you should provide a cancel booking option in the app.

Features for admin panel: 

Here is the list of some important features that on must include in their application.

1. Dashboard: Through the dashboard, you can control the platform. You can see the total number of cars, car owners, and renters registered on your platforms. Also, you can oversee users’ login/Sign up data like Facebook, email login. Etc.

2. Revenue Management: Since admin has control over the system, they would be able to manage all the revenue related matters like commission decisions, charges for cancellation, etc.

3. Manage Users: You will have all the control over managing car owners and renters and activities related to them.

4. Manage Listing: You will be able to do a screening process for every new car owner. Through that, you can allow or disallow the listing according to your guidelines.

5. Booking Management: Every booking that happens on the platform can be managed by admin. You can accept or decline the booking at your will.

6. Manage Listing Dimensions: All the car models, its features, and category added by the car owner can be edited and managed by the admin.

7. Rating & Reviews: Your car host and the user will be able to rate and review each other and their experience. You being an admin can see and manage these reviews and ratings. If you find that someone has written some abusive language and you don’t think it is appropriate on your platform, then you can delete such reviews.

8. Manage Dispute: If a passenger will have some adversity during the trip and decides to generate a ticket regarding his issue, you will get notified and resolve it.

How to start earning from the car rental business?

Now you might have a clear idea about how to start a car rental business but the question that will arise in everybody’s mind is how to earn from this business.

If you are going with the B2C model than it won’t create much of a problem for you to decide your fee structure. You have to decide a fixed price for particular car he or she chooses to rent.  You could also add some additional charge if renter takes more time to return the car than agreed time.

On the other hand, P2P business models work on commission. You just have to build a platform for the owners and take the commission from it. Usually a company charges 15-25 % commission on one successful transaction.

SEE MORE: Looking for a development company for your car rental mobile application? Let’s Connect


According to statistics in 2020 car rental industry has generated $22,260 million and it is further predicted to touch $23,545 million in 2023 with a CAGR of 1.9%.

It is pretty clear from the statistics that this industry will be booming after the situation is normal after the pandemic. Whichever model you choose either P2P or B2C you will gain handsome business profit from this industry.

If you are thinking to start a car rental business and looking for a technical guide for your application, I strongly recommend this company that will help you reach new heights of success.