What is the target for bad debt expense per car in a rental service?

The target for bad debt expense per car in a rental service is set between $7-10 per car. This range is considered a reasonable estimate for maintaining financial health within the industry. It reflects the need to account for potential losses from unpaid rental fees or damages that customers fail to cover. This range ensures the rental service can manage its finances effectively, allowing for sufficient coverage of potential defaults without unreasonably high reserves that could hinder operations.

Setting the target within this range enables rental services to balance profitability and risk management. It takes into account typical customer behavior, operational costs, and market conditions, which are crucial for forecasting revenue and planning for future expenses. This balance is essential in maintaining a sustainable business model, especially as market dynamics can vary and impact customer payment behaviors.