5 Things (Maybe 16) You Should Know Next Time You Rent A Car - By David Oglesby
Everyone looks forward to a vacation but packing, planning and budgeting for one can be a little stressful. Many vacation plans also include getting a rental car. So when you have budgeted and made arrangements and step to the rental car counter the last thing you want is more unexpected costs that can throw your plans in a tailspin. What most people don’t know is the price you booked at is just a starting point for most rental car companies. They expect their agents or more appropriately sales representatives to increase this bottom line at the counter in ways you may or may not know. Here are five things to be aware of before you step to the rental counter and get that dream ride for your next vacation.
First Consumer Facts- According to Consumer Affairs as of 2023 - 18% of Americans rented a vehicle on average at least twice in a year. Most of these rentals were for vacation and leisure travel. The major factors for those who rented were price/affordability, vehicle size, and fuel efficiency. With the average rental costing about 86 dollars a day. In a recent study done by Fidelity your base price could be increased by more than 40% before you leave the counter. For most Americans this is significant enough to affect other aspects of that planned vacation.
Rental location REALLY REALLY matters- The location and city you pick up the car can make a major difference in price. Most people are not aware that there are built in prices increases at most major airports. These fees often marked as concession fees or airport surcharges and can add between 10% to 15% to your total rental price. In addition some companies might also add a premium location fee which will can add an additional 10% to 15% to the bill. When possible picking up the car from an off airport location could save you significantly. Try to find locations within the city or area you plan to stay the selection may be more limited but if you are flexible on size and type the savings can be significant.
Be prepared a Deposit is Required- Yes many will say they know but do you? Let me state firmly this is a mandatory requirement at most rental car companies including Avis, Enterprise, Hertz, and National. According to Booking.com deposit amounts range from $200 to $1000 depending on the rental company, car class and your credit worthiness. These deposits are generally taken as an authorization hold. The hold placed on your card will temporary block your access to a certain amount of funds until the contract is complete and car is returned. For example if you’re charged $87.50 for a one day rental, you should be prepared for $287.50 (or more) to be authorized on your card. Once you complete the rental $87.50 will then be billed and the remaining of funds will be released on your card. Access to the release credit or funds could take anywhere from a few hours to two or three days in many cases. Bottom line you should prepare yourself for an inability to access held funds by ensuring you have planned other ways to fund expenses. Too many people (many of us with very tight budgets) forget to plan for the deposit and doing so can throw a major wrench into your car and travel plans. Additionally deposits can vary by location, age (under 25 may require a larger requirement) and if you use a debit card (which companies think of as a riskier transaction than with a credit card and could impose even higher deposit requirements).
Insurance is a MUST but perhaps not through your rental company- Making sure you are covered on a rental car is just as important as the protection you have on your primary car. When you sign a contract with a rental company you are accepting responsibility for that vehicle in whole for the time it is rented. In simple terms that means you have an ownership stake in the rental and any issues with its function or lack there of will be your responsibility. With that in mind the rental sales agent will stress correctly to you that you want to make sure
your covered to limit your liability and be legal compliant. What they won’t tell you is that there are many other ways (potentially cheaper) than theirs to protect your rental.
Before we explore the options a here’s a quick 101 - lesson for dummies on auto insurance terms:
General Auto Insurance Terms:
Liability Coverage: Pays for damages or injuries you cause to others in an accident.
Collision Coverage: Covers damage to your vehicle from an accident, regardless of fault. Comprehensive Coverage: Covers damage to your vehicle from events other than collisions, like theft or vandalism. Deductible: The amount you pay out-of-pocket before your insurance covers the rest of a claim.
Premium: The amount you pay regularly to maintain your insurance coverage. Uninsured/Underinsured Motorist Coverage: Protects you if you're hit by a driver without insurance or with insufficient coverage.
Personal Injury Protection (PIP): Coverage for medical expenses and lost wages for you and your passengers after an accident.
Actual Cash Value (ACV): The value of your vehicle at the time of a loss, taking depreciation into account.
Rental Car Insurance Terms:
Loss Damage Waiver (LDW)/Collision Damage Waiver (CDW): Releases you from financial responsibility for damage to the rental car.
Supplemental Liability Insurance (SLI): Increases the liability coverage provided by the rental company, often covering higher limits.
Personal Accident Insurance (PAI): Covers medical expenses and accidental death for you and your passengers in the rental car. Personal Effects Coverage (PEC): Covers loss or theft of your personal belongings in the rental car.
Primary Coverage: The rental car insurance is the first to pay for a loss, without needing to file a claim with your personal auto policy. Secondary Coverage: The rental car insurance pays after your personal auto policy has paid out.
Now let’s look into options (other than your rental company) for coverage of your rental. The first option is your own auto coverage. Generally, if you carry collision and comprehensive (also known as full coverage) it usually will carry over to your rental car. Rules vary depending on the state but most states require liability, personal injury, medical payments, and collision. It’s best to check with your insurance company but if you are covered this will provide a cost savings as you can say no comfortably to the salesperson at the counter.
The next option is your credit card. With this in mind some credits give you secondary coverage and others provide primary coverage.
Secondary coverage will provide protection for you after your personal car insurance pays their portion of the claim. First you would file with your personal insurance company then the credit card to cover any remaining costs. Examples of cards that provide this coverage are Chase Freedom, Fidelity Rewards Visa, Blue Cash Preferred American Express, and Capital One Venture Rewards.
Primary coverage cards as stated will be the initial place you would file a claim in the case of an accident. One of the benefits of this is you could avoid paying a deductible on your personal insurance and avoid your rates potentially increasing because of a claim. Fewer cards carry this feature because it is potentially costlier to the company. You will probably have to pay an annual fee to secure a card that provides this feature. Examples of these types of cards are Chase Sapphire, Capital One Venture X Rewards and American Express (various cards).
American Express also offers a Premium Car Protection Plan that you can enroll into on some of its premium card offerings. The plan allows you to choose between a basic and plus plan that will cover your entire car rental for a fee around $20 to $25 (in most cases) for the entire rental period which can be up to 42 consecutive days and used at many international locations. This is a great benefit because the cost savings compare to playing a rental car company’s daily protection fee could be tremendous.
Another option for insurance protection are independent or third party providers of rental car coverages. These usually offer substantially lower rates compared to what you will be offered over the counter. Check out companies like Bonzah, Insure My Rental Car, Allianz, and Sure directly for rates.
Bonzah
Collision Damage Waiver (CDW), Rental Car Liability Insurance (RCLI - minimum state required liability), Supplemental Liability Insurance (SLI), Personal Accident/Effects Coverage (PAI/PEI)
Up to $35,000 for CDW, Up to $500,000 for SLI per accident ($100,000 per person), $500 for personal effects, $50,000 renter loss of life
Up to $1,000 for CDW, $0 for liability claims, Up to $25 for PAI
Primary coverage options available. Offers liability coverage for US and Canada rentals. Covers collision damage but not theft under CDW.
Allianz
Collision Damage Waiver (OneTrip Rental Car Protector), Trip Interruption, Baggage Loss/Damage
Up to $50,000 for collision, theft, or damage, Up to $1,000 for trip interruption, Up to $1,000 for baggage loss/ damage
No deductible
Primary coverage. Includes 24-hour emergency assistance. Available globally with some exceptions.
Insure My Rental Car
Coverage for damage or theft of the rental car
Up to $100,000
No deductible
Offers both daily and annual policies.
Theft or damage to the rental car, Personal effects coverage, Coverage for flat tires and lost keys
Up to $100,000 for vehicle damage/theft
Not specified in provided information .
Mobile-based platform. Includes coverage for belongings within the car.
Finally A Few More things to keep in mind before stepping to counter:
To upgrade or not: Rental car companies usually have variable rates on what they can/will charge for an upgrade in class or type (this amount can even vary from person to person during a day based on sales representative and availability). This is truly a wild west area of rental contracts that could increase your costs a little or a lot. Be aware price can be dictated by supply and demand. Here’s an example - If a location has an excess of a particular type of car they might offer it at an upgraded discount rate like $20 extra instead of a typical $40. The season or week can also dictate prices. Example - If it is winter along a popular summer beach location the inventory levels could be higher and upgrades will be easier and cheaper. Try negotiation which at many companies is acceptable although not advertised. Salespeople usually have A-LOT of flexibility in upgrade prices at the major companies. If they offer an upgrade (which they often do) haggling on the price - could get you a reduction (most are sales representatives are paid on commission and want the sale). You could also join a loyalty program as they often offer free and discounted upgrades (partnership programs like AAA might also have agreements that will get you an upgrade at check in).
Additional driver fees and a child seats: If you plan on having more than one driver or need a child seat, expect a fee of around $5 to $15 per day per additional driver or seat. Some car companies have partnership agreements that can save you on these fees. An example of this is when making reservations through Costco Travel that has agreements with Alamo, Avis and Enterprise.
Young driver fees: If the driver is under the age of 25, a daily surcharge may apply, often averaging around $25 per day for those 21 to 25. Young drivers may also be barred from renting higher end vehicles or being added as an additional driver on a contract. It is best to call ahead check the rules for young adults with your company prior to arriving at the counter.
Fuel charges: Returning the car without a full tank can lead to inflated charges as rental companies often charge a higher price per gallon than market value for refueling. This charge could run you three or four times the market price and even if you are few places below full some companies will charge you for a full tank of gas at these elevated prices. Companies do offer prepay for a tank or fill up the difference for prices that with taxes might run you between 10% to 20% more that on the street but I you don’t have time to stop by a station this might be the best deal you can get at the counter.
Mileage fees: Some rentals have mileage caps, and exceeding them can incur charges of $0.10 to $0.50 per extra mile. It is a good idea to read and ask the counter whether your rental has is unlimited or if you will be charged beyond a certain distance this will save you surprises and headaches upon return of your rental.
Toll transponders: Using the rental company's toll transponder often comes with a daily fee of $5 to $10, plus the actual toll charges. If you have your own transponder consider using it (you’ll need to delete the rental license plate once you return the car). You can see if a toll pass app would be worth it. The main point you should consider is if you will be often using any toll road so that any extra fee you might pay is worth it. If you don’t take one of these options the rental company will charge you directly (with a service fee) for toll roads you have used. Be sure to check these charges as companies have been know to make mistakes such a charging for past or future toll fees that have occurred on the car you rented.
Equipment add-ons: Renting a GPS, Sirius XM or other extras can add $5 to $25 or more per day to the cost. Yes there are some reasons for this (if your international you could save on roaming charges or maybe you don’t want to search for a station that plays your music. In any
case these are charges that could add up over a rental more than two days so be aware of the charges and weigh them again using your phone to roam or using a music app.
One-way fees: Returning the car to a different location than where you picked it up can result in fees ranging from $50 to several hundred dollars, and even over $1,000 for international rentals. The need for one-way rentals happens more often most may think. If you are in need of this type of rental keep in mind these fees are charged because you a putting inventory in a location that shifts supply. Make sure you are aware of cost before you pick up.
Cleaning fees: If the car is returned excessively dirty, you might be charged a cleaning fee ranging from $50 to $200. This could also be the case if you put a pet in the car. Keep in mind the next renter could have allergies so companies might need extra time and effort to get the car back in service. Check with the specific company and location about charges prior to rental if you think you may get the car unusually dirty in someway.
Oh One More Thing: Your debit card may not be welcomed. According to NerdWallet.com, most major rental companies will take debit cards but there are specific rules, locations and situations where it may not be an option. Car companies prefer credit cards because they carry an open line of credit that is easily accessible for to holds on and to charge for costs after the fact (damage, gas, tolls) where they don’t have to seek out your authorization again. Debit cards are subject to soft credit checks that could leave you without a car if your score is
low. Additionally most rental companies will not take gift cards for similar reasons. Payment with both of these once the car is return is often acceptable. Again see the specific company and location for more details (Example - debits cards at Nashville Airport will not be accepted by any major rental company without an accompanying flight out on the day of return).
The ability to rent a car for your travel is a wonderful option that gives you more flexibility on your movement away from home. When renting make sure you read the rules and regulations associated with your rental and ask questions of the company and location before arriving. The points above and a little preplanning ahead of time could save you a lot of headache trying to secure that vehicle to get down the road.