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The Hidden Costs of Renting a Car

Written by Nickel - 20 Comments

When we picked up our rental car while this past weekend, I was reminded of the many hidden costs associated with renting a car. You can comparison shop until the cows come home, but odds are you’ll still end up paying more than you expected. Here’s a sampling:

Refueling charges

It’s no secret that rental car agencies stick it to you if you return your car with less gas than a full tank of gas, but this is starting to get ridiculous. When picking up your car, you have two main choices: prepay for a full tank of gas or refill it yourself.

The upside of prepaying is that they you’ll pay market price for gas. The downside is that you don’t get any credit for unused gallons. Thus, you end up paying for any gas that’s left in the tank when you bring it back. Given the recent runup in gas prices, you’re paying a lot for convenience with this option.

Conversely, if you choose to refuel it yourself and then fail to do so, they’ll gouge you like there’s no tomorrow. in our case, the price per gallon for returning it less than full is $7.99/gallon. Fortunately, I’ve never had trouble finding a gas station when returning a rental car, and I certainly don’t intend to start now.

Taxes

Regardless of how low the “normal” sales tax in a given area, you can typically expect to pay 10-15% (or more) in taxes when you rent a car. There’s nothing quite like building a tax base on the backs of visitors.

Airport fees

If you rent at the airport, you can count on paying additional “concession” fees. These are fees that are charged to the rental agency for the right to do business at the airport, and they’re pass on to you. Here’s a tip: If at all possible, pick up your car away from the airport. In our case, we rented from an agency about 2 miles from the airport, but we’re returning it at the airport — the concession fees only apply for renting, not for dropping off.

Additional drivers

I totally forgot about this one. We found a great price, but neglected to factor in the fact that my wife would need to drive, as well. If we were AAA members, this would have been free. But since we weren’t, they charged us $11/day (capped at 5 days) for her to be allowed to drive. I asked them to drop it, but they wouldn’t budge.

Loss and damage waiver (LDW)

In my opinion, this is second only to refueling charges in terms of price gouging. Rental agencies always push their loss and damage waiver on you when you’re signing up. This option typically provides you with zero-deductible coverage for any sort of loss or damage to the rental vehicle. Unfortunately, it comes at a price — usually $20-$30/day or more.

But guess what? Individual car insurance almost always covers rentals (check with you agent if you’re not sure). Moreover, many credit cards provide car rental insurance if you pay for your rental with the card.

Drop-off charges

If you pick up at one location and return at another, you might be subject to a drop-off fee, even if the other location is just down the road. This isn’t always the case, though, so check at the rental counter.

Partial days

Almost without exception, car rental agencies charge for each day, or portion thereof. Thus, if you pick your car up at 10AM, be sure to return your car by 10AM on the day you’re dropping it off or you’ll be charged for another full day. This is actually the reason we’re dropping our car off at the airport — the location from which we rented closes on Satrudays at 1PM and doesn’t re-open until Monday morning.

Since we were planning on returning the car late in the day on Saturday (following a morning pickup the previous week) they were not only going to charge us for an additional day, they were going to charge us the daily rate until they re-opened on Monday. By returning it to the airport on Sunday morning, we’ll pay the same that we would have with a Saturday afternoon dropoff, but without the charges running through Monday morning since the airport location is open 24/7. Better yet, there’s no dropoff charge.

Mileage limits

In many cases, car rental agencies limit you to a certain number of miles per day (usually around 150). Exceed this limit and you can expect to pay $0.25-$0.50 for each additional mile.

Frequent flyer fees

Many rental agencies charge a fee (usually around $2/day) if you want to earn frequent flyer miles in return for your rental. This is fine for business travellers (if they don’t mind wasting their company’s money) but it’s not a very good deal for individuals.

Child safety seats

When traveling with kids, it’s important to find out how much you’ll have to pay to rent a child safety seats. In our case, we had every intention of bringing out own. Unfortunately, we forgot two booster seats in our car at the airport. We actually realized it before the plane departed, but security was a nightmare and we didn’t want to roll the dice with a trip back out to the parking deck.

Care to guess what Hertz charges for a child safety seat? $60/week. Plus tax. Our solution? Buy a couple of new Graco booster seats at our destination for $18/each. We’ll probably leave these with family for future trips, but even if we didn’t we’d still come out way ahead.

GPS rental

If you want/need a GPS in your car, be prepared to pay $15-$20/day for the privilege. A much better option would be to print out directions from MapQuest or Google Maps before you depart. Also keep in mind that many hotels have free internet connections for looking up directions. Alternatively, if you absolutely have to have one, you might want to just buy your own and take it with you. For example, you can get this one for $150. This would practically pay for itself with a week-long rental and then you’d have it for future use.

Upsizing and reduced fuel economy

Last but not least, it’s not uncommon for a rental agency to run out of cars in a certain size class. In such cases, the standard practice is to upgrade you to a larger vehicle. That’s all well and good, except that bigger cars get worse mileage, and you might find yourself spending far more on gas than you had anticipated. Fortunately, we weren’t stung by this one. We got exactly what we asked for and the mileage hasn’t been too bad, even considering we’re hauling around six people (ourselves plus four kids).

Published on June 25th, 2008
Modified on July 6th, 2008 - 20 Comments
Filed under: Automotive, Travel

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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20 Responses to “The Hidden Costs of Renting a Car”

  1. 1
    crazypumpkin Says:

    I’m not sure where you’ve looked recently, but I just rented a car a few weekends ago for a weekend trip. Every single rental agency I looked at now does unlimited mileage. I rented from Budget who also offered that if I traveled less than 75 miles that they would do the gas refill for about $13. Definitely worked to my advantage, especially when I negotiated getting this deal when I had actually driven 78 miles. I could not have refilled the tank for less than $75. I pad $58 total for a Sat-Mon rental from an airport (this includes a Costco discount and a “free” upgrade because they didn’t have the economy car I had requested).

  2. 2
    john Says:

    I agree with crazypumpkin, you also aren’t going to get nickel and dimed as much if you go with the big companies and negotiate. you can negotiate anything!

  3. 3
    "Mo" Money Says:

    I am always amazed at the tax they charge you, many times as much as 17%. This is how the local government collects taxes from their visitors. And I don’t know of any cities that don’t.

  4. 4
    Sandwichartist Says:

    We travel to see grandparents a few times a year and usually drive, especially after having more than one kid. I’ve thought about renting a car, since they advertise unlimited mileage, but does anyone know if they limit geographically where you’re allowed to drive? Our typical trip would be from Dallas to Minneapolis, putting almost 2,000 miles on our car roundtrip. We do it in one day and only stay for an extended weekend, so the daily rates wouldn’t be too bad if we could pull it off, and we’d be paying for gas either way. Anybody ever do anything like this?

  5. 5
    Dan Says:

    I rented a car at Avis near Detroit a few years ago to drive to Boston. Even went thru Canada as a shortcut and I had no problems. Just had to get extra paperwork from the rental counter for border crossing.

    The major rental places I looked at clearly give restrictions on locations, typically Canada and US is ok, but check to make sure in their fine print.

  6. 6
    Cheap Like Me Says:

    Ouch! That extra driver charge would almost pay for AAA membership (ours is about $80 a year). I will keep that AAA tip in mind when we pick up our rental car this weekend, and I’m going to call our insurance agent about coverage right now – thanks for the reminder!

  7. 7
    Kevin (ReturnToManliness) Says:

    Be careful on the insurance front. If you are traveling for personal reasons (and more importantly can prove it) then you are just fine. Your credit card company and your personal car insurance company can fight it out over who pays for an accident. You will be covered. But what I found out recently that if you are there on business (and the burden of proof will be on you to prove that you were there for personal reasons) your personal car insurance carrier will not cover any damage regardless of the credit card or not. I am not sure if the CC companies will fight this as well, but just be careful when traveling on business to get the insurance (unless you have investigated it and feel comfortable).

    Amen to everything else in the post as well.

  8. 8
    FFB Says:

    A couple of years ago we rented a car in Miami while on vacation. We didn’t understand the whole cut-off time issue and we had to pay extra. What a rip-off!

  9. 9
    Winning Startups Says:

    I like to look at cost savings on a per hour basis. This weekend I rented a car – of course I used my handy dandy coupon codes which you can almost always find when renting a car – and I was 45 minutes overtime on my rental. I asked a quick 30 second question, “Will you please not charge me for the extra minutes, I’m a Blue Chip member?” She immediately took off the charge, saving me $8.60. If I were to calculate that hourly (1/120 hour divided by $8.60), I earned $1032 that hour.

  10. 10
    jim Says:

    Hmmm I never mention other drivers…

  11. 11
    nickel Says:

    Jim: Just be sure that your other drivers never get in an accident. Or be sure to switch real quick if they do.

  12. 12
    Mike Says:

    Don’t forget underage fees. Most car rental companies will charge you $25.00 to $40.00 extra per day if you’re under 25 (like me).

  13. 13
    Justin Says:

    I haven’t rented a car that had to returned with a full tank in the US in years. I have to return the car with the tank where it when I picked it up. So if I pick it up at 3/4 I need need to return it at 3/4

  14. 14
    nickel Says:

    Mike: Yep, I’m aware of the underage fees. But since I’m not underage, and since I was writing from my own recent experience, I left those out.

    Justin: Every time I’ve rented a car, it’s been given to me with a full tank. So yes, you’re technically correct that it had to be returned with the same amount of gas that was in it when you received it. Nobody would ever expect you to fill a tank that wasn’t full when you got it.

  15. 15
    Justin Says:

    Hmmm, did subscribing to comments go away?

    Also, I rented a car in Australia recently, AMEX doesn’t insure cars rented there, the GPS was $8 a day and was a must have since I drove over 2500km. Printing and using maps is cumbersome at best, assuming you have somewhere you CAN print.

  16. 16
    nickel Says:

    Yes, subscribe to comments is gone for now, but might be making a comeback.

  17. 17
    Sarah Says:

    I just got back from a trip, and almost feinted when I saw the $7.99 per gallon if not full fee. AND, I got hit with the ‘free’ upgrade. But with the rental savings, along with hotel and disney tickets, my AAA membership more than paid for itself. Check their web site. they have other discounts too for shopping and things.

  18. 18
    Jane Says:

    Kevin,

    Unless you are the business your business should be responsible for insuring the rental at least that’s how it works at my employer.

  19. 19
    freecia Says:

    Don’t forget the “dings and dents” fee. With some car rental companies, if you don’t indicate all the dings and dents when you drive off the lot, they charge you “repair fees” because they assume you put it there.

    I use Hertz and they don’t do this in the states. The usual luggage scratches put on the bumper fall under normal wear and tear for them.

  20. 20
    Joe E Says:

    Great post.

    Be aware of being given an older car also. In 2004 we rented a car to drive on our two week vacation and we were given one with over 29,000 miles. That one had steering problems so we took it back for a replacement which they gave 2 us with free GPS.

    The 2nd car had over 27,000 miles on it and we got a flat tire about 4,000 miles into our trip. We called Hertz and they told us to bring it in at the nearest location at our convenience for a 3rd car.

    The 3rd car had less than 10,000 miles on it but when we were about 500 miles from home the ‘check engine’ light came on right after I gassed up. I figured it was only a gas cap problem so I was not about to get a 4th car. Instead we cut our trip short by one day and headed for home.

    Renting a car cuts down on wear and tear for your own car but pay attention to what the contract says or you could ending paying a lot more than you expected to.

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