Car rental hidden costs

So you scored an awesome deal on you rental. A convertible mustang deal for only $19.99 per day. That’s what the advertising said. It must be right. That’s what you are expecting to pay.. until you drop to your friendly car rental shop and find out the actual cost of your rental. Well this doesn’t look all that great now does it.

The advertised price of any rental is what I call the “1/3 price” of the actual deal. The hidden part is the 2/3 part. Simple math tells me that there is a lot more to pay. Here’s a breakdown of what that 2/3 is all about, how to minimize it with some careful planning so that you’re not stuck trying to make last-minute (under pressure) decisions at the car rental shop.

Our LA rental - Mustang
Our LA rental - Mustang

Taxes on you (the 2/3)

Let’s dig straight into this.

The 1/3 is what the rental company calls “time & distance”. This is your car. Let’s take a standard 4 cylinder vehicle as an example with a cost of $19.95 per 24hr day.

The 2/3 part is the “Insurance”. Even if you purchased a holiday package deal which stated “car included” this part of the bill is NOT included with the rental deal. This means the $19.95 might have been covered by the package but the Insurance never is. The Insurance is all about you.

But wait, there is a way out of paying for rental Insurance

If you/spouse have car insurance in Californian (say you own a car in California since you work here) then you may have rental cover too. Call up the insurance company and check! Most personal car insurance plans cover rental cars in USA & Hawaii. That should save you a nice chunk of the rental insurance.

Here’s what the Insurance looks like on this $19.95 rental:

Note: these are optional! However as I always say, it’s not you but other drivers that you should watch out for when on the road driving.

  1. Damage Waiver (DW):Also known as Collision Damage Waiver covering the rental vehicle during an accident 100% with $0 deductible.
    • Cost: $8.99 per day.
    • How to avoid it: If you have a Wells Fargo credit card then you can waive this fee as long as you use your Wells Fargo credit card to pay for the rental. See here. Most American credit cards give this benefit.
  2. Personal Accident Insurance (PAI):Covers your expenses from an accident with a lump sum payment. Remember this is America, without health insurance you are a dead duck in the water should the unfortunate happen.
    • Cost: $3.00 per day.
    • How to avoid it: When you left your country (say Australia) you would have (I hope) purchased insurance which would have included health. This should cover you for a bit while you’re in the states. Else if you are working as a full-time employee for a company in USA then you already have health insurance (HMO/Kaiser etc) through your firm. So you don’t need extra expense.
  3. Supplemental Liability Protection (SLP):Third-party liability protection and will provide additional protection. e.g. You destroy someone’s house / other car during the accident. This covers the other party repairs if it’s your fault.
    • Cost: $11.99 per day.
    • How to avoid it: No way that I’m aware of unless you already have car insurance in the USA and this is covered somehow within that policy. Highly unlikely tho.

So final numbers for a week (7 days) rental look like this:

Car: $19.99 x 7 = 139.93
DW: $8.99 x 7 = 62.93
PAI: $3.00 x 7 = $21.00
SLP: $11.99 x 7 = $83.93
Total: $391.72
Taxes: $35.25

Final cost: $426.95, and here you thought you got a bargain that would cost roughly $139.93 for that week. DW+PAI+SLP alone cost you $251.72.

Other common fees & ways to avoid them

Sales taxes – if you are hiring in California expect to pay additional 9% tax on top of your bills. That’s an additional $35.25 ontop of the bill above. Sorry no way to avoid this one.

Taxes and airport surcharges – if you are picking up your car from the airport you will be hit with 10% – 20% airport tax. If you can find out where the closest car rental place is located near your hotel vs the airport. Unless you have no lift to your hotel from the airport then you will get stuck with this tax.

Gasoline charges – you will often get asked if you want to prepay a full tank of gas so that you can return it with any amount of petrol (gas) left. Say no. Gas is cheaper outside and you will save money. Seriously how well can you predict how much gas you will consume.

Drop-Off charges – always drop off the car at the location you picked it up. Charges vary here so don’t get stung or find out upfront what the charges would you especially if your travelling across state.

GPS charges – this one is a good money-maker for the rental companies. $10 per day to hire a GPS unit. Save yourself the $70 per week fee by using your smart phone & Google maps.

Hire on the weekends – companies like Enterprise have weekend deals because there are so many stock left over. Check out their websites, they always advertise this. Also when you drop into the car hire shop few minutes before they close on Friday you will be in a better state to bargain a great deal. I once hired a Mercedes C300 (pic below) for half the listed price and paid 1/3 of the listed insurance on it. Killer bargain and I had a fun car to drive over the weekend.

Me with my rental - Mercedes-benz C-300
Me with my weekend special rental - Mercedes-benz C-300

Sign-up now for a newsletter – most rental companies send out monthly newsletters with specials / deals like free upgrades or discounts. You can use those when making your rental.

Finally, I also came across this nice post with 9 Confessions From A Former Enterprise Rental Salesman: http://consumerist.com/2007/03/9-confessions-from-a-former-enterprise-rental-salesman.html

Hope this helps you with getting a great deal. If there are other tips and tricks I should include please let me know.

~ Ernest