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Car Rental Hidden Costs – Are they DRIVING you Crazy?

By March 30, 2012 No Comments

We’ve talked about this before, but I find that it’s always helpful to review the hidden costs of renting a car.

To begin, let’s say you’ve found a great rental deal for $20/day. Unfortunately that “great” rate doesn’t guarantee you a low-cost rental. Instead, upon returning your car, you find the price has skyrocketed and the bill now includes sales taxes, airport surcharges, insurance, and licensing fees. By the time all the extra charges are added on, the guaranteed result is a severe case of sticker shock … and a final cost double the initial alluring base rate.

So how can you avoid the shock of pricing overload? Here is a summary of car rental surcharges and a few tips for how to cut costs on your next rental.

Taxes and Airport Surcharges

Sales tax and airport charges vary considerably from state to state, and you won’t be able to avoid state and local sales taxes. Many local governments also charge fees to fund their own development projects, such as convention centers or sports stadiums, and some car rental companies also include a daily surcharge for economy recovery fees.

But avoiding airport charges is simple and something to always consider. You can eliminate airport concession recovery fees and customer facility charges by picking up and dropping off your car at an off-airport location. Weighing the possible inconveniences and the price of additional transportation to and from the airport against the concession fees charged by the airport location is, however, a must as doing so could save you more than 15% of your total price.

Insurance

This is usually referred to by rental companies as “collision damage” or “Loss Damage Waiver (LDW).” For an extra $25 – $30 a day, you can avoid liability for any damage to the vehicle, provided you’re not found guilty of gross negligence. Insurance is optional, although in a few states it is compulsory and built into the basic car rental cost.
So, before you purchase the extra insurance, check to see if your regular car insurance covers you in a rental car. Some policies do. Most credit cards also provide insurance if you pay for your rental with that card. Larger companies also include car rental addendums in their company insurance which also covers office equipment and the like. Keep in mind that limitations may apply to all types of coverage. If you’re not comfortable with the risk, consult with your insurance administrator or travel manager.

Gasoline Charges

Returning a car with an empty tank will create an extra charges to your bottom line.  In most cases you’ll want to fill up before you return your vehicle. However, car rental companies now offer the option of purchasing a full tank of gas when you first take the car, enabling you to return the car with as much or as little fuel as you wish.

Keep in mind that there is no refund for unused fuel, so you’d be paying a little extra for the convenience of skipping the trip to the gas station. Also, you may be able to find a better per-gallon price by shopping around on your own.

Drop-Off Charges

An extra fee is usually charged if a car is returned to a different location than where it was picked up. This fee varies by location. In some instances there is no charge, however you could pay more than $1,000 for picking a car up at LAX and dropping it of at JFK plus around $0.35 per mile.

If your corporation has a car rental contract make sure it notes a “one way” rate. The rates will be higher than your normal corporate rate but will save money in the long run.

The 24-Hour Clock

If you rent your car on Wednesday and return it on Thursday, most companies charge you one day only if you return it within 24 hours. Some companies will give you a 29-minute grace period before hourly charges kick in and after 90 – 120 minutes you may be charged for the full extra day. Some rental car companies are also now charging a late return fee of $10 per day.

Make sure you check the terms and conditions in your rental documents.

One Day Surcharges

Picking a car up only for one day will cost you more if those days are Monday through Thursday.  Because of the yield management process, it is more expensive for the car rental company if you pick your car up in the morning on Monday through Thursday and return it the same day. It eliminates the possibilities of another traveler needing that car for two or more days at a time. The one day surcharges are $5 to $7 over the normal daily rate and are “hidden” in the rate so you will not recognize you are being charged extra. Corporations can sometimes get this fee reduced or waived when negotiating a car rental contract.

Age Penalties

Renters under the age of 25 may have to pay additional fees of about $25 – $30 per day. Those companies who rent to drivers under 21 often charge much steeper surcharges. Those over 70 may also have to pay extra (if they’re able to rent at all).  Age restrictions vary by country and franchise, so be sure to check ahead.

Frequent Flier Fees

Car rental companies often charge a small fee when you request frequent flier miles for your rental. The fee varies by airline and can range anywhere from a few cents to $2 a day. Another choice would be to opt for the free day program instead of earning miles. There is not a charge for earning free rental days and are usually earned for every 15 days rented.

Kathleen Roberts

Kathleen Roberts

Kathleen Roberts is the Vice President of Business Development and passionate about providing innovative solutions for corporate travel programs. She is a member of GBTA and Utah GBTA, as well as a Certified Travel Counselor (CTC) and Global Travel Professional (GTP). In addition to being a travel addict she finds joy in a good game of basketball. Connect with Kathleen on LinkedIn.

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