The True Cost Of Renting A Car

Whether you’re going on vacation and want the freedom and convenience of wheels while exploring or need a car while yours is in the shop, chances are you’ll rent a car at some point.

There were 1.8 million rental cars in service in 2021, according to Zippa. Costs vary depending on the type of vehicle you rent, which rental car company you use and where you rent the car. Understanding how these factors affect the price will help you to budget for the expense.

Typical cost of a car rental

The expected cost to rent a vehicle varies depending on factors including location, car type and rental company. But the average cost in mid-October 2022 was about $81 per day, according to travel website Hopper. To calculate your expected cost, reach out to Hertz, Enterprise, Avis or other rental companies you’re considering to best prepare for the cost.

Factors that impact rental car costs

Several details affect the cost of your rental — both in and outside your control. Save money where you can by understanding what impacts price.

Car type

When choosing a rental car, the first question most renters ask is how much space they need. Car rental companies classify their vehicles according to size.

• Economy cars are usually the least expensive and smallest rental companies offer. These vehicles have room for one or two people, along with their luggage.
• Intermediate or compact cars offer more space than economy cars, usually through extra room in the trunk. Intermediate cars accommodate up to four people and a minimal amount of luggage.
• Standard vehicles with full-size back seats have room for four adults. They also offer plenty of trunk space, making them a good choice for families that have a considerable amount of luggage to bring along.
• Luxury vehicles are premium vehicles that range from sporty convertibles to full-size SUVs and vans.

In most cases, the daily rental fee increases with the size and category of the car or truck. However, sometimes rental companies offer specials on vehicles in certain categories, especially if they have plenty in stock.

For example, if the company has a limited number of economy cars available to rent for a certain weekend, they may offer a discount on standard vehicles.

Here are the lowest daily rates for different types of vehicles, according to Kayak.

Kayak as of October 2022.

Location

As with other goods and services, prices fluctuate according to supply and demand. Many people find better car rental deals near the center of the city instead of the airport.

Rental fees also vary in different regions of the country. Highly trafficked tourist areas may have lower rental fees than other locations because of the increased competition. But they may also have higher fees during popular seasons when demand is high.

Kayak as of October 2022.

Age of the driver

The renter’s age greatly influences the cost. The younger the driver, the higher the price, because young drivers increase risks to rental companies. Many rental companies do not even rent to those under 20 years old.

Rental companies may charge additional fees for young renters. Depending on the state, these fees can range from $40 to $65 per day. Consider these higher prices when determining the driver for your rental.

Some states allow fees for drivers in certain age ranges. For example, renting from Enterprise in Michigan comes with an additional $40 per day fee for drivers 18 to 20 years old and $19 per day for drivers between 21 and 24. Young renters in New York can expect to pay an additional $64.50 due to their age.

But not every rental company charges these fees. Consider both the daily cost and additional fees when choosing where to rent from.

How to get the best deal on your rental car

Although a rental car’s price is based on a range of factors, there are still a few things you can do to drive away with some extra cash in your pocket.

Comparison shop

You can save money on your next car rental by shopping around. Prices often vary by rental agency, so a little legwork could land you a much better deal. Comparison sites like Priceline, Expedia, AutoSlash and Kayak make it easier to compare rental car quotes.

Visit the rental agency’s websites to ensure you’re getting the best price available on the vehicle.

Fill up the tank

Always stop to top up the gas tank before returning your rental car to the agency. You’ll avoid additional fees for refueling.

Book early

Booking your rental car ahead of time allows you to get the right vehicle, avoid long lines and potentially save money. This is especially important if you intend to travel around a major holiday.

Skip add-ons

Before receiving the keys to your rental, you will likely be offered several add-ons. Options may include a GPS, toll plan, access to XM radio or even car seats. Skip these options if you can to save money.

Rental car insurance is another costly add-on often presented when you reserve or pick up the vehicle. It can add an additional $15 to $30 per day to the bill but could save you thousands if you’re involved in an accident or the car is stolen.

The four types of common rental car insurance include:

• Loss-and-damage waiver (LDW) or collision damage waiver (CDW): provides coverage if the car is damaged or stolen
• Supplemental liability protection: protects you from liability if you damage property or other vehicles
• Personal accident protection: pays for medical expenses for yourself and passengers (if applicable) in the event you get into an accident
• Personal effects coverage: covers the cost of belongings stolen from the rental car

These protections may already be available through your credit card or current auto or homeowners insurance policy. Some have limitations, though, so be sure to confirm how they work with your credit card issuer or insurance providers.

Hidden fees and additional costs

Car rental companies also charge hidden fees that affect the cost of the rental. They build some of these fees into the cost of the rental. Others may appear on statements several months after the rental period.

• Renting a car at the airport costs more than renting at an off-site facility. This is because the airport charges fees like an airport concession fee and a customer facility charge that the rental car company passes on to the consumer.
• Some companies place an authorization hold on the customer’s debit or credit card. This charge, which ranges from $150 to $500, gives the rental car company some protection if the renter damages or fails to return the vehicle. The company releases the funds within a few days after receiving the rental car back in acceptable condition.
• Many companies charge a cancellation fee to renters who cancel their reservations less than 24 hours before the rental. If the renter paid in advance, the company would refund the payment minus the cancellation fee.
• Renters who damage the interior or exterior of the vehicle must pay for the repairs. Unwary renters may end up paying for damage caused by previous drivers. Thoroughly inspect the vehicle before driving it off the lot, take pictures of visible damage and alert an employee.
• Most rental agencies charge a daily fee to add drivers to the rental contract. The cost is determined by the state and rental agency.
• Changing the terms of the rental agreement by modifying or extending it may also come at an added cost. The amount you’re charged will vary, and you may pay a higher daily rate.

Although knowing about these hidden fees helps renters understand why the total rental fees cost more than the advertised rental price, there is usually little that can be done to avoid them.

The bottom line

Rental car costs vary by rental agency, car type, location and age of the driver. You’ll also find that some markets are far more expensive than others. However, there are ways to lower your costs, like shopping around, booking early and skipping add-ons. Be sure to read the rental agreement’s fine print to avoid incurring any unexpected costs.

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