Apply the brakes: Top car rental traps to avoid
Are you planning to travel interstate over the summer holidays? There’s a good chance you might also want to get car rental, at least for a few days.
And while there are plenty of great deals to be had, there are some car rental traps you should know about before handing over your deposit. Otherwise, that deal that seemed too good to be true most certainly will be.
The first thing you should do before even hiring a car is consider whether it’s cost effective. Where are you travelling? And how good is the local transport? That means both public transport and access to services such as taxis and ride shares.
If you’re going to be spending most of your time in a city, it’s probably more of a hassle to have a car than not. Aside from the cost of hiring the car, you’re also paying for fuel, parking and probably tolls. It would be cheaper to use ride share or public transport for the duration.
But if you want to visit friends and family who live in the outer suburbs, where public transport is sketchy at best, or travel further afield into the country, then hiring a car makes more sense.
So, what are the traps to avoid, you ask? Put your seatbelts on as we navigate the potential pitfalls.
Extra insurance
You do a search online for deals and come up with what seems like a great rental car for seven days. But once you start completing the form to book the car, you realise that the cost to bring down the excess – that's the amount you pay in the event of an accident, theft or damage – makes a significant dent in your budget. Like regular car insurance, how much you pay to knock off this excess depends on your age, the car and your driving experience.
It could double the cost of hiring a car from a relatively affordable $40 a day. Which will make a significant dent in your holiday budget. But, given that many car rental companies can charge excess upwards of $4500 in the event something goes wrong, it’s something you need to consider. You don’t want that dream holiday to turn into a financial nightmare. Like it did for Ron Thorburn when his rental car was stolen and burnt in Broome, Western Australia.
How to avoid paying expensive car rental excess?
This doesn’t mean you have to buy the insurance from the car rental company. Standalone third-party insurance covering excess can be much more affordable. It is also usually covered under general travel insurance. So if you have taken that out, you may be paying twice. Beware, though, that if you take out separate insurance it is likely you will have to pay the car rental company for the excess upfront. And then seek a refund from your insurer.
You may also be covered under credit card travel insurance but check the fine print. This usually only covers the card owner, not any additional drivers. And this may only be relevant if you paid for the car hire with that credit card.
When it comes to insurance, it pays not to assume you’re covered. Triple check what is covered. Even if you reduce the excess to zero, there are exclusions such driving on unsealed roads or under the influence. Include that in your overall costings for car hire. Don’t be caught short.
Additional drivers
Like excess insurance, this is another one that often catches out drivers when they go to pick up their car at the airport. If you’ve just booked under your name and want to add an additional driver at the car hire concierge, you could be in for a nasty surprise. Some companies, believe it or not, change an extra 5 to 10 percent for another driver to be added to the agreement. Make sure you check this before you book. And choose another car rental company if that is one of their extra charges. It’s just money for jam to them, so don’t let them get away with it.
If your additional driver is under 25, you are also likely to be slugged anywhere between 10 and 25 percent more per day. This is what is known as a ‘young driver surcharge’. (None of the major companies will let a driver under 21 behind the wheel of a rental car.) It can see the cost of your seven-day rental jump by a considerable amount. So if you’re planning to share the driving with someone aged 21 to 25, make sure you compare the costs before booking. You may decide to just limit the driving to yourself. Or add another driver aged over 25 if the insurance for younger drivers gets too expensive.
Toll fees
Depending on where you’re travelling, you might need to factor in toll fees for the duration of your stay. If you have an electronic tolling account, you can add your hire car's registration to your account for the exact days, to the hour, of your rental and the amount will be charged to your usual tolling account. If you don't have a tolling account, you can elect to pre-purchase a transponder. This will automatically record the fee every time you go through a toll road. You can get this from the rental car company if you know you’ll be using tolls more than once.
If you’re only likely to use them once or twice on given days, you can purchase day passes directly from the toll operators. But make sure you do so. If you leave it to chance and then return your car to the rental agency without having paid tolls as you go, you will find that they will add a little extra on top of the toll costs to your bill. And if you get fined for not paying a toll and that gets passed on to the rental company, you can expect more charges for handling.
Extra equipment
Travelling with children who need car seats? This will cost you extra to hire – about $8 to $15 a day. So work out the sums (and logistics) beforehand. It might be cheaper to bring a car seat with you. But this also depends on the number of children you’re travelling with.
But don’t forget you’re supposed to be having a holiday. It’s much easier to step into a car that’s already kitted out with everything you need than to lug it through the airport and fit it when you’re tired from the journey and the kids are fractious. Car seats must comply with State laws and many companies will cap the cost after a certain number of days. So research the local requirements and your options.
Need a ski rack or extra storage on top of the car? Organise that before you arrive, or you could find that, even if there is a car available where you can add all that on the day, it will cost you a lot more money to do so at the last minute.
And don’t fall for any hard sell on GPS. Unless you’re planning to drive where mobile coverage is sketchy, there's no need to fork out extra to work out where you’re going. You can just use your phone.
Premium location surcharge
Also known as the airport surcharge, this is when you pay more for the privilege of convenience. You know, getting off the plane, going straight to the car rental bay outside and signing some paperwork to get your keys – then you’re on your way. Car rental companies will often charge a hefty 20 to 25 percent more for picking up a car at the airport. To be fair, they are often passing on the fees the airports charge them for keeping the cars on the premises. But it’s still a significant impost for travellers.
Again, you’ll need to weigh up convenience with looking a little further afield. There are a lot of car hire companies that offer free shuttle buses to and from the airports in the capital cities. So it’s actually not a huge hassle if you’re happy to wait a little longer to get to your car. You just need to make sure that if you’re returning the car to the same spot, allow extra time to get to the airport for your return flight.
Several Australian cities also have train services from the airport, including most recently the Perth airport line. So you can just take a train to the city or certain suburbs to hire a car, if that works out more cost effective.
Some companies will also charge you a lot for returning your car to a different point than when you picked it up from. This is often known as the ‘one-way fee’. If you need to do this, ask the question about how much it will cost before you arrive at Point A, not once you return the car to Point B - or you could be in for another unpleasant surprise.
Fuel excess with car rental
We don’t need to tell you about the price of fuel. It seems to dip momentarily before heading skywards again. The cost of filling up a car is certainly a factor you should consider when weighing up the benefits of renting a car versus public transport and ride share when you’re on holiday. If you do decide to hire a car, whether it’s for convenience or the destination you’re heading in, put some thought into the type of car and consider its fuel economy, as well as its fitout. It might be worth sacrificing a little extra space for better fuel mileage.
What will definitely add a huge amount to your bill when you return your car is if you haven’t filled up first. Car rental companies will charge you for the cost of a full tank. And they will charge you their price per litre, not the average pump price. So, while the pump price might be about $1.75 per litre, you could be slugged more than double that if you haven’t taken the time to swing by the nearest petrol station and fill up yourself before returning the car. Not a nice way to end your holiday.
Other hidden fees in car rental
Processing fees
We’re all used to paying for the privilege of using our credit cards, and car rental companies are no different. It’s legal and there’s not much we can do about it. However, don’t simply glide over the amount and accept it unquestioningly. It can’t be more than the reasonable cost of processing your transaction. The Reserve Bank of Australia suggests that payments using Visa or Mastercard may cost a business 1-1.5 percent of the transaction and 2-3 percent for American Express. If you see an alarming amount added to your bill as ‘credit card surcharge’, don’t be afraid to question it.
Administrative fees
Car rental companies also commonly charge one of those nebulous ‘administrative fees’. This could be the cost of doing business. Or just another way of getting more money out of you. This fee could add up to 3.5 percent to your bill. So factor this in to the overall costs before you book the car.
Early return fees
Another one that might leave you a little flummoxed is an ‘early return’ fee. If you decide to cut your holiday short or that you don’t need the car for the last few days, you could get slugged with fees to cover the company’s loss of income. That doesn’t mean, however, that they are allowed to keep the entire amount of your remaining day or days.
Late return charges
They can charge you for every hour you’re late returning the vehicle, though. So allow yourself plenty of time to get back to the dropoff point at the appointed hour. You could end up paying for an entire day extra, otherwise.
If you do see unexpected charges on your credit card from the rental car company, it could be a breach of Australian Consumer Law. The company needs to give you the chance to dispute any extra charge before deducting the amount.
When in doubt, reach out
As you can see, there’s a lot more than the daily hire cost of a car to ponder when choosing your next holiday rental. But with a little homework, you can tally up all the expected (and unexpected) costs before you start. You'll be less likely to run in to any nasty surprises during what is supposed to be a relaxing time.
If you think the rental car company has unfairly slugged you for any extras that weren’t disclosed when you booked the car, lodge your complaint with us. We'll help you handle it and you’ll be back in the driver’s seat in no time.
