1. "We're a tax magnet."As with the rest of the travel industry, business is up for car rentals and expected to climb even higher after having remained fairly flat for several years. But customers are already paying more, due to an unprecedented slew of taxes and fees.
However, that extra money doesn't go to the rental car companies but into city and state coffers, where it's used to fund municipal projects. For example, in 2005, car rentals in Arlington, Texas, were hit with a 5% tax to help pay for the new Dallas Cowboys stadium. Car rentals get tapped as fundraisers because local politicians won't feel the repercussions at the voting booth. "They're taxing people who are flying in from someplace else," says Hertz spokesperson Richard Broome. "These people can't and don't vote locally, so there's no harm for them."
But there's a way for consumers to dodge some of these fees: Pick up your car in town, not at the airport. Last year Travelocity found that taxes and fees were 45% lower for off-airport rentals. An added bonus, according to Neil Abrams, president of Abrams Consulting, is that you'll save on rates, too: On average, they're $10 cheaper per day in town.
2. "We track your every move."Over the past few years, rental agencies have begun to install GPS devices in their vehicles. These units allow companies to track cars that are lost or stolen. But the technology also lets them know when a renter has been speeding or has taken a car into another state, which may be construed as increasing wear and tear. "Opportunity for a rental car operator to impose geographic limitations was never pitched by GPS sellers, but was discovered coincidentally," says Michael LaPlaca, an attorney who specializes in rental car law.
To date, most companies don't use the technology to impose fines, but it can and does happen. American Car Rental, for example, was charging customers in Connecticut $150 each time they topped the speed limit for two minutes at a stretch, claiming it damaged their vehicles. The good news for consumers: Connecticut's Consumer Protection Commission deemed the fines excessive and ordered the rental car agency to refund penalized customers. Last year the state's Supreme Court affirmed the decision. Other states, including New York and California, have passed laws preventing rental car companies from imposing such penalties.
3. "Our prices are etched in sand."Trying to find the best rental deal can be very frustrating, since rates can fluctuate dramatically from day to day, even minute to minute. "Prices are constantly changing," Abrams says. That's because rental car agencies use something called yield-management technology, which continually adjusts pricing depending on how many cars are available. A sudden rash of cancellations or bookings can push rates up or down. When we recently priced an Enterprise rental for a spring trip to Los Angeles, the cost vacillated dramatically: Two hours after we first checked the company's web site, the per-day rate for a full-size car dropped almost $8. Over the next week it continued to yo-yo, ranging from a low of $32 to a high of $73.
Even the way you book can affect prices: When we called the Avis desk at LAX to reserve a minivan, we were quoted a price more than $150 higher than the amount being advertised simultaneously on the company's Web site. Also, online travel agencies like Orbitz or Priceline can have completely different prices. That's why it pays to comparison-shop and check back later to see whether rates have fallen — there's usually no fee to cancel a reservation or rebook at a lower rate.
4. "You probably don't need our insurance."Most companies make reserving and renting a car very easy — until it comes to the issue of insurance. That's where they offer a bewildering array of supplemental coverage, which can easily add $10 to $30 to your daily bill. What the overeager reps won't tell you is that you may already be covered, either partially or completely.
There are two major types of insurance you'll want: a collision/damage waiver and liability. The former covers repair and replacement costs to the car should anything happen to it; the latter protects you from lawsuits if you've injured anyone or damaged property when driving. If you have auto insurance, it usually extends to rental cars, providing both collision/damage and liability, as long as you're on a leisure trip. And many credit cards cover damages to the vehicle but don't offer liability.
As with any type of insurance, it's always more complicated than it seems. "You shouldn't assume you're covered by your credit card," says Jeanne Salvatore, spokesperson for the Insurance Information Institute. Check ahead of time with both your credit card and auto insurance providers to see if, when and how you're covered.
5. "Your reservation doesn't mean bupkis."Andy Parker was looking forward to spending his vacation in February exploring the back roads of Aruba. He even reserved a Jeep with Hertz to handle the rough driving conditions. But when he went to pick it up, he was told all they had on the lot was a sedan. "It was a sore spot," says the Buffalo, N.Y., meteorologist, who got stuck with a small Nissan.
As Parker found out, a reservation isn't a guarantee. The rental agreement is contingent on availability. In fact, you're not reserving a specific car model, but simply a class of car. (One exception: Hertz allows you to reserve high-end models in its "Prestige Collection.") What a reservation actually means is that the company is supposed to have some kind of vehicle on the premises for you to rent. So if you get a smaller car than what you reserved, be sure to ask for a rate adjustment. (Parker got Hertz to take 20% off his bill.)
If the lot is empty, the company is supposed to find you a car even if it means calling another agency and covering the difference. So if the clerk doesn't offer, remind him that the company is liable if you wind up paying more for a rental car elsewhere.
6. "Special orders are our bread and butter."Just like supermarkets, rental car companies bank on getting their customers to do some impulse buying at the checkout counter — where you can now choose from a sizable menu of a la carte amenities and services. The strategy seems to be working: 2005 revenue was up almost 15% since 2003 and at its highest level since 2001.
According to Justin McNaull, a spokesperson for the American Auto Association, a rental vehicle tricked out with extra features could run you $20 more a day. Here's how it breaks down: GPS with turn-by-turn directions costs about $10 a day. Satellite radio, roughly $3 a day. Avis and Budget are rolling out a service that for up to $2 a day will let you pay highway tolls electronically — but that fee doesn't include the tolls themselves. And if you want a baby seat for the minivan, add another $10 a day.
Companies have also begun pushing specialty cars: "It can be a place to make money," McNaull says. Last year Avis inaugurated the "Summer of the Hummer," when it added the H3 to its lots, and even low-priced Thrifty stocks the trendy Dodge Magnum and Chrysler PT Cruiser.
7. "The little guys charge less."If you're like most travelers, you check with a few big car rental agencies and then choose the best deal. But there are hosts of smaller, independent companies that often offer significantly better rates. Good to know, since rental car prices — which have remained relatively flat since 2000 — are beginning to rise again. American Express Business Travel forecasts rental car rate increases of as much as 8% in 2006. That would represent the biggest year-over-year rate hike in a decade.
How to find a good independent rental car agency? Start online with CarRentalExpress.com. On this site you can search more than 300 small car rental firms worldwide, all of which promise to be 15 to 30% cheaper than the large chains. A recent search of the site, for example, turned up a $39 rate for a Saturday rental from EZ Rent A Car, located at Atlanta's Hartsfield-Jackson International Airport. That's $30 less than what Avis was charging.
8. "We're cutting corners anywhere we can."You may not have noticed, but over the past few years the fine print on rental contracts has not so subtly been changing, even for the industry's best customers. For example, this past winter Hertz shortened the grace period for returning a car from one hour to half an hour for everyone including its #1 Club Gold members; customers also can no longer return a car after a location has closed for the night without incurring a late fee.
In another move to cut corners, rental companies across the board have begun making customers liable for damage caused by so-called acts of God, such as hurricanes and floods. Avis and Budget, the last major holdouts to this policy change, will soon be adding it, even to their frequent renters' contracts. The new rule means it's now up to renters either to return a car before the natural disaster hits, drive the vehicle out of harm's way...or pay up for the newly developed insurance option to cover this type of damage.
9. "Think gas prices are high at the pump? Look what we charge."Even when Brandon Harris is in a hurry, he tries to gas up before returning his rental car. Last spring, when he was on vacation in Costa Rica, he went 15 minutes out of his way to find an open station. "I don't think the rates that [rental agencies] are charging are fair," the Chicago resident says. "It's cheaper to do it yourself."
According to McNaull, rental car companies generally charge more than $5 a gallon for gas. You're paying for the gas plus the luxury of not having to pump it yourself, he says, and not filling up the tank can tack on an additional $20 to your bill. Car rental companies do offer you another option: prepaying for a tank of gas at a more reasonable rate when you pick up the car. Sure, it beats having to worry about finding a station at the last minute, but you're likely not going to return the car empty. "Whatever gas you leave in the tank is a donation to the rental car company," McNaull says. Unless you're tight for time, it still pays to make a pit stop. But when you do fill 'er up on your own, watch out for gas stations right next to the airport since they usually have higher rates. "Stations make a killing on out-of-towners filling up rental cars," McNaull says.
10. "We offer some terrific deals — on Thursdays when the moon is full."Jay Winger thought he had found a great deal. He was planning to use a Budget double-upgrade coupon when he rented a car for his Las Vegas vacation in March. The coupon had been accepted when he made the reservation online, but when he arrived at the rental desk, the agent refused to honor it. Why? At the bottom of the coupon in "really small print," Winger says, it stated that the coupon wasn't valid in all areas. And Las Vegas wasn't one of them. "There are always certain locations that don't take part in national promotions," says Avis Budget Car Rental spokesperson Susan McGowan. Winger wound up spending about $60 more than he had planned. "Renting a car is really tricky," the Minneapolis native says.
On every rental car company Web site, there are ads flaunting the companies' latest deals. Not to mention the paper coupons that appear regularly in newspapers. But there are so many rules and restrictions involved that it's often impossible to get exactly the deal that's being advertised. For starters, some require a Saturday-night stay or a minimum five-day rental. Companies also designate blackout days, exclude popular locations like New York and Las Vegas, and reserve the right to terminate any given offer at any given time. Hertz, for one, reserves the right to revoke its free upgrade special "especially during periods of peak demand," which, given the recent travel boom, should be fairly often.
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