Beware of hidden car rental fees

Have you ever booked a car thinking you would pay $150 for the week, only to end up paying $400 at the counter? It’s common for consumers to suffer sticker shock brought on by a low base rate that turns into an exorbitant bill when all those mysterious taxes, fees, and insurance add-ons are included.

The rates listed on SmarterTravel.com’s website are base rates for car rentals. Unless stated otherwise, prices do not include the various fees and taxes added to each rental, which vary by state, agency, and rental location. However, since fees can add a significant amount to your rental car bill, we feel it’s important for you to understand just where all those extra dollars are going.

Even within a region, fees and taxes will vary between rental locations and companies. Often, rental agencies are franchised, and since many of the fees are in part determined by state and local tax rates, airport costs, and relative demand, compiling all the possible taxes and fees is a non-standardized, piecemeal process.

Renting through an organization that discloses all fees up front is the best way to avoid paying more than you expect. Travelocity has a “total price” feature that allows you to see all taxes and fees, with the exception of insurance, up front. And, booking directly through car company websites often means that you can see an itemized list of charges before you book. Always remember, the best way to fight suspect charges tacked on at the counter is to print out your itinerary so you have a record of the quoted price.

Below are explanations of many of the common taxes and fees that rental companies add on to car rentals. The fee types have been divided into taxes, common fees, and other possible fees.

We’ve also provided summaries of the different types of insurance that rental companies offer, and have indicated what insurance you may already have that will cover the car, your belongings, and you while you are renting a car.

Taxes | Common fees | Other possible fees | Insurance fees

Taxes

There’s no getting around taxes. You will be subject to local and state taxes when you rent a vehicle. But knowing about how much to expect will allow you to budget accordingly, and will reduce counter frustration. Always check when booking so you know how much you’ll be paying in taxes. Taxes include:

• State and local sales tax: This tax varies by state. For example, on a Hertz rental in Boston, the sales tax was five percent; while on an Avis rental in San Francisco, the sales tax was eight percent.
• International taxes: For international rentals, taxes can be high. For instance, a Hertz rental in Paris carried a tax of almost 20 percent, and on an Avis rental in London the tax was over 17 percent.

Common fees

Here are some of the more common fees you’ll encounter when renting. These fees are hard to avoid, although you may not find all of them on every bill. Knowing what each is may not lower your bill, but it will make you a more informed consumer.

Travel Smarter! Sign up for our free newsletter.

By proceeding, you agree to our Privacy Policy and Terms of Use.

Sign Up

• Deposit: Rental agencies generally charge your credit card for a deposit on the rental vehicle, but do not process the amount unless, upon return, the car has been damaged or misused. The amount varies but may be hundreds of dollars. For example, at Budget, the minimum deposit is $200 or the total estimated rental charges plus 25 percent, whichever is greater. For an Advantage rental at Los Angeles International Airport, the deposit is $300 plus the amount of the rental. Keep in mind that the refundable charge, while not processed, can affect the spending limit on your card.

  Make sure to check the car thoroughly before leaving the lot, noting any damage to the interior and exterior of the car. Also, make sure your list stays with the contract, so that the company doesn’t try to charge you for existing problems when you return the car.

• Airport concession fees: Also called recoup fees, consolidated facility charges (CFC), facility usage fees, and concession recovery fees. These fees can be as much as 10 percent of the total rental cost.

  Although base rates may be higher at non-airport locations, you can avoid paying airport taxes and surcharges by renting at a downtown or suburban location. You can estimate taxi costs and relative inconvenience to assess whether this is a practical option.

• Parking tax: Fee that the agency charges to cover the rental of the parking lot. Usually around 30 cents.
• Reimbursement fee/Vehicle license fee: The fee that contributes to the cost of registering and titling the car, usually between three and eight percent of the base rate. This fee is sometimes referred to as a vehicle excise tax.
• Convention center/stadium/sports arena tax: The money from this fee goes towards construction of area centers. Charges of this type are calculated as daily fees or as a percent of the rental rate. For example, you’ll pay $10 at Boston’s Logan Airport, and five percent of the rental rate at San Antonio International airport. You pay regardless of whether or not you visit the venue.
• Peak season surcharge: Sometimes car rental companies will charge a per-day or flat fee for rentals during popular times. For instance, a Dollar compact car rental in Boston during August has a $3 per-day peak season surcharge.

Other possible fees

If you plan on deviating at all from the rental norm, expect to pay for it. Drop-off location, age, and the number of drivers are just a few of the things you can expect to pay extra for.

• Drop-off fee: A fee charged for returning the car to a different site than the pick-up location. One-way rentals are the likeliest type to incur such a charge, although agencies sometimes offer specials that waive it. Fees of this type can be high, so it’s a good idea to ask about them before booking. For example, we found a drop-off fee that was over $500 on a Thrifty rental from San Francisco to San Antonio, TX.
• Frequent flyer tax: Charges that you incur when earning miles for your rental. The fee tends to be 7.5 percent of the value of the miles. This charge covers taxes the rental company pays on the frequent flyer miles it gives to customers.
• Late fee: Rates are charged based on the 24-hour clock. If you pick up the car at 9 a.m., you must return the car at 9 a.m. on the last day of your rental, or steep charges will be added to the bill. Some agencies, such as Budget, grant drivers a 59-minute grace period, while others begin charging late fees immediately. Late fees are charged by the hour until the hourly charges exceed the daily rate, at which point most companies charge you for a full extra day.
• Fuel charge: Per-gallon gasoline charges that you pay for returning a car without a full tank. Agencies often charge up to double the local price for gasoline. When you rent, always check to make sure you leave the lot with a full tank; if you notice that the tank is not full, ask a rental attendant to fill it up before you leave.
• Mileage fee: For rentals without unlimited mileage, a per-mile fee based on the number of miles overall, or number of miles over the per-day allotted usage. Mileage fees tend to come from smaller rental companies that offer a certain number of miles per day and then charge a fee (usually between 15 and 50 cents per mile) for mileage above the allotment.
• Additional drivers fee: Usually a flat fee charged for extra drivers other than the renter. Some rental agencies, such as Avis, allow the spouse of the renter, or in the case of business travel, an associate of the renter, to be added as a driver for no additional fee. Additional drivers fees vary wildly by location and company, and range from no fee to upwards of $25 per driver.
• Young drivers fee: For drivers under age 25. Rates can run from $10 to $80 or more per day, depending on agency and location. Read the SmarterTravel.com tip on renting cars if you’re under 25 for more advice on working with and around these fees.

Out-of-state fee: Fee charged for driving the vehicle outside of the state where you rented it. Check before you rent, as some companies restrict which neighboring states you can drive in, or have mileage allowances for out-of-state driving. There is no standard for out-of-state fees, so it is best to call and check with the company before booking.

Equipment rental fee: Extra charges for items such as car seats, ski racks, cellular phones, and GPS devices. Examples of fees for such items include $8 per day for child safety seats from Avis, and $6 per day for a cell phone and 10 minutes of use from Budget.

Insurance fees

Car rental companies often pressure you to buy their coverage, which can cost upwards of $40 per day. However, doing so could cost you money you don’t need to spend because you may already be covered. Check with your car insurance carrier and your credit card company to see which types of insurance they cover on rental cars, and in what locations.

Often, as long as you charge the car rental to your credit card, you can use the card as secondary coverage in addition to the insurance that you have through your regular car insurance. Also, your credit card may be able to pick up the slack if you choose to buy the rental agency’s collision damage waiver (see below).

The main types of insurance offered by rental agencies are:

• CDW (Collision damage waiver), also referred to as as LDW (Loss damage waiver): CDW covers damage to the rental car. It is usually an optional feature. Your regular auto insurance may already provide coverage on cars you rent, thus making the purchase of CDW unnecessary. Also keep in mind that many Gold and Platinum credit cards provide some CDW coverage (call to confirm what type), and that Diners Club actually offers primary CDW coverage.

  Some larger cars may come with the CDW already built into the price. In some cases, renting the larger car might be more economical than renting a smaller car without CDW coverage. The actual CDW policy will vary among agencies and states, so be sure to read the terms carefully.

• ALI (Additional liability insurance): ALI is optional insurance that protects the renter against claims made by third parties in the event of an accident. Rental companies are required by law to provide the minimum level of liability insurance, which varies from state to state. Personal auto insurance may provide this type of coverage as well. If you don’t own a car but rent often, it may be more cost-effective to purchase an annual non-owner liability policy and forgo the agency’s extra liability coverage on each individual rental.
• PAI (Personal accident insurance): PAI is optional insurance that provides payment in the event of the injury or death of the renter or an accompanying passenger from a car accident. This type of insurance is generally covered by personal auto or health insurance.
• PEC (Personal effects coverage): PEC is optional insurance that provides protection against theft or loss of personal belongings from the rental car. This type of insurance may be covered by personal auto, travel, renters, or homeowners insurance.

As part of SmarterTravel.com’s commitment to providing consumers with the information they need to make sound purchasing decisions, we pledge to include a link to this page anywhere we list car rentals on our site. If you see anywhere we’ve forgotten to do this, please e-mail [email protected].