Car Rental Hidden Costs

Car Rental Hidden Costs
So you think you've gotten a great deal on your rental car -- but unfortunately, netting that fabulous $19.99-a-day rate doesn't guarantee you a cheap rental. Instead, you may find the price skyrocketing as your bill is rung up at the rental counter. Sales taxes, airport surcharges, insurance, licensing fees -- by the time all the extra charges are added onto your bill, you may find yourself suffering a severe case of sticker shock ... and paying double that seductive base rate (or worse).

On a trip to Italy a few years back, I rented a car with a base rate of about $110 for three days. The final total? Including insurance, mandatory theft protection, a 20 percent tax, an underage driver fee, a surcharge for not filling the gas tank, and a few other "mystery" charges written on our bill in illegible Italian, I paid about $380 -- more than a 200 percent increase over the base rate. Ouch.

How can you avoid being nickel and dimed to death? Read on for a roundup of the surcharges you're most likely to face, and tips for how cut costs on your next trip to the car rental counter.

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Taxes and Airport Surcharges
Sales tax and airport charges vary considerably from state to state and from country to country. Unfortunately, you probably can't avoid state and local sales taxes -- or the European equivalent, the value-added tax (VAT), which can be as high as 25 percent. (Note that in some countries you may be entitled to a partial refund of the VAT.) Many local governments also charge fees to fund their own development projects, such as convention centers or sports stadiums.

However, you may be able to avoid the airport charges -- such as concession recovery fees, customer facility charges and the like -- by picking up and dropping off your car at an off-airport location. Be sure to weigh the possible inconvenience and the price of any additional transportation against the concession fees charged by the airport location -- which can total 10 percent or more of your total price.

Editor's Note: We recently got an e-mail from a reader wondering whether the airport concession fee could be avoided by not picking up your rental car as soon as you get off the plane. If the reader went to his hotel first and then returned to a rental location near the airport to pick up his car, would he still have to pay the fee?

According to Neil Abrams, founder of Abrams Consulting, a car rental consulting and travel market research organization, the answer is yes. "If the rental location is at the airport, the rental agency is contractually required to pay the concession fee to the airport," Abrams says -- no matter whether the renter is a local or has just flown into town that day. The same generally applies to near-airport rental locations, though he notes that the fees and requirements for these properties may vary from airport to airport.

The bottom line? If you don't want to pay the airport concession fee, check out your rental options downtown.

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Insurance
One of the most common extra charges is for insurance, 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 in most states, although in a few states it is compulsory and built into the basic car rental cost.

Before you purchase the extra insurance, check to see if your regular car insurance covers you in a rental car. Most policies do. Some credit cards also provide insurance; check with your company to find out, and to see what limitations apply. Other optional insurance coverages include Personal Accident Insurance (PAI), Personal Effects Coverage (PEC) and Additional Liability Insurance (ALI), which you can purchase from the rental company. Again, your best bet is to check your existing policy to see whether you're comfortable with the coverage you already have.

Gasoline Charges
You will often pay a high premium for returning a car with an empty tank, so in most cases you'll want to fill up before you return your vehicle. However, most 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.

Note that there is no refund for unused fuel, so you'll likely 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.

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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, while you could pay $1,000 or more for cross-country drop-offs. However, some companies do not require a charge when dropping off in-state at many Florida and California locations.

For more information, see One-Way Car Rentals and Driveaways.

The 24-Hour Clock
Be aware of the 24-hour clock rate. 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 start kicking in; after 90 - 120 minutes you may be charged for the full extra day. Check the terms and conditions in your rental documents.

Early Return Fees
You might imagine that returning your car a day or two early would be a good thing for your car rental company, but unfortunately you may be dinged for that too. Some car rental companies will offer you a prorated refund if you return the vehicle early, but others will charge you an early return fee of $10 - $15 -- or worse. You could also have to pay a hefty rate difference, particularly if your shortened rental period means that you no longer qualify for a weekly rate.

Mileage
Most major rental car companies allow for unlimited mileage in the same state or country, but it's a good idea to check their policy before you reserve a car. Many smaller, local companies charge mileage if you exceed a given daily allotment. Another caveat: Some "special" rates may not include unlimited mileage, so be sure to read the fine print.

License Fees
Some states allow car rental companies to charge extra to recover the costs of licensing their cars, usually between 3 and 8 percent of the cost of the rental. You may not be told about this fee in advance, so make sure to ask.

Varying Rates and Peak Season Surcharges
Rental car companies' rates vary a great deal from city to city, and sometimes even within the same city. Make sure to shop around. Be aware that you may pay a specific surcharge for traveling at a "peak" time.

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Age Penalties
If you're under 25, you may have to pay an additional fee, usually about $25 - $30 per day. Those companies who will rent to drivers under 21 often charge much steeper surcharges. Internationally, you'll not only see penalties for underage drivers but also for older ones -- those over 70 may 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.

Additional Drivers
Adding more than one driver to your rental agreement often carries a surcharge, anywhere between $7 and $25 per day. Note that some companies, like Avis and Budget, will allow the renter's spouse or domestic partner to drive the vehicle for no extra charge -- so if both partners are planning to take the wheel, consider renting from one of these providers.

Extras
There may also be additional charges for things you had not considered, like infant and child seat rentals, roof racks, GPS navigation systems and other extras. These could run you anywhere from $5 to $25 or more per day, depending on where you rent.

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.

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Overseas
Many of the above charges, including airport fees, underage driver surcharges and local taxes, also apply to international rentals. Most travelers rely on credit cards to cover collision insurance overseas, as costs are significantly higher than they are in the States. But due to the high risks, some credit card companies now refuse to provide this coverage. Be sure to contact your credit card issuer before you leave to be sure you have coverage in the country you're visiting.

There are many country-specific fees and charges to keep an eye out for. For example, theft insurance is mandatory in Italy, and there are highway charges for cars driven in Austria or Switzerland; you'll need to purchase a sticker to avoid paying a fine.

If you don't have an international driving permit, you may also have to pay for a temporary permit, which can cost $10 to $20 or more. For more on international driving permits, see International Car Rental Tips.

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--updated by Sarah Schlichter