5 Minutes Will Save You 66% on Your Next Rental Car
Renting a car is a lot like buying one: You know you're going to get taken advantage of, you just don't know how badly.
Last week, my wife relearned this painful lesson when a rental car associate transformed her $19.87-a-day online rental into $52.77-a-day package.
Here's how to avoid a similar fate -- and save as much as 66% off your next rental.
1. Shop Around the Right Way
Even though the rental car market is competitive, there's a wide range of rates in the industry.
All else equal, I found a $100 difference between renting a compact car at my local airport from Hertz Global Holdings (HTZ) for a four-day weekend versus Advantage -- never mind that Hertz owns Advantage.
Generally speaking, the least expensive car rental companies have value-oriented names. On the cheap side of the spectrum are companies like Budget (a subsidiary of Avis Budget Group (CAR)), Dollar (a subsidiary of Dollar Thrifty (DTG)), and Advantage. On the other end are Hertz, Avis, and National. The average price difference between these groups was nearly $67 -- or 23%.
While you can catch this by using an Internet aggregator like Priceline.com, Expedia, or Orbitz Worldwide, there is one glitch: These sites often do not compare add-ons like insurance and GPS devices. In the case of Hertz and Advantage, for example, I found the difference in price between comparable insurance policies was 40%.
2. Steer Clear of the Airport When You Pick Up a Car
Rental car companies do most of their business, and therefore make most of their money, from airport locations.
From the renter's perspective, however, renting cars at the airport involves a variety of additional taxes and fees -- not to mention, some companies charge more for the cars themselves if rented at the airport.
Here in Portland, Ore., the so-called airport concession fee alone ranges from $15 to over $30 for a weekend rental.
Although it's obvious that the best way to avoid this is to rent at a non-airport location, what isn't as clear is how much you can save by doing so. In my research, it chopped an average of $100 off a four-day rental. And in one case, the price dropped an astounding $160!
3. Refuse Any and All Add-Ons
The biggest opportunity to save on a rental car is to refuse any add-ons that increase the overall price.
A closely watched metric in the industry is the so-called "revenue per transaction day," or RPD, which measures the average daily rate customers pay to rent a vehicle. The objective, of course, is to grow it, and the easiest way to do so is by selling customers things like insurance contracts and navigation systems -- notably, items that aren't captured by the travel websites.
The best way to combat this is simply to say "no" when pushed to add anything else on, particularly insurance.
According to NerdWallet.com, a popular personal finance and credit card comparison website: "Not only does your primary insurance company often step in ... [but] Visa, MasterCard, American Express, and Discover all provide rental car insurance above and beyond what your primary insurer and rental company will offer."
In other words, buying insurance from a rental car company is effectively the same thing as flushing money down the toilet. And at $23.61 a day for the typical loss damage waiver, you better get your plunger out.
Was That Really 66% Savings? Yes, It Was
The title of this article promises to show you how to save up to 66% on your next car rental. Although that number sounds crazy, what's truly shocking is how easy it was to do so. Namely, by choosing the least expensive non-airport option and refusing the loss damage waiver, the daily price of a rental car here in Portland went from a whopping $93 a day down to just $31 a day. Not bad for a few extra minutes of work.
Motley Fool contributing writer John Maxfield does not have a financial position in any of the companies mentioned above. The Motley Fool owns shares of Hertz Global Holdings, McDonald's, and Priceline.com. Motley Fool newsletter services have recommended buying shares of Priceline.com.