Car hire hidden costs

Cars can be a great way to get around when travelling (but aren't always), and, unless you’re travelling directly from your home, you will probably want to hire a car at your destination if a car is your chosen method of local transport.

To appear more competitive, car-hire companies devise ways to make what they are offering look much cheaper than it really is.  Car-hire companies have a well established reputation for hiding costs from you during the booking process and then loading you up with extra charges when you come to collect the hire car.  This deception has reduced a lot over the years, but it’s still there, and you need to guard against it to avoid unpleasant and expensive surprises when you go to collect your hire car.

If you intend to have more than one driver driving the hire car you’ll need to register all additional drivers on the hire car contract.  This is important because the car-hire company's insurance won’t cover you if an unregistered driver is driving the car and an accident happens, and you could be responsible for the entire value of the car if it’s stolen or destroyed.  

The car-hire company will usually charge you to register additional drivers.  If you register additional drivers when you initially book the hire car you will usually pay a lower price than you would if you registered them when you collect the hire car.  Additional drivers are usually cheaper to register when you are booking a hire car with a car-hire aggregator, rather than a car-hire company.    

Most car hire companies charge extra for younger or older drivers; this applies to both the primary driver and additional drivers.  Usually this is for drivers under 25 or over 65, but it varies from company to company.  

As with additional drivers, if you register young or old drivers when you initially book the hire car you will usually pay a lower price than you would if you registered them when you collect the hire car.  Young or old drivers are also usually cheaper to register when you are booking a hire car with a car-hire aggregator, rather than a car-hire company.  

There are a few possible arrangements for refuelling a hire car before you return it to the car hire company.  

Most commonly, you will collect the hire car with a full tank and be expected to return it with a full tank.  The car-hire company may ask you to fill the hire car up with fuel before returning it, within a nominated distance of the hire car return location to ensure that it is full.  They may also ask you to keep a receipt from the fuel station to prove that you have done this.  I’ve never actually been asked to show the receipt; usually they just quickly check the fuel gauge to see if it’s showing full.

If you return the car without a full fuel tank the car-hire company will fill the tank for you and charge you a fee for doing so, and charge you for the fuel, usually at a price considerably higher than the going rate. 

An alternative but similar arrangement is to collect the hire car with a half a tank of fuel and be expected to return it with half a tank.  This is similar to the full-tank arrangement, but less precise.

Another common arrangement is to collect the hire car with a full tank and return it with an empty tank; the fuel that is initially in the tank is incorporated into the hire cost.  This sounds straightforward, but I’ve tried this – trying to arrive back at the hire car return location just on an empty tank is harrowing.  You end up returning the car with lots of fuel in it due the fear of running out on a freeway somewhere and consequently being late with the return, being charged for another day, and missing your on-connection, too.  

I’ve already covered car-hire travel distance in an article about car hire tricks and tips, here.  Usually a car-hire contract allows you to travel an unlimited distance (unlimited kilometres) during your hire, but you should look for this to be stated clearly when you book, as your car-hire could have a limited daily distance with a charge rate for extra kilometres beyond this limit.  If you only find this out at the rental collection desk, and need to change to unlimited kilometres, it is likely to cost you more than it would at the time of booking the car hire. 

An extra charge for unlimited kilometres is also usually less when you are booking a hire car with a car-hire aggregator, rather than a car-hire company.

I’ve already covered one-way hires  in another article about hiring a car, here.  When you book a one-way hire the extra charge may not be presented to you; but, be assured, there will be one, which you will be expected to pay it when you collect the hire car.  If you don’t see a charge during the booking process look for it in the fine print.  

The extra fee for a one-way hire is likely to be less if you pay it when you initially book the hire car than it will be if you pay it when you collect the hire car.  The extra charge for a one-way hire is also usually less when you are booking a hire car with a car-hire aggregator, rather than a car-hire company.

Everyone needs road-side assistance in case of a breakdown but it’s not always included automatically.  As always, if this charge applies it’s likely to be cheaper if you pay it when you initially book the hire car rather than when you collect it, and it’s likely to be cheaper or included from a car-hire aggregator, rather than a car-hire company. 

Even though car hire companies almost always insist that you pay with a credit card (or debit card) for the security that it gives them, they will commonly charge you a fee for doing so.  In Australia, this fee is limited to 1.5% which is quite insignificant, but in other countries it may be much higher.  There’s not a lot that you can do about this fee; just make sure that know how big it is, and that you factor it into your expenses as this extra cost may mean a different decision on your transport needs.

When you collect your hire car the car-hire company will collect a security bond (deposit) from you.  The security bond covers any extra cost that you may incur, and the repair cost of any damage that isn’t covered by the insurance.  The security bond isn’t actually a hidden charge, because, if all goes well, you’ll get it back at the end of your car hire.  You can find out more about the security bond in another article, here.

The Hidden and extra car-hire costs that I’ve covered so far are the ones that you may actually see.  There are a few others to watch out for, but they are usually incorporated into the car-hire charge, and you’re unlikely to ever see them.  But watch out, and look to see if they are specifically excluded or, if charged, already included.  

If these charges do pop up when you get to the rental desk they are all likely to be greater if you pay when you collect the hire car and you have no choice, than if you pay them when you initially book the hire car.  These charges are also usually greater when you are booking a hire car with a car-hire company rather than a car-hire aggregator.

Admin Fee – I can’t imagine that this fee has any real meaning, and is the sort of thing that usually gets hidden under ‘miscellaneous’, but it’s there.

Premium Location Surcharge – this is usually a charge for collecting a car at an airport, although you may be charged for collecting a car in an inner city area, too.

Vehicle Registration – this is you paying the hire company’s rego for them!

The greatest hidden cost by far is the insurance you will need in case you damage the car.  Insurance can easily cost much more than the car hire alone!  Hire-car insurance is a big subject, so I’ll go into the ins and outs of insurance specifically in more detail in another article, here.

I’ve based this commentary on my personal experiences, circumstances, and impressions, and my limited research on the hidden costs of hiring a car – it isn’t the result of an exhaustive study about the hidden costs that you may incur when hiring a car.  It may not apply to you, or your circumstances.  

Over time, the things that I say here may become out of date, and, while I’ll correct anything I know is wrong, I’m not going to be excessively conscientious about ensuring that it is current.  So, treat this commentary as a great place to start, but do your own research and confirm everything that you read here before deciding to hire a car!

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