If you’ve ever needed to rent a car, you may have wondered how rental companies decide how much it costs to rent a car from them. While the costs of certain things like milk or bread tend to stay relatively stable over time, rental costs can vary quite a bit. The cost to rent a car is highly dynamic and based on several factors, which we’ll examine below.
Cost of renting a car: Contributing factors
Prices for a rental car can fluctuate quite a bit, based on the answers to the following questions:
If you’re under 25 years old, most rental companies are likely to charge you an extra daily fee and may not allow you to rent certain types of vehicles (such as sports cars). This is because younger drivers are typically seen as being less experienced and more prone to risky driving.
Adding another driver, even one who’s over 25, may incur an additional authorized driver fee. This is typically a requirement in most rental contracts and even applies to spouses.
What kind of car is it?
The type of car you choose to rent may also affect the price you pay. Understandably, luxury or specialty vehicles may cost you more than your standard sedan or minivan. Vehicles such as these tend to be more costly to insure, and that added expense is typically passed on to the consumer. In some cases, high-demand vehicles may also cost a little more to rent than less popular models.
What extras (if any) were requested?
It should go without saying that any extras, such as a car with upgraded features or trim, will add to your cost. Many rental companies also offer various insurance policies for an additional cost.
When did you book the car?
As is the case with booking plane tickets, timing and foresight is essential if you want to save money on your car rentals. The earlier you book (possibly up to several months in advance), the more likely you are to get a better rate. Waiting until the last minute will likely result in spending quite a bit more to rent the same car.
When will you be driving?
Another similarity car rental prices have with flight tickets is that they are both impacted by seasonality. Renting a car during a busy holiday travel season, for instance, is likely going to cost more than it might at other times of the year.
Where are you getting the car?
Renting your car at the airport as soon as you get off the plane certainly is convenient — which is precisely why it typically costs more. This is partly because rental companies must pay their own fees to set up at the airport.
If you’re flying into a major city, you could consider getting your rental from a place further in the city. It’s a little less convenient, but the potential savings may just exceed the cab fare into town.
Where are you dropping it off?
Dropping your rental car at an alternate location than the one you picked it up from typically incurs an added charge. This is true whether you simply go across town or go all the way across the country.
How long is your trip?
The length of your rental will naturally raise the overall cost of renting as charges are typically assessed per day. However, a longer trip is often subject to a lower per-diem rate, and you may even find options to book for entire weeks at a time. This could be a way to get a better deal. If you’re anticipating not being able to return the car on time, calling ahead to extend your rental may sometimes work out to be less expensive than having to pay a late return fee.
What other fees might there be?
While specific fee structures vary from one rental company to another, some additional fees associated with renting a car may include:
- Early return fee: Ending your rental contract prematurely may result in an early termination or “rental change” fee.
- Late return fee: Returning your rental car past its specified return date and time typically incurs additional daily charges. Some companies may offer a small grace period, but others will charge you for a full day as soon as you pass the agreed-upon return time.
- Refueling fee: Cars that are returned with inadequate fuel or no fuel receipts may be subject to a refueling fee.
- Cancellation fee: A cancellation fee may be assessed if you cancel your rental entirely within a certain period of when you were supposed to pick it up. This is typically 24-48 hours ahead of the pickup time, but this can vary.
- Lost key fee: Losing your car keys can be potentially costly if you’ve got a modern transponder or “smart” key, and you can bet your rental company will charge you for this if you lose the key they provided. Bear in mind that this fee is typically per key.
As you see, when it comes to determining the cost of a rental, the question isn’t simply “How much does it cost to rent a car?” When, where and how you book your rental car can all make a significant difference to the rates you get, as can the personal details about you and any other drivers who’ll be behind the wheel of this car. These factors and others all combine to create the highly dynamic number that is the price of your car rental.