Facts for Consumers from the Federal Trade Commission

Car Rental Guide -- October 1993

Car Rental Guide -- October 1993

When you go to rent a car, you may be puzzled by some terms car-rental agents use, such as collision damage waivers and drop-off fees. This fact sheet explains such industry terms, and also provides a checklist and worksheet to help you choose the rental car best suited for your needs. (We apologize that the worksheet is not available on-line. To obtain a copy of the worksheet, please request a free copy of the brochure by contacting: Public Reference, Federal Trade Commission, Washington, D.C. 20580; (202) 326-2222. TDD call (202) 326-2502.)

Choosing a Car-Rental Company

Before you reserve a car, know what model and options you want or need and how much you are willing to spend. In that way, you are less likely to feel pressured into making a hasty or expensive decision that you may regret later. Before you choose, you may want to take the following steps.

Call several car-rental companies and get price estimates. Many companies have toll- free numbers, and many offer weekly and weekend specials. Watch the newspaper ads and ask about advertised specials. If your business or vacation plans permit flexibility, you may be able to save money by renting a car when you can get a price break. Be sure to ask about any restrictions on special offers, including blackout dates, when an advertised special price is unavailable.

Decide on what model and size car you want, but realize that each car-rental company has its own vehicle classification system. The terms "compact," "mid-size," and "luxury" sometimes differ among companies.

Know that there may be additional fees that could substantially increase an advertised base rate. These costs might include: collision damage waiver fees, in states that allow them; a refundable charge; airport surcharges and drop-off fees; fuel charges; mileage fees; taxes; additional-driver fees; under-age driver fees; out-of-state charges; and equipment-rental fees, for items such as ski racks and car seats. To understand the meaning of these charges, check the definitions given below. To help you compare the cost of these additional fees, refer to the worksheet on pages 6-7.

Learning the Terms

The glossary listed here defines charges that are frequently added to the quoted base rental rate. Asking about these charges before you sign your rental agreement may help you save money on your trip and avoid disputes when it is time to pay the bill.

Collision Damage Waiver (CDW), in states that allow it, is an option charge of $9 to $13 a day. Car-rental agents may use hard-sell tactics to convince you to buy it. Although they call it "collision damage" coverage, technically it is not collision insurance. Rather, it is a "guarantee" that you buy from the car-rental company that it will pay for damages to your rented car. However, under CDW, the rental company will not pay for bodily injuries or damages to your personal property. If you do not buy CDW coverage or are not covered by your own auto insurance policy, you could be liable for the full value of the car. Other companies will hold you liable for the first $1,000 to $2,000.

Some CDWs exclude coverage under certain circumstances. For example, coverage may be revoked if you damage the car when driving in a negligent manner, on unpaved roads, or out of the state in which you rented the vehicle. Some companies void their CDW coverage if a driver drinks alcoholic beverages or if someone is driving other than the one authorized on the rental contract. The coverage offered by car-rental companies may duplicate what is already provided by your auto and homeowner\'20s insurance policies. If you are concerned about bodily injuries, coverage under your medical plan would offer protection that CDW coverage lacks. Check your policies and medical plan. If you are traveling on business, your employer may have insurance that covers you. Also, some credit-card companies and motor clubs provide their members free rental protection when they use the card to pay for the rental.

In addition to CDW coverage, a car-rental company also may offer:

Personal-accident insurance (PAI), at a daily cost of between $1.50 and $4.00, insures against death and at least part of your medical expenses if you are involved in an accident.

Personal-effects coverage (PEC), also known as personal-effects protection (PEP), safeguards your luggage against damage at an average daily cost of $1.25. You may not need this protection if your homeowner's policy already covers your luggage and other belongings when you are traveling.

A Refundable Charge may be required when you pick up your car. The charge varies, but may cost hundreds of dollars. Most companies make the charge to your credit card but do not process the amount against your account unless you do not return the car, as specified in your rental contract. What you need to remember is that, until you return the car, the spending limit on your card may be reduced by the amount of the deposit. This may be important if you are on vacation, intend to place large charges for hotels and other items on your credit-card account, and are approaching your credit limit on your card. If you do not have a major credit card, or do not wish to charge the deposit to your account, companies may ask for the amount in cash.

Airport Surcharges and Drop-off Fees can add considerably to a base rental rate. Surcharges apply when airport authorities impose fees for airport use even when car- rental companies shuttle you to an off-airport site. Drop-off charges refer to fees that some companies charge to allow you to drop the car at a location different from your pick-up point.

A Fuel Charge is the amount many rental companies add to your bill for gasoline. Some companies give you a half-tank at a charge of $10 to $15 and tell you to return the car empty; others initially fill the tank and charge for the amount of gas you use. Companies that do not charge you for the initial tank of gas may ask you to return the car with a full tank. If you do not refuel the car, you will be charged the rental company's price for gasoline, which is often much higher than you would find at a local station.

Mileage Fees are usually assessed on a cents-per-mile basis or a flat fee when you exceed the allotted free mileage cap. Knowing approximately how far you will drive will help you select the company that offers you the most favorable mileage terms. Taxes, of course, are levied by states and some local municipalities. But you might save some costs if, for example, you pick up your rental car at a suburban location, so as not to be subject to a higher tax rate of an urban pick-up site.

Additional-Driver Fees and Under-Age Driver Fees, costs that a company assesses when you share the driving with a companion or when the driver is under a certain age (often 25), can add a daily charge to your base rental rate.

Out-of-State Charges, as the name suggests, are fees a company adds when you drive the car out of the state where you rented it. Equipment-Rental Fees are costs that a company assesses when you order such extras as ski racks and car seats. If these items are important to you, be sure to request them in advance.

Checklist for Renting a Car

As mentioned earlier, you are likely to negotiate a better deal if you know what kind of car you want and what you want to spend. Here are some other check points that may save you money.

Determine where you will pick up and drop off the car and if these locations are without special fees.

Find out about any blackout dates that could affect an advertised special.

Ask about the weekly rate if you are considering a rental for more than four days. The daily rate for rentals of more than four days, but less than seven, is often higher than renting a car at the weekly rate.

Ask about mandatory additions to the quoted price, such as mileage rates and caps, airport surcharges, and taxes.

Ask about charges for optional CDW, PAI, and PEC coverage. Find out if your own auto insurance policy covers rental cars and the conditions of the coverage.

Ask about other optional charges, such as additional-driver fees, under-age driver fees, out-of-state charges, and equipment-rental fees.

Further Car Information

These car-related publications also are available free from the FTC: A Consumer Guide to Vehicle Leasing; New Car Buying Guide; Buying a Used Car; Car Financing Scams; Auto Service Contracts; and Car Ads: Low-Interest Loans and Other Offers. Write: Public Reference, Federal Trade Commission, Washington, DC 20580. You also can write to this address for a copy of Best Sellers, which lists all the FTC's consumer and business publications.


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