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Cheap Car Hire
Save $100's on your car rental and sneaky insurance costs
Article updated quarterly - last updated Friday 12 February 2010
Car hire companies charge a small fortune if you book directly through them. However you can easily get an identical car with the same conditions for up to half the price if you know where to look. Then there's the insurance/Excess – this is where the car hire companies make big money. But again there are easy ways to save here as well.
This guide provides information on how to get the cheapest car hire, both in Australia and overseas. It also explains car rental insurance jargon and gives you tips on getting the cheapest insurance while still making sure you’re covered.
Make sure you consider the following before you book your rental car:
How many drivers? – You’ll generally pay more for each additional driver so don’t forget to include them when you’re booking. Otherwise you may be charged more if you pay for additional drivers when you pick up the car.
Also most car rental companies charge more for drivers under the age of 25, and will not hire a car to drivers under 21.
How far are you travelling and are you going interstate? – These days the majority of car hire companies provide unlimited kilometres, but some smaller ones don’t. Also some car hire companies in Australia and the USA will not let you leave the state, or charge you extra for doing so. Again check when you’re booking.
Airport pick up - You'll generally pay a lot more if you rent a car from the airport as the rental will include the expensive 'airport surcharges'. To save money consider renting the car from a 'downtown' location.
Insurance costs – Please make sure you read the car hire insurance jargon section below – otherwise you’ll pay a bucket load on an over-priced insurance policy.
Additional fees – As well as the headline rental car fee, car hire companies get away with charging many add-ons such as vehicle registration recovery fees, airport/location surcharges, admin costs, additional driver fees and credit card surcharge fees (as well as the insurance excess fees mentioned below). Most car hire companies will include these fees in their ‘day hire charges’ but some still don’t. So always check the website and small print before booking.
To get the best deals for your car hire, it's hard to beat the online car rental comparison sites - they quickly and easily compare all the best deals with the major car rental companies.
If you're looking to rent a car or motorhome/campervan overseas then visit GlobalCARS*. They compare prices from Alamo, Avis, Budget, Britz Motorhomes, Europcar, Jucy Rentals, Hertz, Maui Motorhomes, National, RedSpot Australia, Sixt and Thrifty in Europe, UK, USA and over 100 countries worldwide. All prices are fully inclusive of airport surcharges, collision damage waiver (cdw), local taxes, theft waiver (theft protection), third party liability insurance and unlimited mileage (GlobalCARS are powered by holiday autos).
DriveNow* (Australia only) compare prices for cars and motorhome/campervans from Hertz, Budget, Avis, Europcar, Redspot, Apollo, Thrifty, Britz, Network rentals and Backpacker campervans in Australia. They also have a 'lowest price guarantee' (see their website for details). Whilst there are no hidden fees just remember that you'll still have to pay additional costs for Excess Insurance so make sure you've read the insurance information below.
Expedia* is also good for overseas rental, particularly in the USA. They compare prices from the major car rental companies and some of larger US companies including Fox, Sixt, U-Save. Payless and Dollar. Note that the prices shown often do NOT include all insurance - If you are hiring a car in the USA read the Cheap insurance for car hire in the USA & Canada below.
If you're booking in Australia or New Zealand then check out Standbycars.com.au. They have some last minute deals from some of the larger and less well known car hire companies.
Finally for overseas car rental check out Priceline* - they offer a 'name your price' tool. Instead of doing a search, you enter the pick up location, date details, and the price you're willing to pay. There is a catch - once you enter your details, you're committed to booking if the offer is accepted and payment will automatically be debited from your credit card.
Before you book your car rental online, make sure you consider the following ways to save even more money:
Book a small car - The car hire companies often have a lot of midsize cars and only a few small cars so, more often than not, book a small car and you'll get an upgrade. However this does not always work, so don't risk it if you really need the bigger car.
Try the local car rental companies - Try doing a Google search for car hire companies in the destination you need the car in. The smaller, local car hire companies often have some good deals, as they offer older cars.
Just ensure you are fully aware of all the costs and what you are insured for as some companies will give you a 'car hire rate' and then hit you with a range of other additional fees.
Online discounts - It's worth signing up to the car hire companies email newsletters before you rent - they'll often have special offers and deals.
Booking accommodation/flights - You can often get a discount if you book your car with a flight or accommodation. For example Expedia* offers car rental discounts if you book your travel through them. Just remember that a discounted rate is not always the cheapest, so research prices before you book.
WARNING: Car hire companies make big profits by flogging expensive insurance policies to unsuspecting rental customers. To help you prepare for this make sure you understand the terminology and decide what insurance and Excess you really need before you book. And remember, they'll often try and sell you more insurance when you pick up the car, sometimes even when you're already covered!
Here's the lowdown on the jargon:
Excess – If you hire a car in Australia, New Zealand, Europe (including the UK & Ireland), most of Asia and Africa, Collision Damage Waiver (damage to the hire car), theft and third party liability are generally included in the car rental price.
However you are almost always charged an Excess (sometimes called a Non Waiver, Deductible or Super CDW) which is usually around $1,500 to $3,000 or more. This means that if you need to claim on the car hire insurance (e.g. you have an accident), you will pay this Excess.
To avoid paying this Excess, or reduce the amount, you can purchase Excess Reduction Insurance. Most car hire companies will pressure you to buy Excess Insurance and charge you around $25 to $50 a day, reducing the Excess to a few hundred dollars. However you can buy Excess Insurance cover from a separate provider for around $10 a day, or sometimes it's included in your travel insurance – see 'Cheap Excess Insurance' below.
What is CDW/LDW & SLI? -These complicated terms stand for Collision Damage Waiver (CDW)/Loss Damage Waiver (LDW) & Supplemental Liability Insurance (SLI).
Generally when you hire a car in the USA, Canada and South America insurance is not automatically included. To cover yourself you should always consider CDW/LDW - covering damage, theft and loss of use of the rental vehicle, and Supplemental Liability Insurance (SLI) - covering third party damage to other people & property.
See 'Cheap insurance for car hire' in the USA & Canada below for tips to reduce these insurance costs.
Personal Accident Insurance (PAI) – Covers the renter for accidental death or injury during the rental. If you’ve got travel insurance or life insurance, check as you may already be covered for PAI.
Personal Effects Cover (PEC) – Covers the holder and family for theft and damage of personal effects. Check your travel insurance or household insurance as you may already be covered for PEC.
What isn't covered by insurance?
The car rental insurance companies are sneaky and will still try and get away with not paying certain claims. Be careful as often you are not covered, even if you have paid for Excess Insurance, for the following:
Single vehicle accident – where there is no 'properly identified third party' to an accident you may be liable for any damages. For example you may not be insured for such things as driving into a stationary object, hitting an animal or rolling your car if you take a corner too quickly. Every insurer is different so check with them.
Damage to roofs, water damage, tyres and the roof & undercarriage of the car – Unbelievable isn’t it? You pay heaps for car rental insurance but you may not be covered for things such as damage to the roof of the car (e.g. hail damage), punctured tyres and driving on unsealed roads. So make sure you read the terms and conditions carefully before you book.
If you hire a car in Australia, New Zealand, Europe (including the UK & Ireland), most of Asia and Africa, Collision Damage Waiver (damage to the hire car), Theft and Third Party Liability are generally included in the car rental price - but ALWAYS double check. However you'll still get charged a big Insurance Excess of up to $5,500 if you make a claim.
If you purchase Excess Insurance through the car rental company - you can pay $25 to $50 per day extra and they'll reduce your Excess to a few hundred dollars. But if you buy Excess Insurance from a stand-alone insurance provider you’ll pay around $10 a day and your Excess can be reduced to zero. So make sure you compare the stand-alone car hire insurers against the Excess Insurance provided by the car rental company:
Single Trip Excess Insurance
DailyExcess.com* (underwritten by Chartis Insurance) provides cheap car hire Excess Insurance for approx $10 per day, reducing the Excess to $0. They also cover additional drivers, lost/stolen car keys, damage to windows, tyres, undercarriage and the roof, and cover stolen baggage from the car.
Note that the website does not show the price in AUD$ - but don’t worry as they do cover us Aussies for overseas and Australian car hire. They’ll ask for your country when you book online.
Excess Insurance for more than 2 weeks or annual car hire Excess Insurance
If you’re hiring a car for more than 2 weeks, or regularly use car hire services, then consider insurance4carhire.com* as they are cheaper for periods of more than 14 days.
They charge approx $140 for 31 day Worldwide Excess Insurance. This covers you and additional drivers on the car hire policy for Excess on damage to the rental vehicle including the undercarriage, Excess on theft, and damage to windows and tyres.
Note that the website does not yet show the price in AUD$ - but they do cover Aussies for overseas and Australian car hire. They’ll ask for your country when you book online. Again, you cannot get insurance for car hire within 150km of your home in Australia.
Excess Insurance with credit cards and travel insurance
Some travel insurance policies or travel insurance provided with credit cards also include Excess Insurance, so double check your policy wording before you make a car rental booking.
For example the ANZ Platinum Card* offers overseas Excess Insurance up to $2,000 for rental cars overseas ($1,250 in Australia).
However you need to read the terms and conditions of these cards carefully to ensure you are covered. Generally the Excess Insurance is only for overseas car rental so you won't be covered in Australia, and you need to pay for your trip using the credit card to be covered.
For more information on credit card travel insurance read our Travel Insurance for under $100 a year article and for regular travel insurance read our Cheap Travel Insurance article.
If you rent a car in the USA or Canada, unlike many other countries, no insurance is usually included in the car hire fee.
You will still get some great deals from the comparison sites mentioned above, however buying essential insurance directly from the car hire company can often add 50-100% in extra costs to your hire price!
For separate USA/Canada car rental insurance compare cdwsli.com* against car insurance provided by the car rental companies. Their CDW insurance covers damage and loss of use of the rental vehicle up to US$100,000 in value, and SLI covers third party liability up to US$1m. Cover also includes theft protection. It costs approx $12 a day or $260 per year for cover.
If you'd rather cover both car hire and insurance in one booking then consider an 'all inclusive' car hire company. The likes of GlobalCARS* include insurance in their fees and are substantially cheaper than booking directly with the car hire companies.
Want to comment on the above article? Any stories or experiences (good or bad) about car hire providers that you'd like to share? Have you got any other money saving tips on cheap car rental? Please share them on our Forum.
Important disclaimer: The above information is carried out using independent journalistic research and our recommendations are general in nature. MoneySavingMaster.com.au is passionate about helping you find the best deals but we can’t take everybody’s individual circumstances into consideration.
If you visit any of the above sites please ensure that you read and fully understand all the car hire and insurance details and conditions, including any product disclosure statements, before you sign up for any product or service. Always read your policy wording for insurance to review your specific coverage and to make sure that the policy is right for you. The information given above may have changed since this article was published.
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Our research is NEVER impacted by any revenue we earn from these links. If we feature a provider as a 'best buy' and they do not offer a paid link, we will still tell you about them, but we will not always provide a link through to their site. We think that's fair enough....we hope you do to.
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