01.Clause for concern
Renting a car is a popular way of solving transportation issues at home and on holiday, with some companies advertising prices from $20 per day. But while this seems cheap at first, there are often extra costs hiding behind an asterisk. And then there is the potential cost of having an accident in a rental vehicle.
When CHOICE asked members to write in with their car rental experiences in Australia, the response was largely grim. With dodgy credit card charges, extra fees, indecipherable contracts, and insurance exclusions and excess nightmares, the industry is notorious for consumer issues.
One of the costliest “optional” extras is excess reduction, and often contracts dealing with the details of what is covered are unclear. Several rental companies including Avis, Budget and Europcar allow customers booking online to select and pay for excess reduction without informing them of important details – like the amount customers are liable for in the event of an accident - until they pick up the vehicle.
Some companies charge over $40 per day to reduce liability to a few hundred dollars. A good alternative is to take out domestic travel insurance that covers rental car excess – 1Cover is one such option. Some premium credit card insurance, which kicks in once customers pay for car rental with their card, also offers this protection. But before relying on these options, make sure you read all relevant product disclosure statements – in many cases you may be obliged to take out the excess reduction offer before you are covered. Even if you’ve got insurance, be aware that damage to tyres, windscreens, the interior, roof or underbody of the vehicle, and water damage, are often excluded.
CHOICE member David Melville rented a car from Europcar in Cairns, Queensland. When he returned it, a Europcar representative inspected the car and everything seemed fine. Later, they rang claiming there was a scrape on the front bumper. They sent a photo, but David says that the damage would have been obvious during the inspection. The car was moved to a washing facility, and the damage discovered there – by that stage it had been out of David’s control for several hours. David appealed, to no avail. He was charged the excess of $400, and by the terms of the rental agreement was stuck with it.
Premium location shenanigans
Stephen and Rosemary were on a family holiday in Sydney last year. They hired a van from Budget at the Airport, but did not take out the excess reduction option. The excess was listed as $2500. During their travels, they had a minor accident in a parking lot, causing damage to the side of the car, but after notifying Budget of the prang they were able to keep driving. When they got to the airport to return the van and catch their flight home to Tasmania, it was raining and they were running late after being held up in traffic. They were presented with a bill for the total cost of hire, and while it initially seemed high, they didn't have time to investigate further. When they got home, they realised that they had been charged the 18% premium location surcharge and 3.5% in administration fees on their $2500 excess. They have written to Budget to dispute the charges, and are still waiting for a resolution.
It pays to share
Car share schemes have become increasingly popular with people who need occasional access to a car. GoGet and Flexicar are leaders in the market, with cars parked in hundreds of locations around Melbourne, Sydney, Brisbane and Adelaide. Even with application and monthly fees, the rates are often better than rental cars, and petrol is free. Exclusions in insurance policies are minimal, and standard and reduced excesses are cheaper than most of the car rentals.
- Photograph vehicles at the beginning and end of hire. Try to time stamp, and if possible, get the sales assistant in the photos too.
- If driving in the Eastern states, look into your e-tag options in advance – in many cases it is cheaper to buy a visitor’s pass or pay as you go than to rent an e-tag with your car.
- Inspect your vehicle carefully in the presence of a sales assistant before taking possession of your car and make sure all pre-existing damage, no matter how minor, is documented.
- Hose down your vehicle before returning it so that any potential damage is visible.
- To avoid having to pay for someone else's misdeeds, aim to return your car during opening hours and get a company representative to inspect the vehicle immediately upon return.
- Fill up the vehicle as close to the drop off as possible and keep your receipt to avoid a refuelling fee.
- Avoid one way fees, which are charged by most companies, by hiring from and returning to the same location.
- Wherever possible, avoid hiring and dropping off your vehicle at airports. In many cases, CHOICE found that car rental companies slap a huge premium location surcharge (up to 23% in some cases) on the total bill, including the cost of an accident, so you may be paying hundreds of dollars for convenience. Consider taking a taxi or public transport to a cheaper location.
- Read contract terms and conditions before you select a rental company.
- Familiarise yourself with hidden fees and charges by doing a dummy run through the online booking system of the companies you're considering. Keep an eye out for fees, and be aware that you will probably have to pay a credit card surcharge of between 1.5-5%.