Car hire and your rights

What can you do if your rental turns bad? You have some protections under Australian Consumer Law but it also pays to read the contract.

Rented a lemon?

No one wants to remember their holiday for the hire car fender bender or the huge bills it incurred.

When it comes to renting a car, most of your rights and obligations will be governed by your contract with the rental agency. So, it's important you're well aware of your liabilities – what you're covered for and what you're not – at the point of entering into a contract.

You also have some rights under Australian Consumer Law (ACL) by way of consumer guarantees, as well as protection against unfair contract terms, false and misleading claims and unconscionable, misleading and deceptive conduct. But the ways these laws are applied isn't exactly clear-cut, particularly in the context of car hire, so consumers can be left in the dark on exactly what rights they have.

Tips for hassle-free car hire

  • Inspect the car thoroughly and insist on an inspection report before driving away.
  • Arrange to return the car at a time when you can hand the keys back in person and get a sign off so you are not liable for any damage. You may also choose to take photos of the car when you return it.
  • Clearly specify (preferably in writing) any special requirements you want the car to be fit for.
  • Pay for any fines or tolls before you return the car to avoid extra administration charges.
  • If you do damage the car make sure you get an itemised account of any repair charges from the rental agency.
  • Acquaint yourself with the terms and conditions and know exactly when and what you're covered for. You may also want to shop around for a better deal to reduce your liability. It may be possible for you to get the insurance cover for a rental vehicle from your own insurer, a motor vehicle association or travel insurance package.

Consumer guarantees

Your consumer guarantees will most likely apply once you've rented the vehicle. This means that any car you rent in Australia must be of acceptable quality. It needs to be safe and roadworthy, clean, tidy, be reasonably fit for its purpose and be free from defects (unless you're aware of them and are OK with them). The vehicle must also match the model you booked and be fit for any purpose specified by you or the rental company. Most importantly, your consumer guarantees cannot be diminished by a car hire company, even if it tries to do this by agreement or through terms in a contract.

As well as your consumer guarantees, car rental agencies can't make any false or misleading representations about the car, price, or your level of cover and liability. Businesses also shouldn't use unfair contract terms. However, given that a consumer would generally have to take a business to court simply to have the term voided, protections are quite limited.

Travelling overseas? Find out about your car hire rights in other countries.

Your rights: car hire

I purchased liability reduction from the car hire agency so why aren't I covered?

What if there's damage to the vehicle I didn't cause?

When can a car hire agency put extra charges on my card?

Can the car hire company give me a vehicle different to the one I booked?

Can the car hire agency prevent me from taking the car off-road?

I had to pay more than the advertised price – is that allowed?

It seems unfair but the rental car company says it's in my contract – is there anything I can do?

What are my options if the car hire company does the wrong thing?

So how do I resolve the problem?

I purchased liability reduction from the car hire agency so why aren't I covered?

Understanding your liabilities when purchasing extra cover for a rental vehicle can be a little confusing, especially when you're keen to get on the road and start holidaying. However it's important to work out when you're covered and what your level of liability is before you agree to the contract.

Many people may think they're purchasing an insurance product when they're just getting an excess reduction product. Excess reduction products often have exclusions, which could mean you aren't covered for roof and underbody damage, single-vehicle accidents, windscreen damage, careless driving, or for vandalism and hailstorms. For example, Hertz's terms and conditions stipulate that even if you have the maximum rental protection option, you won't be covered if you hit an animal on the road if you're driving between sunrise and sunset.

You may find it's not worth taking out the company's excess reduction cover and look for additional insurance through another provider instead. Some travel insurance also provides cover. You can find out more about insuring your rental car in our buying guide.

If you do choose the rental agency's liability reduction, the business needs to be clear about what is and isn't included. It can't mislead you into thinking that extra cover products provide greater protection from liability than is actually the case and it shouldn't hide important details in the fine print. For example, a product called 'Total Cover' that doesn't provide cover for everything could well be considered misleading.

One helpful precedent occurred when a car hire company tried to hold a customer liable for an accident despite having paid $21 a day for seemingly comprehensive extra cover. The customer inadvertently went through a red light and caused damaged to the hire car as well as $50,000 worth of damage to a Mercedes. The hire car company's fine print read that the company wouldn't grant cover if a customer failed to comply with local traffic rules or drove without due care or attention. However, the court ruled that the car hire company pay for the damages and the customer's legal costs, because offering an almost worthless damage waiver as "comprehensive" was unconscionable as well as false and misleading. However not all consumers may be so lucky and may wind up having to pay for the damage.

What if there's damage to the vehicle I didn't cause?

You shouldn't be held responsible for any pre-existing damage, or for damage caused after returning the car, but proving your case could be difficult if you haven't taken precautions.

  • Pre-existing damage: You're entitled to check the car thoroughly for any pre-existing damage and note it on a vehicle damage report before driving away. Filling this out thoroughly is the best way to avoid any future disputes about liability. You can't be held responsible for any pre-existing damage noted on the report, or any damage that would require expert knowledge to identify such as mechanical failure or hidden defects.
  • Damage after returning the car: You shouldn't be held responsible for any damage caused after returning the car. The ACL industry guidelines also suggest you shouldn't be liable if you return the car at an agreed time and location but it's damaged by vandals before it's inspected, which sometimes doesn't happen for a day or so. But liability in this area can be a little tricky unless you can prove you've actually handed the keys to someone and got it signed off by the company. You're entitled to be present for the inspection but if that's not possible, it's a good idea to take photos of the vehicle upon returning it.

When can a car hire agency put extra charges on my card?

There is no clear-cut rule about how long a car hire company has to charge your credit card for damages or fines after you've returned the vehicle. However, the ACL guidelines suggest:

  • Before charging you money for damages the rental company should try to ascertain what the actual costs of the repairs will be.
  • The company should notify you of any extra charges before deducting money from your account, giving you a reasonable chance to dispute them.
  • If the car hire company wants to charge you for damage to the vehicle, make sure they provide you with an itemised bill (which must be provided at no cost within seven days if you ask).

If extra charges are placed on your card without you being given the chance to dispute them, or if the maximum damage liability is charged without a repair quote, you can try seeking a chargeback through your credit card company. A term in the car hire company's contract allowing such practices is likely to be deemed unfair according to the ACL's guidelines.

Can the car hire company give me a vehicle different to the one I booked?

Regardless of any clauses a car company may include in its contract, you have the right to rent a car that's not significantly different to the one you booked and fit for the purpose for which it was supplied or advertised.

This means that the car needs to meet any representations made about it, whether on the rental car company's website, in an advertisement, as told to you by one of the company's representatives, or as specified by you when you made the booking.

Sometimes you may be offered a different car to the one you booked, perhaps as a free upgrade. For some, that's a bonus, but there may be a number of reasons why you chose to book a particular car model – perhaps to fit a large amount of luggage, or because it was more fuel-efficient.

If a particular feature of the car is important to you but isn't specified, it's a good idea to mention this when booking. For example, if you choose a small car to save on fuel but the website doesn't specify this as a feature, it's a good idea to make that known. Otherwise it may be harder to turn down a bigger car if the small one isn't available. If, however, the company advertised the car you booked as being fuel-efficient, or a company representative told you it was, any replacement car needs to be fit for this purpose.

Can the car hire agency prevent me from taking the car off-road?

A rental car only needs to be fit for the purposes for which vehicles of that kind are commonly supplied, which doesn't mean it needs to be fit for all purposes. Whether the car should be fit for off-road use will depend on what type of car you rent. While a 4WD is commonly supplied for off-road use, a small hatchback wouldn't be.

I had to pay more than the advertised price – is that allowed?

A car hire company isn't allowed to mislead you about its prices. This means they can't entice you by advertising great prices and then hit you with additional mandatory charges.

For example, a car hire company advertises a daily rate of $34 a day plus fees and charges. If those extra fees and charges were mandatory, the company would also have to advertise the single total price just as prominently. The single total price is the minimum total cost you'll have to pay to obtain the service. That means that if the price included a $7 a day mandatory service charge and an administration fee of $55, the car price should be advertised as $41/day + $55 administration fee. For any fees that can't be calculated at the time of advertising, say a fee per kilometre, the advertiser should spell out how much the fees are and the manner in which they are charged. Any optional extras, like excess reduction, don't need to be included.

It seems unfair but the rental car company says it's in my contract – is there anything I can do?

Car hire companies usually have standard form contracts which outline most of your rights and obligations. While contracts are legally binding documents, car hire companies sometimes include terms which may be deemed unfair. ACL provides some protection for consumers against unfair contract terms but they need to be ruled unfair by a court first. If that's the case the term will be treated as if it does not exist, while the rest of the contract remains binding.

Contract terms which would likely be deemed unfair are ones which allow the rental agency to:

  • vary the terms of the contract without allowing you to do the same
  • make you liable for things that would normally be outside your control
  • prevent you from relying on information given by the business or its representatives
  • charge your credit card without giving you notice or a chance to dispute it
  • forfeit your security bond for a breach of the contract that has no link with the forfeiture
  • avoid liability for negligence.

What are my options if the car hire company does the wrong thing?

Generally, determining a remedy for a problem with the car hire company will depend on whether the problem with the rental vehicle is deemed a major or minor failure.

Major failures are when a significant problem occurs that can't be resolved in a reasonable period of time. For example, if the car fails to start when you're on the road and it can't be fixed for several days it would be considered a major failure.

It would also be a major failure if:

  • the car is unsafe
  • you wouldn't have rented the car if you'd known about the fault
  • the car isn't fit for its normal purpose or purposes specified by you or the rental company, and can't be made fit within a reasonable time
  • the car is significantly different from the model you booked.

A minor failure occurs when the problem is smaller in nature and can be fixed free of charge within a reasonable period of time. For example, if the car you were given to rent was dirty inside, it would be deemed minor, as the car company could either offer you an alternative vehicle or clean it.

If the problem is a major failure you're entitled to choose from a range of remedies. If there's a replacement vehicle available, you can accept that. Alternatively you can cancel the booking and get a refund for the remaining days, or if it's possible you can continue with the same vehicle and claim compensation for the drop in value caused by the problem. You can also claim compensation for losses incurred as a result of the failure. If it's a minor fault, the rental agency can choose to fix the problem or give you a refund.

So how do I resolve the problem?

If you do run into trouble, try first to resolve it directly with the rental company. If that fails, you can make a complaint to the ACCC or your state-based consumer affairs body. If money has been debited from your card unfairly you can also request a chargeback through your credit card company. Also see our advice on making complaints as well as scripts and templates to help deal with the company.

Travelling overseas?

If you're travelling overseas it also helps to know what your rights with car hire are in that country. Here's a list of resources from our sister organisations and various consumer protection bodies in the relevant country.

United Kingdom

New Zealand

United States

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