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How to rent a car in Australia

Don't be taken for a ride with 'insurance' or other hidden fees and charges.

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The flight arrived late, the kids are swinging on your arms, the warm body odour of the person behind you is wafting into your personal space and the car rental clerk hands you a 24-page 10,000-word hire agreement to sign.

Are you going to read it first?

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Car rental fees, charges and catches to look out for

Here are some of the catches regularly hidden in the fine print of a rental car contract.

Roadside assistance fees

Yes, you read that right. The big rental companies charge extra for you to access roadside assistance for the vehicle they rent to you. 

Single Vehicle Accident

If you're in an accident where there's no other vehicle involved, you'll pay extra on top of the standard liability. Some rental agreements may be broad in their definition of 'Single Vehicle Accident'. For example, the Thrifty rental agreement expands the application of this fee to accidents with parked cars, reversing into stationary cars, or where another vehicle was involved but the driver of the other vehicle hasn't been identified to Thrifty.

Glass and tyres

Regularly excluded from the standard liability, you could be up for an extra fee or have no cover at all for damage to wheels, tyres, the windscreen and other windows.

Underbody and overhead damage

You may find yourself fully liable for damage to the underbody or top of the vehicle.


Some contracts may charge an extra fee or not cover you for an accident involving an animal. The Hertz contract, for example, won't cover you if you hit an animal or have an accident while avoiding hitting an animal at night-time in an area they define as rural.

Bad weather

Damage from a flood, fire, storm, cyclone or other natural disaster may incur extra costs on top of the standard liability.

Excess reduction or Collision Damage Waiver

Also referred to as Loss Damage Waiver (LDW) or one of the many acronyms invented in car hire contracts, this extra cost can seriously jack up the price of your car hire.

It's not actually insurance cover but a fee paid to the car rental company to release you from liability for damage, subject to the terms of the rental agreement, and it often excludes damage for the catches mentioned above. 

In our car hire company comparison, we found the basic level of Collision Damage Waiver (CDW) can leave you with a liability between $5000 and $5500. Many people will pay the extra daily rental fee to reduce this liability, but there are alternatives.

Third-party car rental 'excess reduction' policies

Domestic travel insurance or excess reduction insurance can be a far cheaper alternative to forking out for the car rental company's excess reduction. You take out a policy with an external insurance company and if there's loss or damage to the vehicle, then you pay the excess to the car rental company and claim reimbursement from the insurance company.

It does require you to have the basic insurance offered by the car rental company, which is usually included in the car hire, but check with the insurer because this can be a grey area.

Hidden fees and the Australian Consumer Law

Rental car companies love fees, especially hidden fees, but they can't advertise a price that's only part of the cost of hire unless they also display the total price at least as prominently.

For example, companies can't state the car hire costs $40 a day but then stick an unavoidable cost on top, like $10 for administration fees or taxes, unless they also advertise the minimum total amount of $50 just as prominently as they advertised the $40 before the fees.

In other words, if you see two prices advertised for a hire car, then you can presume the higher price is the real one. And if you don't see another price advertised but the company springs some extra compulsory costs on you, you should mention that it's in breach of the Australian Consumer Law (ACL).

Note that this doesn't include other costs such as parking fees and toll fees or optional extras that you may choose to pay, like adding a GPS system or that doozy that rental car companies really love: excess reduction.

Can you rent electric vehicles?

In our comparison of the six big car rental companies in Australia (Avis, Budget, Europcar, Hertz, SIXT and Thrifty), we found four of them rent out electric vehicles. Only Avis and Budget don't rent electric vehicles. However, all six companies do have hybrid vehicles available for rent. Europcar also has CO2 emissions data available so you can pick the vehicle with the lowest environmental impact.

More than 60% of transport emissions in Australia come from light vehicles, so renting an electric or hybrid vehicle can go a long way towards reducing emissions, not to mention your fuel costs. Car rental companies require you to return cars with a full tank of petrol if you want to avoid their exorbitant refuelling costs but electric vehicles generally don't have to be returned with the battery fully charged.

Top tips for renting a car

Before the hire

  • Read the contract terms and conditions before you select a rental company.
  • Inspect your vehicle carefully in the presence of a sales assistant before taking possession of your car. Make sure all pre-existing damage, no matter how minor, is documented.
  • Photograph the vehicle at the beginning and end of hire. Try to time-stamp the photos and, if possible, get the sales assistant in the photos too.
  • Ask for information about what to do in the event of a breakdown or accident.
  • Find out whether you need to bring the vehicle back with a full tank of petrol and what the charge is per litre if you don't.

During the hire

  • As you drive out of the car hire depot the first thing to check for, apart from a running motor, is the nearest petrol station so you can fill up on return without incurring the exorbitant fuel charges.
  • If the vehicle breaks down during the rental or you have an accident, follow the company's procedures. Don't have it repaired without approval.

After the hire

  • In our 2016 investigation of Avis and Hertz, we found fuel mark-ups approaching 300%. Fill up the vehicle as close to the drop-off point as possible and keep your receipt to avoid a refuelling fee.
  • While you're filling up, 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.
  • Get a company representative to inspect the vehicle in your presence immediately upon return.
  • If there is no damage, the ACCC suggests you ask for a written statement noting that the car was returned undamaged.
  • Work out any disputes over damages on the spot.
  • If you have a complaint, contact your local fair trading or consumer affairs office for advice or if it was an overseas hire, check the advice from consumer advocates in that country.

Is the industry improving?

The ACCC has investigated the car hire industry for a number of reasons over the past few years. Since then, some companies have admitted to engaging in dodgy practices, which they've promised to rectify.

These court actions have resulted in some small but significant improvements in the rental industries, as these companies and others appear to have learned something from their mistakes. However, these issues occurred after the ACCC issued an official guide on how to operate within Australian Consumer Law for car rental companies.

Unfortunately, a lot of problems seem to happen at individual locations. While company policy seems to be getting better, a lot of decisions are still left up to the broad discretion of staff, which can cause problems.

Why we don't recommend any car hire services

You don't need to look far to find car rental horror stories. Damaged vehicles, dodgy contracts, outrageous additional fees billed to the driver once the car has been returned... These sorts of stories pop up in the news and on social media all the time. Of the six car hire companies we assessed, all of them had several aspects that could be improved, whether that be annoying booking processes on your mobile or poor coverage for damage meaning renters are left with hefty bills.

Though we acknowledge that the industry has improved, ongoing negative feedback means we won't be recommending any car hire services. However, people continue to use them, so we choose to assess their performance and usability on the grounds that many CHOICE members will likely rent a vehicle at some point in the near future.

Car hire alternatives

If you're hiring cars frequently in one area, then car share schemes such as GoGet can be a viable option. Check out our car share schemes vs car hire comparison.

Or if you're at the other end of the scale and need the convenience of a car but won't be using it too much, ridesharing could be a viable alternative.

Stock images: Getty, unless otherwise stated.