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Three Rental Car Myths To Avoid

(August 26, 2002)

Many assume that small cars are the cheapest, car rental company's websites offer the best rates, and our credit cards completely cover us in case of an accident. Not necessarily so, as I recently discovered. So, how do you know if you're getting the best deal, and what should you look out for when renting a car? Here are three rental car myths you should be aware of.

Myth 1: Smaller cars are the cheapest

For a last-minute trip to Seattle, I was astonished to discover that the cheapest weekend daily rate for a compact car was $53, plus tax (18 percent plus a $4 concession fee). I don't like compact cars, so I checked the rates for larger cars. I discovered that a standard car ended up being less at $48, and a full-size at $52.

In fact, of the four car rental companies I looked at, all but one had larger cars for less. What's going on? In short, the lack of business travel is what's going on. According to a recent Abrams Travel Data Services' study, corporate rentals are down by 15 percent, which means that there is a surplus of big cars that need to be rented. And when supply is up, prices go down.

Therefore, don't assume that smaller cars are the cheapest. Always scan the rates for all car sizes. You may end up with a pleasant surprise.

Myth 2: Rates quoted directly from car rental companies are the cheapest

Yes, it's true that most car rental companies offer exclusive discounts for booking directly through their websites. For a recent trip to Lake Tahoe, I booked a full-size car through Hertz at a special rate offered only on their website. (Again, a rate that was cheaper than that of a compact- or economy-sized car.) On top of that, I was able to upgrade to a bigger car using Smarter Living's Hertz member benefit.

However, the biggest savings can be found on sites like Hotwire and Priceline. (Keep in mind that these sites don't disclose the car rental company until after you book.) Using Hotwire, my Seattle car, a standard car from Budget, ended up costing only $28 a day (plus tax). On the Budget website, this car was $64 a day (plus tax).

Even rental car employees can't believe these deals. Upon check-in at the Budget counter, the agent remarked that my rate was the best he's seen in awhile. In addition, I had an upgrade coupon from US Airways Dividend Miles. The agent ended up giving me a double upgrade to a Hyundai Sante Fe SUV, normally $85 a day.

Myth 3: My credit card provides all my insurance coverage needs

When you rent a car in the U.S., liability insurance is included in the rental, but collision insurance is not. If you don't have any car insurance, it's best to purchase supplemental coverage which will run anywhere from $15 to $20 a day. Some credit cards automatically provide collision damage insurance that covers damage to or theft of rental cars. However, policies vary by credit card and location of the rental. It is important to understand that most credit cards provide only "secondary" collision coverage, which goes into effect only after your personal auto insurance has been activated.

Be careful when upgrading your car because many credit card companies will not cover the following:

  • Some luxury cars.
  • Exotic cars such as Porsche or Lamborghini.
  • Certain SUVs (and they will not cover any accidents off paved roads).
  • Pickup trucks.
  • Vans that carry over eight passengers.
  • Moving vans or trucks.
  • RVs
  • Motorcycles.
Don't upgrade until you check with your credit card to find out what's covered. If you end up in an accident, you could be financially responsible for some or all the damage. And that's one rental car pothole you'll want to avoid.

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