The Hidden Costs of Rental Cars

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Saddle Road  •  Hawaii  • 
 
Risk Factor: A combination of vision-obscuring fog, narrow lanes, rough roads, and one-lane bridges once made Hawaii's Route 200 so dangerous that some rental car companies would forbid customers from driving their cars on it. Much work has been done to widen the narrow roadway and re-pave the roughest portions, but the low visibility and single-lane bridges are still a problem.  • 
Why you’ll be tempted to drive it anyway: The highway got its nickname, the Saddle Road, for being the "saddle" in between the Mauna Loa and Mauna Kea volcanoes and it provides roadway access to the observatories that branch off of Route 200. The Mauna Kea State Recreation Area on Saddle Road offers views of the volcanoes as well as a picnic area.  (Photo: Masa Ushioda / Alamy)

You're renting a vehicle, not buying it, but many consumers have likely looked at their bill and wondered if that's really the case.

When it comes to rental cars, most consumers know the price they start off with isn't always the price they end up with. A rental includes sales tax, and hopefully everyone knows that if you bring your vehicle back with virtually no gas in it, the company will charge you a premium to fill it up (unless you opted for the prepaid tank option, which can work out unless you return the car with close to a full tank). Extra insurance from the rental car company will also increase your bill.

At least the latter expense isn't hidden. Unfortunately, there are other, less-visible add-on fees and unexpected costs that can come with renting a car. We did not name the rental car companies in the following anecdotes, to avoid getting into a he said, company said argument no one will win.

[Read: Should You Purchase Rental Car Insurance?]

An authorization hold. This is the most ominous and devious of fees if you're unaware that it's coming, but rental car companies typically warn consumers at the counter beforehand.

Some rental car companies will "hold" an extra few hundred dollars on your credit card or debit card beyond the rental fee price, then credit the money back to you when you hand over the keys. That may be all well and good if you've budgeted for it, but you may run into problems if you find that $200 in your bank account is unexpectedly unavailable. And the hold is only released when you return the keys in theory. If you use a debit card, it may take several more days to get the money back.

It's beyond annoying, but there is a valid reason for this practice. The hold is there in case you spill grape juice all over the passenger seat or drive the car into a pile of manure (if you've seen the "Back to the Future" movie series, you know it could happen).

Charges for damages. You might be charged even if you weren't the person who damaged the rental car. Charmaine Weems, a government worker in Philadelphia, rented a car for one week in 2011 when her own car was at the mechanic. "The car had cigarette burns in the back," Weems says. "I started to say something to the manager, but I thought because he was the manager, he knew it was there."

When Weems returned the car, the staff said she was responsible for the burns and tacked an extra $300 onto her credit card. "I urge everyone to check and go over every dent or marks and burns in their car," Weems says.

You'll help your cause even more if you take photos of any damage you see -- and make sure the manager makes the condition of the car clear on the contract. Walt Meyer, a freelance writer and speaker based in San Diego, learned this the hard way. About four years ago, he rented a car for a friend who had bad credit and couldn't rent one on his own.

"We listed him as a second driver on the car," Meyer says. They both noticed a large gash in the roof of the vehicle and asked if they could rent another one. No dice. Meyer took photos to prove they rented the car with a gash on it, and his friend drove off.

"About two months later, I get a notice from a collection agency saying that I had damaged a rental car, refused to pay and it had been forwarded to them for collections," Meyer says.

The bill: $4,000. Meyer eventually got everything straightened out, but it took a lot of phone calls.

Your credit may be affected if you use a debit card. Some rental car companies will do a credit inquiry when you rent a vehicle, and if that credit check shows up on your credit report, at least in some cases, according to Dollar Rent A Car's website, it "may have an effect on your credit evaluation."

It will probably be a very minimal effect, but if you're hypersensitive about your credit score and rent a lot of cars, it's worth knowing.

Cancellation fees. If you line up a rental car and then cancel it, you may be charged a fee, often around $10. If you prepay and don't show up, your money will reappear in your bank account eventually, but the industry standard no-show fee is $50.

Higher costs for airport rental cars. As many travelers know, it's almost always more expensive to rent a car at the airport. Some studies and surveys have suggested as much as 25 percent more. So if you're visiting an area for a while, it might be cheaper to pay a taxi or shuttle service to take you to a rental car agency away from the airport.

[Read: 6 Car-Buying Mistakes to Avoid.]

That's a suggestion from Maranda Gibson, who worked at a big-name rental car agency for five years. "It isn't uncommon to see daily rates $10 to $15 cheaper away from the airport," Gibson says. "Another thing to consider is the additional taxes and fees you pay for renting at an airport ... They add up pretty quickly."

Upgrading your car for free will cost you. It happens all the time: You reserve an economy car, and the company upgrades you to something bigger and better for no extra charge. That's true, except for what you'll pay in gas. You're probably too happy to be given a bigger car for free to think about that, however.

Toll booth fees. Last summer, Dianne Langston, a Realtor based near San Francisco, wanted to buy a new car but didn't want to rush the process, so she and her husband rented a car weekly for about five months. They had a good experience -- at first.

"I enjoyed the opportunity to try out different styles of vehicles for an extended period," Langston says.

She also had a FasTrack responder, which automatically deducts the cost of toll booths from her credit card. What she didn't know is that many rental car companies use services that charge drivers when they pass through all-electronic, cashless toll booths. Langston didn't catch on right away, partly because the fee charges were separate from the rental car. She racked up at least eight $24.75 charges during her five months of renting cars.

Some rental companies offer to charge drivers a fee that allows them to go through tolls without paying, but those can come with per-day charges even if you only go through, say, one toll booth.

[See: 10 Saving Strategies That Can Backfire.]

Plan ahead. That's a plea from Gibson, who was often behind the counter, lining up cars for consumers. "Far too many times, I experienced someone booking a big SUV the day before a holiday and knew that no matter what I did, I was not going to make that vehicle happen for my customer," Gibson says.

She suggests booking 24 hours in advance during slow periods and as early as possible if the rental overlaps with a major holiday. If you put some forethought into renting a car, you may avoid making other mistakes, like not budgeting for an authorization hold. Plenty of people rent cars with nary a problem, but if you're careless, you might find yourself wishing you had taken some other mode of transportation -- like traveling the friendly skies. Everyone knows there are never hidden fees when you travel by plane.*

*Except booking fees, baggage fees, seat selection charges, in-flight movie fees, meal fees...