Spending

Car rental rates are going from $60 a day to an 'outrageous' $500, experts say: Here are 5 ways to save

"We've seen entire cities, like spring break destinations, sold out" of rental cars.

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You might want to expand your travel budget this year. Not for airfare or accommodations, both of which you can get deals on right now, but for a rental car.

Rental car prices are soaring, says Pauline Frommer, editorial director of Frommers.com. "We've seen car rentals go from an average of $60 a day to $500 a day," she says. "The increases have been outrageous in some cases."

Here's why car rental rates are so high, and how to save money if you need a car while traveling.

'There is a global car shortage'

Demand for rental cars has grown as people resume traveling and the economy reopens, Frommer says. People are renting cars for longer stretches of time, too, given the popularity of rural and remote destinations where people can social distance, and as many people opt to work remotely and away from home.

"We've all seen a small but significant number of people fleeing cities to places where they don't have the same public transportation options," she says. "We are seeing more long-term rentals with cars."

This is compounded by the fact that many car rental companies sold off some of their fleet at the beginning of the pandemic. "Selling cars is nothing surprising for a car rental company," Frommer says. "That has always been a way they have made some money."

However, in the past, car rental companies could buy new cars for their fleet easily, and usually for a 30% discount because they buy in bulk, she says. Right now, they can't do that. "This year they sold far more than they usually do and because there is a global car shortage, they are not getting a discount and they can't get the cars. You have far smaller fleets than you've had in recent memory and growing demand."

This global slowdown of auto production is caused by a shortage of semiconductor chips.

What a car shortage means for your trip

"We've seen entire cities, like spring break destinations, sold out, and those people who have been able to get cars have been paying outrageous amounts of money for them," she says.

Destinations where car rentals have been extra pricey include Las Vegas, Phoenix, Hawaii, and anywhere in Florida, says Jonathan Weinberg, CEO of car rental discount site AutoSlash.com.

We've seen car rentals go from an average of $60 a day to $500 a day. The increases have been outrageous.
Pauline Frommer
editorial director of Frommers.com

The car shortage might also affect travelers looking to book one-way trips to specific destinations. "One-way trips to Canada were common in the past and that seems to be all but impossible now," he says.

Depending on where a rental company needs more cars, you might have to pay more to pick up a car in one city and drop it off in another. Typically during this time of year, rental car companies try to move their fleet of vehicles north. This meant that renters could get cheap deals if they were willing to drive from, for example, Florida to D.C. But because the pandemic has changed where the cars are, some routes might be more expensive one way.

"Rental car companies will clamp down on those if you're trying to rent opposite of the flow they want to go," Weinberg says.

One-way trips to Canada were common in the past and that seems to be all but impossible now.
Jonathan Weinberg
CEO of AutoSlash.com

5 strategies to get a deal on a rental car

This problem of sky-high rates will not be fixed soon, Frommer says: "It will take a while for car manufacturers to ramp up to the place where they will be able to give car rental companies these discounts."

If your travel plans include a car rental, there are some things you can do to get a better deal.

  • Book as far in advance as possible. "The prices we are seeing that are out of whack are rental pick-ups in the next two weeks or so, but further out we don't see as much of a problem," Weinberg says.
  • Price compare airport rentals and non-airport rentals. People typically think airport rentals are more expensive, but because airports house more rental companies, prices there might be more competitive. "There are situations where the airport might be less money," Weinberg says.
  • Ask about membership discounts. AAA, USAA, and Costco Travel, among other groups, all offer car rental discounts. If you are a member of any of these, it's worth checking to see what savings you can get.
  • Join loyalty programs. "We highly recommend joining rental-car loyalty programs," Weinberg says. Programs through the major rental companies can offer discounts like 5% off your rentals, and allow you to skip car rental lines at the airport.
  • Use a car-sharing site. Services such as Turo let people rent out their cars for cash as a side hustle. "With the demand so high and people out of work who may own a car, we're going to see this sector really expand and grow to fit the need," Frommer says.

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