You may have noticed by now that I rarely write about renting a car. Which means I barely ever write about car rental loyalty companies. If I ever do rent a car, I usually bank the points directly to an airline or hotel partner because I so rarely rent a car (maybe once a year at most).
An article from CBC Marketplace triggered the idea for today’s post: Hidden camera footage catches misleading sales practices at car rental agency.
I put in italic some of the key points bought up in the article, and I provided my thoughts on the rest of the post.
- Article mentions: Unnecessary insurance: there may be times when employees up-sell customers on insurance they may not need.
- Being charged a fee (e.g. of $11.95 per day) for using our own credit card insurance coverage.
There is a whole debate about what insurance we are required to purchase by law and what we can incrementally purchase for more protection. The point is that some insurances cannot be avoided and some can be.
From my personal experience, even if you remind the car rental agency that you already have existing insurance coverage (such as with your personal credit card or other means), the car rental agency will usually push their insurance with responses such as: “those companies make it hard for you to file a claim, our process is much simpler.” Whether true or not, I personally see it as a high pressure sales tactic. At the end of the day, the company’s goal is to make profit so I cannot blame them for trying to make a sale, but it does make the experience very uncomfortable.
- Surprise charges: charges that were not as transparent upfront, such as
- daily “VLATR” fee
- daily “Energy Recovery Fee”
- daily “MTFC” fee, also known as a vehicle maintenance fee
- daily border-crossing fee for anyone heading to the U.S.
- service charge for vehicles that use the 407 toll highway (a highway in the Greater Toronto Area)
- “AMF” fee, also known as an airport maintenance fee
Whether these fees are justified, the fact that they are broken down so specifically does make it seems more like a surprise charge if they were not included in the advertised price.
In North America, when you pay for things, especially food, the price pretty much never includes taxes and tips. If you travel to pretty much anywhere else in the world, you pay what you see. Whatever “hidden” costs there are is already included in the price, which I will elaborate in the next section.
Two Ways of Thinking
This may sound controversial, but I believe this has to do a little bit about culture. In North America, there is this whole movement about being “transparent”. People say things like: “I want to know where my money is going. I want a full breakdown, etc.” Well if that’s the case, then your bill is going to be broken down, which opens up more questions like: “why am I paying for this and that?”
Conversely, a retailer can just include everything into one price. You pay it, no questions asked on where the money goes, which is how it works is many countries around the world, outside of North America.
I’m sure that if I asked 100 people about this, I would probably get 100 different opinions on the matter. Personally, I would rather just see 1 price, and not worry about the breakdown of the cost. Instead, I rather see more competition in any industry, so that companies can compete with each other to drive down the prices. At the very least, if there is more competition, we can at least compare prices. I personally rather not get caught up on the breakdown of where my money goes, I rather spend my time shopping around the different “all inclusive” price tags. It is a pain to shop around when the final price is not advertised, which makes it feel misleading.
However, price is only an issue in the absence of value. So are these high prices justified? I will discuss more in the next section.
Thoughts on the Industry Overall
Remember the days when you can rent a car for $9.99 a day, plus tax, over the weekend and very minimal hidden costs? There were days when you can rent a car for less than $15 a day all-inclusive. If you compared that to $30-$40 a day, I don’t think you will question too much where your $15 is going. The breakdown of the cost becomes a bigger issue when the price doubles, then we ask whether the retailer is receiving a 100% markup?
What I am trying to say is, when the cost is high, every single dollar gets highly scrutinised. There probably are justified reasons for increased costs in car rentals, such as:
- higher maintenance costs
- high demand (so no need to drop prices)
- low competition
The challenge is if all those factors are working against consumers, it is inevitable to avoid higher costs to renting a car. And gone will be the days of renting a car for $15 a day.
What I do
To make my life simple, I actually just avoid renting a car whenever possible and put my money towards other methods of transportation like:
- shuttle services
- My personal favourite: all-inclusive passes (e.g. Japan Rail Pass or Swiss Travel Pass)
Although there is less flexibility on the schedule, I would rather not have to worry about things like:
- Picking up and returning the car
- Insurance (especially insurance claims)
- Damaging the car
- Tickets for traffic violations (especially when I am not familiar with the roads)
I remember being on a road trip in the U.S. and I got a speeding ticket. I was driving on a 50 mile and hour road, that dropped to 30 mile at a corner and I missed the sign. I was ticketed for driving at 45 miles and hour. I was driving at 45 miles an hour to stay under the 50 mile and hour speed limit to avoid a ticket. Guess what happened anyway!! Now my eyes are glued to speed limit signs, so do not distract me when I am driving…
Basically, when I am on vacation, I want to relax and not add more stress. So I rather give up the convenience of having a car to avoid headaches.
What are your thoughts on renting cars? Please let us know in the comment section below.