Cars
Car rentals
Introduction
Unexpected costs and hassles over insurance are problems sometimes faced when hiring a car.
We've been collecting Consumer members' experiences of car rentals for five months. Here we report on what we found, and our experiences checking out cars from four nationwide rental agents. We've also drawn up some handy tips for your next car hire.
Extra costs
When they picked up a rental vehicle, some of our members were confronted with "extras" - both large and small - they hadn't expected from the information they read on the company's website.
We asked the New Zealand Rental Vehicle Association how clear additional costs should be on a company website. Their response: "Most rental vehicle companies will clearly show on their website their daily hire rates, and if there are additional charges for extra drivers ... or for drivers under 25 years of age. If you're in doubt, check these out with the company."
We found that some of the costs were hard to find on the companies' websites. You need to know what costs to watch out for when booking a car online.
What to look for
Look out for these extras when hiring a car:
- You'll need a credit card to pick up the car and that can be an opportunity for rental companies to charge extra. For example, Europcar's credit card charge is 1.3 percent of the total cost of rental and Britz's is even higher.
- It's usually extra to add additional drivers to the rental agreement - around $3.50 per day.
- Picking up the rental car from a "premium" location such as an airport or ferry wharf will usually attract another fee. A Toyota Camry from Budget would cost $34 more if we picked it up from Wellington airport.
- Drivers under 25 will most likely be charged extra - for example, $28.15 per day if you rent from Avis.
- Companies will charge a "relocation fee" if you drop your car off at a different location. But this additional cost might be waived depending on your destination, or if you rent for a certain number of days. Europcar charges $337.50 if you hire a compact car from Auckland airport and drop it off at the Wellington ferry terminal. But there's no charge if you hire in Wellington and drop the car off in Auckland or if you hire for five days or more.
- Depending on the rental agreement, you could be charged extra if you exceed a certain kilometre allowance. For example, Capital City Cars allows the first 100km free - and then charges 20 cents for every kilometre after that.
In the small print
Norman Dix rented a car from Europcar at Wellington airport. The company website said that there were no "hidden charges" - but when Norman went to pay at the counter he was surprised by an extra charge of $4.50 to use a credit card. There were other costs as well: "It was an extra $3.50 per day to have my wife entered as a driver, just in case I took sick or became incapacitated - so much for no hidden costs!"
Rental companies are getting better at including all costs in the quoted price. For example, Europcar's credit card charge is noted in the booking process: it's obvious provided you know what to look for (see "What to look for" above). But other costs - such as the cost associated with adding an extra driver to the rental agreement - could take some digging to uncover.
Insurance you don't need
Personal Accident Insurance (injury or death, plus medical expenses) should already be covered by your travel insurance overseas or ACC here.
Personal Effects Cover (baggage and other personal effects) should already be included in either your travel or your home contents insurance.
Bonds and excesses
Often rental companies will take an imprint of your card as a security bond. Some companies don't put this through at the time, but others will whisk out the bond straightaway and refund it later once the vehicle is returned. Security bonds can be thousands of dollars.
Find out how the bond is charged before making a booking. If the company does take money from your account, your credit card will accumulate interest unless you pay it off by the due date.
For overseas car hires, adverse changes in exchange rates may affect the cost of the bond.
Large bond
Nicole Campbell booked a campervan with Britz over the internet. The campervan was for a seven-day holiday with her three-year-old son. Nicole thought she'd discovered the most affordable deal - $31 per day plus a $100 pick-up-fee and an insurance bond. But when she arrived at the pick-up-point, she was shocked to hear that the bond was $5000.
"I'd expected to leave some sort of bond by way of credit-card imprint, but I didn't have that sort of money lying around."
The insurance "excess"
The $5000 bond was for the insurance "excess". In Nicole's case, $5000 would've been the maximum amount she'd pay if the campervan were damaged. Britz points out that the bond is reasonable considering each campervan costs around $110,000 to make.
Nicole could've paid extra per day to reduce the excess bond on her Britz campervan. Currently, you can reduce the excess to $2500 for a non-refundable fee of $20 per day, or you can reduce the excess to nil for $38 per day. This daily charge will add substantially to your rental costs (almost an extra 50 percent if you choose to reduce the excess to nil).
While we don't think that Britz's online booking process is misleading, you need to know what an "excess" is and how the bond will be charged. We recommend ringing the rental company well before the pick-up date and getting them to run you through the booking process.
Tips to reduce your excess
- The rental company's "excess reduction waiver" is an additional fee you pay to the rental company to reduce the excess, but they're not cheap. For cars, a daily waiver of around $25 can bring the standard excess down to $350 (this varies between companies).
- A cheaper option for overseas hires is to see whether your travel insurance covers the rental-car excess. This will usually be up to a maximum amount (for example, State Insurance and The Warehouse cover the excess up to $2500). You still might have to pay the first few hundred dollars of a claim - depending on the policy.
Vehicle condition
Mechanical condition
Some of our members reported receiving faulty vehicles. So we decided to hire rental cars from Avis, Budget, Europcar and Pegasus - all nationwide chains. We drove them and also had them checked by a mechanic.
The Avis, Budget and Europcar rentals passed with flying colours - although the near-new Holden from Avis had a leaking window washer bottle. The older car from Pegasus had a few more minor problems. Our mechanic said: "The car is mechanically sound, but will need a little work in the future."
But then you get what you pay for. The Pegasus rental was just over half the one-day rate of the cheapest of the other three rental companies.
Damaged vehicles
Most rental contracts have a diagram showing scratches, dents or damage on the vehicle. Make sure it's accurate and that you and the company agree on the car's condition before you leave the yard. We were impressed with the Wellington branch of Pegasus. A staff member walked us around the car as a matter of course - both when we picked it up and dropped it off.
Some members told us about charges for damage (mostly nicks and scratches) that appeared on their credit card for no apparent reason.
How to get some money back
There are some forms of redress if you think that you've been charged for damage that didn't occur during your hire:
- Complain to the company first - preferably in writing. If you talk to them by phone, keep a written record of your conversation.
- Check whether your travel insurance covers the damage if you're hiring overseas.
- Contact your credit-card company and claim for a "chargeback". If it accepts the claim, the charge will be paid back into your account. You can do this whether the rental was made here or overseas. But you need to act quickly - there are time limits for chargebacks.
- You could complain to the Rental Vehicle Association of New Zealand - most rental firms are members.
- For New Zealand hires, consider taking your claim to a Disputes Tribunal (contact your local District Court).
Damage (to the credit card)
Ros Gutterson - a Consumer staffer - was only moments away from returning her Hertz rental car when she was hit from behind by another motorist. Ros immediately rang Hertz, filled out all the relevant forms, and returned the damaged vehicle.
Ros hadn't paid for an excess reduction waiver. Although the accident clearly wasn't her fault, under Hertz's terms and conditions all damage is the renter's responsibility unless an excess reduction waiver is signed. The excess was charged to Ros's account. Hertz explained in a letter that the excess would be reimbursed once the rental car was fixed and costs recovered from the other driver's insurance company.
But two months later, Ros is still waiting for the excess to be reimbursed. Hertz says that the standard period for cost recovery is 30 days: "But in this particular incident, the third party's insurance broker is still waiting for the third party to lodge an insurance claim. Until then ... Hertz cannot recover the costs."
Overseas rentals
There can be different rules when hiring a car in other parts of the world. Here are some points to watch out for when visiting the UK, the US, Australia, and Europe.
- Some Australian car-rental firms charge a single-vehicle-accident excess when you have an accident that doesn't involve another car. This can be A$2000 on top of the standard excess. So unless you've paid the excess waiver, you could pay upwards of A$5000 if you have a crash where no other vehicle is involved.
Pegasus is one local rental company that charges a $2000 excess for a single-vehicle accident. That's double its standard excess of $1000. - Legal liability in the US is very different from here. A travel insurance policy won't usually pay up if you're sued over a car crash, and the standard liability cover that comes with the rental car may not be enough. But you can buy extended protection (known as "EP") from the American rental company. This gives you greater cover if you injure someone or damage property. Look for EPs that give you at least US$1 million coverage.
- In the UK and Europe rental brokers are common. A rental broker buys and sells bulk car rentals and passes on discounts to you. Brokers don't own cars. You book and deal with them, but a rental company agent like Hertz supplies the car.
When you use a broker make sure you know which rental company owns the car because - if anything goes wrong - you'll be held to the company's terms and conditions. - Crossing borders in Europe is usually allowed, although check your rental agreement first to see where you can go. You should be allowed to hop west (Italy to France, France to Spain) but it might not be possible to hop east (Italy to Slovenia, Slovenia to Croatia).
In North America, it's usually fine to cross between the US and Canada but it may be harder to head south to Mexico.
Tell the rental company or broker your itinerary to avoid problems.
Our advice
- Shop around. Rental companies will compete on deals, depending on the location and the season. You'll save money if you book well in advance.
- Be prepared before you reach the rental counter. If you've booked online, print out your quote and the terms and conditions. Make sure you understand the main costs and know the insurance cover you need.
- Check the car thoroughly when you first pick it up.
- Return the vehicle in good time. Penalties for late returns rack up by the hour, and you'll need time to check over the car when you return it.
- Check your credit-card bill when you get home, and question any unusual charges.
NZ rental car accreditation
Rental companies are regulated by the Transport Services Licensing Act. Companies are required to hold an operator's licence and their vehicles must have a certificate of fitness. This is different from a warrant of fitness.
Around 130 rental car companies belong to the Rental Vehicle Association of New Zealand. Members must follow a code of ethics. You can post a complaint about a member via the association's website.
Twenty-two rental companies are also endorsed by Qualmark - an organisation that assesses the quality of New Zealand tourism businesses.
More information
- Qualmark: www.qualmark.co.nz
- Rental Vehicle Association of New Zealand: www.rentalvehicle.co.nz
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Report by Luke Harrison