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Why rental car rates are soaring this year – and 7 ways to beat the trend
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Personal finance | Advice

Why rental car rates are soaring this year – and 7 ways to beat the trend

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Do you budget for airfare and hotel but treat the rental car as an afterthought? It’s time to change your ways, because that weeklong rental could be the most expensive part of your summer vacation.

A dearth of rental cars and an increase in demand mean prices are soaring. “It’s Econ 101,” says NerdWallet travel expert Sara Rathner, who is planning a summer trip. “The most complicated part of the planning is finding a rental car within our budget,” she says.

On one weekend in February, 18 of 20 airports in Florida were out of rental cars, rates in Phoenix approached $200 per day and rental cars in Hawaii went for $400 to $500 per day, according to Jonathan Weinberg, CEO and founder of car-rental comparison website AutoSlash.

Blame the rates on a massive sell-off of cars.

After the pandemic hit, demand for rental cars dropped 90% in a matter of weeks, Weinberg says. Cars were off the road, but lease and insurance payments carried on. Without knowing when demand would return, companies unloaded the most expensive — if most vital — part of their operations.

Now, vaccinated people are going on vacation. AutoSlash saw a huge uptick in demand for Presidents’ Day weekend, and it hasn’t slowed since.

Watch out for the summer demand, Weinberg warns. More people will be vaccinated and sitting on huge amounts of unused vacation time.

Here’s how to make sure your summer vacation dollars aren’t left on the rental car counter.

Book early

Those $400-plus-per-day rates in Hawaii went to the people who failed to book ahead. Last-minute planners at vacation spots across the country were stunned to find near-empty lots, and they paid for their laid-back approach.

Extend your search

Faced with reduced inventory, some car rental companies are dismissing searches of just a few days, holding out for more lucrative longer rental periods, Weinberg says. When AutoSlash staff sees a “no cars available” notice while searching for a weekend, they expand their search by a few days. Sometimes cars are indeed available — and some companies will credit drivers for unused days if they return a car ahead of schedule.

Let taxis or ride-shares help

Renting a car at the airport often comes with a higher price tag, courtesy of airport taxes. Renting from a location in town is almost always less expensive. Explore what it might cost to taxi to a rental office away from the airport. “Factor in convenience, time and effort, because your vacation time is limited,” Rathner says.

During trips, Rathner sometimes strategically pools far-flung outings to limit the number of days she rents a car, even if that requires an occasional Uber ride. “You might be spending $40 a night or more for hotel parking, and you might not even move the car for three or four days.”

Try Costco or Sam’s Club

These membership-only big-box retailers have relationships with car rental companies and often land deals for members.

Check your credit cards

Rathner has booked cars using her Chase Sapphire rewards card, which also includes primary rental car insurance. Its online travel portal allows card holders to pay for a rental using points. Even when paying with cash, they may be able to land lower rates. Visa Infinite and Signature cards also partner with rental car companies to offer discounts and may include secondary insurance.

Use AutoSlash

This site, which Weinberg started in 2010, asks you to input your various memberships, such as Costco or AAA, and then scours offers and coupons to send you the best booking options by e-mail. The site also tracks prices and notifies you if it finds a better deal. Weinberg recommends opting for the pay-later option, even though it may cost more. Unlike with airlines, you tend to lose the bulk of the money paid if you wind up needing to change your reservation.

Join the club

Sign up for rental car loyalty programs. The free membership allows you to bypass the line and head straight to the parking lot to choose a vehicle. “Lines will be long this summer,” Weinberg warned.

Your travel guide: 18 ways to get the most out of this summer

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