4 Tips for Memorial Day Car Rentals

With Memorial Day in sight, you might get that old wanderlust and find yourself renting a car next weekend. Just go into the process knowing the car rental companies have stacked the financial odds against you — and know how to balance the odds in your favor.

Why are rental car companies stacking those odds — and how are they doing so? In a word, it’s all about the Great Recession. Both car manufacturers and rental car companies have taken a financial bath from the economic downturn. The average mileage on a Hertz (Stock Quote: HTZ) rental, for example, was about 15,000 to 18,000 in 2009, while the industry average is closer to 10,000. That’s because the company was offering fewer cars to save on expenses.

Car rental customers have other complaints, too. In a USA Today survey of 1,300 business travelers cited an alarmingly high number of responses about filthy cars with more dents and dings on the outside, reduced customer service, long waits at the rental counter, and less car selection.

The price of renting a car has risen, as well. Avis (Stock Quote: CAR) reports that the average daily price of an auto rental rose by $3 in 2009. That’s a big reason why the bottom lines improved for major car rental firms like Avis, Hertz and Dollar-Thrifty (Stock Quote: DTG). The stock price for Dollar-Thrift alone rose from $1 per share in 2009 to $33 in early 2010.

Hertz has read the tealeaves and has added 80,000 new cars to its fleet in the last quarter of 2009 alone, and is planning more new vehicles this year. That should bring average car mileage to 12,000, company officials say.

Even so, the onus of getting a good rental care deal has increasingly fallen on the shoulders of the customer.

Your best strategy in renting some wheels? Be prepared — and flexible. Follow these tips to get you behind the wheel at a decent price.

Be careful with debit cards. Rental car companies may not appreciate your use of a debit card (or heaven forbid — cash). If you use a bank debit card, use one with a familiar logo, i.e. Visa (Stock Quote: V) or MasterCard (Stock Quote: MC). The rental car firm may also place a “hold” of up to $500 to cover any deposit issues. Always make sure you have enough cash in your bank account to cover a so-called block — and leave you with enough money to spend on your trip.

Insurance coverage? Rental car companies will offer you insurance coverage, and many credit card companies also offer automatic coverage. But don’t count on it. Contact both your insurance company and your credit card company to see if you’re covered for rental insurance or not. If not, expect to pay up to $40 a day for rental car insurance.

Get out of the airport. Rental companies and local municipalities love it when you rent a car at the airport. Chances are, rates are higher there, and governments are prone to slap taxes and levies on cars rented at airports. Mitigate that situation by taxi-cabbing it into town, and renting at a location away from the airport. On the way back, drop the car at the airport before you catch your flight — it’s more convenient and won’t cost you extra.

Check out discounts. There is no shortage of discounts and bargains when renting a car. If you belong to Costco (Stock Quote: COST), for example, you can get a 20% discount on a rental. Similar deals can be found with AARP memberships, the U.S. military and AAA. Check your credit card, too. American Express (Stock Quote: AXP) has good bargains on car rentals for its members.

It’s also a good idea to call ahead and see what a particular rental company has that week in terms of deals. When you do, also ask about airport and gasoline fees — they tend to add up quickly if you’re not prepared. When you get your card, read the contract before you sign it — not after.

There are plenty of good deals out there with rental cars, but you have to dig around to find the best ones. Car rental companies are betting you won’t do that — and that’s a bet you should take before hitting the highways this summer.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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