When creating a vacation budget, you should not assume that housing and airfare will be your largest expenses. Now, more than ever, rental automobiles are becoming one of the largest — and most expensive — components of people’s vacation budgets.
While aircraft and accommodation rates are clearly near all-time highs, rental cars are among the largest price hikes of all travel expenses. According to the most recent batch of Consumer Price Index statistics released in August 2022, hotel prices increased by 7% between July 2022 and July 2019 (the last regular summer before the epidemic). Airfares have increased by 16%. However, rental cars are up a staggering 48%.
How to avoid “drip pricing” when booking a holiday with airlines and hotels
When did rental car rates get so expensive?
In April and May of 2020, when individuals began staying at home instead of traveling, rental car expenses decreased dramatically, as did other travel costs. At the beginning of 2021, however, things began to improve as monthly price increases culminated in a record high in July 2021.
Road vacations were highly popular that summer (thus high demand), but a global semiconductor shortage and manpower constraints in the tourism business contributed to poor supply. According to an examination of Bureau of Labor Statistics data conducted by the U.S. Travel Association, leisure and hospitality industry employment is 7.8% below pre-pandemic levels.
Prices have decreased marginally from their record high in July 2021, but they are still considerably higher than they were before the outbreak.
How to locate inexpensive rental cars
NerdWallet analyzed 360 rental vehicle reservations to determine the most cost-effective rental options. Some of the findings could help you save money on your next automobile hire.
Enterprise is typically the cheapest automobile rental company in the analysis, while National is the most expensive. In addition, the data revealed that last-minute rentals are often more affordable than reservations made months in advance. And you will nearly always save money by renting a rental car at a location other than the airport.
This knowledge can help you better understand the cheapest places to book, but booking from a certain location or firm may be an inconvenience that must be avoided. Here are other methods to help you save:
USE TRAVEL CREDIT CARDS: Some travel credit cards include rental car insurance as part of their advantages, however certain types of pricey automobiles or rentals in specific countries may not be covered. When available, it can save you money on the additional insurance you would have otherwise purchased at the counter.
JOIN CAR RENTAL LOYALTY PROGRAMS: Benefits vary based on your level of elite status, although some levels may include free upgrades and discounted fees. You may even obtain status automatically with a credit card. Yet even the free, entry-level categories may feature rewards such as preferential lines.
RESERVE NOW AND PAY UPON ARRIVAL: Numerous automobile rental agencies offer the opportunity to pay at the counter. Payment upon pickup provides two key advantages over payment in advance: First, if you need to cancel your trip, you won’t have to deal with the hassle of obtaining a refund, as you won’t have to pay a deposit. Second, if rates decrease, you can cancel your reservation and rebook at a reduced price.
How to save money when driving
With high gas prices, road trips may be one of the most expensive forms of travel in the present day. Here are some strategies to reduce expenses.
— USE APPS TO Identify CHEAP GAS: Apps like GasBuddy can help you find the cheapest gas stations along your route by tracking local gas prices.
— CONSIDER AN ELECTRIC VEHICLE: With an electric vehicle, you will never pay for gas. Although you may still be required to pay to charge your electric vehicle, some hotels offer complimentary charging as a guest amenity.
— PLAN A BUDGET-FRIENDLY ROUTE: Consider driving through states with reduced petrol prices if you’re flexible regarding your destination. According to AAA data, the three states with the lowest gas prices for the last week of July were Georgia, South Carolina, and Texas.
Why trip planning should begin with car rental rates
Ensure that you can afford a road trip before you become overly enthusiastic about it. With costs being so much higher than they were two years ago, you should avoid being surprised. Refrain from booking flights or hotels until you’ve compared rental vehicle costs and accounted for them in your vacation budget.