Why Is Car Rental So Expensive Right Now? Find The Reason


August 1, 2023

Reading Time:- 8 minutes

Why Is Car Rental So Expensive

You wanted to visit Yellowstone National Park this weekend with your family. But now that you see the car rental prices, you keep wondering, “Why is car rental so expensive?”

Yes, soaring prices of car rentals can indeed take renters aback and make them reconsider their decision. But have you ever considered why renting a car is so expensive and how to solve this problem?

There are various reasons why rented cars are expensive; you will learn the reason in this article. Moreover, you will also learn ways to evade these high prices and rent a car at a low cost.

So, hop in and buckle up your seatbelts.

Why Is Car Rental So Expensive? Here Are 10 Good Reasons

According to Bloomberg researchers, rental car prices have gone up by 25% post the pandemic situation. And according to an article by Nerd Wallet, the prices have gone up by 50% since 2019.

Whatever the figure might be, there are solid reasons behind these price hikes. And now you too will find out all about these reasons and more.

1.   Demand Is Not Equal to Supply

The most basic reason behind this price hike is- demand is not equal to supply. To explain it simply, rental car companies have reduced their fleet since the pandemic hit. And therefore they have less than before.

However, the pandemic also became the reason why US travelers don’t go abroad as often as they did before. Thus, whatever it might be, luxury or business, these travelers like to rent a car.

With such disparity, the rental car prices are so high, leading to travelers’ and businesses’ pocket burns.

2.   When You Rent Cars, There’s Always Some Risk

The next reason why car rental companies charge high is because of risk. Yes, with renting a car, there’s always some risk involved.

Let’s face it, the US has one of the highest road accident rates in the world, with over 7.7 million cases over the past 7 years. Therefore, there are always some risks involved while renting out a car.

Therefore, car rental companies charge, considering the insurance prices along with the rent, making the prices high.

Moreover, the USA also holds a notorious record of car thefts. Hence, car rental companies have to install the latest anti-theft in their car, whose maintenance comes at a high price.

And this further leads to car rental companies charging more from renters.

3.   Insurances are Expensive and You Know It Too

High insurance charges are one of the most crucial reasons car rental prices increase. In recent years, insurance prices have sky-rocketed, with auto insurance prices rising by 15%.

In such circumstances, car rental businesses cover these prices from their rents and charges automatically go up.

Moreover, car rental companies also provide insurance to renters increasing the base charge of the car.

4.   Have You Considered the Location?

It’s a known fact that price varies according to the location. And the same rule applies to rental cars as well. Some places in the USA attract more visitors than other places.

For example, a tourist attraction spot like Miami or a commuting place like an airport has more crowds than Manhattan City, Kansas.

Therefore, car rental companies pay higher rent, overhead costs, and other fees compared to the less popular places.

And to cover their investments, car rental companies charge renters higher than usual.

Related Article – Best Websites For Cheap Car Rentals 2023

5.   Then There’s Marketing Cost

Everything depends upon Marketing. It doesn’t matter what you’re selling; your things will sell if you have a good marketing strategy.

A similar rule also applies to car renting companies. The better marketing, the more customers! However, great marketing strategies require efficient marketing teams, which leads to great price shedding.

Hence, to compensate for the expenses, car companies keep a high base price for car renters.

6.   Staff Don’t Come For Free

A car rental company requires employees for various job roles. For example, these companies need car agents, mechanics, engineers, and customer service managers to maintain the business flow.

However, with more staff comes more expenditure. These car companies have to pay salaries, overtime, health benefits, and training fees, which ultimately add to rental prices.

Hence, customers have to pay a big chunk of money while renting out a car.

7.   Maintenance High, Car Value Low

When a car rental company buys a new car, they ensure that the car is in its best condition. Furthermore, they maintain those cars, getting regular oil changes, checking the engine, and rotating the tire.

And this leads to a substantial amount of expenses, which affect renters’ bills. Moreover, when these companies sell these cars, they’re already old and don’t sell at a higher value.

Therefore, rental companies charge customers a higher price to cover the rest of the amount for a new car.

8.   Did You Order For an Expensive Car?

This reason is relatively simple; luxury cars eat up a lot of cash for maintenance. And to cover those expenditures, car rental companies charge more for luxury cars than an economic sedan.

Several car renters cannot travel by economy car due to personal and professional reasons. Hence, during such times they hire a luxury car with more price.

9.   Taxes Are Burning Pockets

The USA and taxes go hand-in-hand. Therefore, car rental companies have to pay up to 21.63% tax rates for their fleets and businesses.

However, these companies know that they have to make up for these taxes. Thus, they charge the customer a higher base charge leading to a lot of price increases.

Please note in this matter that some states have higher auto tax rates than others. And in such cases, those states’ car rental companies charge higher than others.

10. Is the Government Responsible Too?

While the government is not directly responsible for the rental car price hikes, they, too, have a fair share of this matter. For instance, the US government has safety rules imposed on car rental companies and car brands.

Hence, these companies have to add theft trackers, airbags, and other features to ensure driver safety.

Moreover, these car rental companies must comply with the government’s environmental safety rules. And this leads to car brands’ added cost in maintaining their cars.

And therefore, to cover these costs, car rental companies put a hefty base charge on car renters.

Now that you know the reason behind the price hike, it’s time you learn how to rebate these high prices.

How to Save Yourself From The High Price?

There are various ways of saving yourself from the high prices of car rental companies.

All you have to do is make smart choices and save yourself from shedding extra money.

These are the ways to make some smart choices:

  1. Take inter-city flights and then use public transport like cabs and buses to travel. They’re comfortable and will save you a lot of money.
  2. Use applications like Turo that’ll help you go on shared rides saving you a lot of money.
  3. Even if you want a car rental service, do it off-airport? As mentioned earlier, car rental companies charge higher prices in Airports. Hence, it’s better to rent cars from other cheaper locations.
  4. Look for reward programs or discounts offered by various car-renting companies. These offers will help reduce a chunk of your car rental price.
  5. You can rent cars at lower prices if you’ve served or are currently serving in the army. Thus, use this privilege to rent cars at lower prices.
  6. Several popular car rental companies offer lower prices than others; if you want, you can opt for such brands.
  7. Purchase auto insurance from elsewhere with your credit card, and avoid paying high insurance prices at the car rental desk. Several insurance companies offer various offers for credit card holders, which you can use.

Parting Thoughts

If you’re finding renting expensive, don’t fret by thinking, “Why is car rental so expensive?” instead, find a suitable alternative to cater to your needs. Remember, if there’s a problem, there will be a solution. And if there isn’t any solution, make sure you find one.

Best of Luck!

A Like Post –  How Much Is Enterprise Car Rental Insurance


Why Are Car Rentals So Expensive Right Now?

Several factors are responsible for this phenomenon. The pandemic, increased auto tax rates, and high maintenance fees have led to higher car rental prices.

Is There a Way to Reduce My Car Rental Charges?

You can use discounts and loyalty programs, and army veteran privileges if you have one. Moreover, you can also buy separate car rental insurance through your credit card to cut off the insurance money. And if possible, kindly look for cheaper companies to rent your car.

Is It Better to Buy a Car or Rent it?

Buying a car is better than renting as it doesn’t bind you from taking the car anywhere you want. Moreover, you can get lower-priced auto insurance and enjoy a sense of ownership that a rented car won’t provide.

Do I Must Pay for Insurance While Renting a Car?

You can purchase auto insurance through your credit card for half the price you must pay while renting a car. That way, you don’t have to pay for insurance and also enjoy the insurance benefits.

Category: Industry News


Write By

My name is Alicia Smith, and I am the editor of the well-known informational website for Car rentals, SpinnyWheels.co

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