This article reprinted with permission from NerdWallet.
When budgeting for your trip, don’t assume that accommodation and airfare will be your biggest expense. Now more than ever, car rentals are shaping up to be one of the biggest — and stubbornly high — aspects of people’s vacation budgets.
While airfares and overnight stays are certainly near their all-time highs, car rentals are among the biggest price increases of all travel expenses. When comparing prices for July 2022 vs. July 2019 (the last normal summer before the pandemic), hotel prices rose 7%, according to the latest set of consumer price index data released in August 2022. Airline ticket prices rose 16%. But rental cars have grown by as much as 48%.
When did rental car prices get so high?
Like most travel costs, rental car prices fell sharply in April and May 2020 as people started canceling vacations to stay at home. But things started to turn around in early 2021, when prices began to increase each month, reaching an all-time high in July 2021.
Travel has been particularly hot this summer (hence the high demand), but other factors — including a global semiconductor shortage and labor shortages in the travel industry — have contributed to low supply. In fact, employment in the leisure and hospitality sector remains 7.8 percent below pre-pandemic levels, according to an analysis of Bureau of Labor Statistics data by the American Travel Association.
Prices are down slightly from the July 2021 record, but are still well above pre-pandemic prices.
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How to find affordable rental cars
NerdWallet conducted 360 car rental booking analysis to better understand the cheapest ways to rent. Some of the findings may help you save on your next car rental. Among the car rental companies in the analysis, Enterprise is generally the cheapest, while National is the most expensive. The analysis also found that last-minute rentals tend to be cheaper than booking months in advance. And you’ll almost always save by booking at an off-site car rental location instead of at the airport.
This knowledge can help you better understand which are the cheapest places to book, but sometimes booking from a specific location or company may be a non-negotiable with the nature of your trip. These other tricks can still help you save:
Use credit cards for travel: Some travel credit cards offer rental car insurance as part of their benefits, although it may exclude certain types of expensive cars or rentals in some countries. However, when applicable, it can save you money on the additional insurance you might otherwise have signed up for over the counter.
Join car rental loyalty programs: Benefits vary depending on your elite status level, although some levels may include free upgrades and waived fees. You may even get automatic status through a credit card. Yet even entry-level levels with a free join can include perks like priority lines.
Book now and pay at the counter: Many car rental companies allow you to pay at the counter. Paying on pickup has two main advantages over paying in advance: First, if you have to cancel your trip, you take the headache out of trying to get a refund because you won’t have staked any money anyway. Second, if prices drop, you can always cancel and rebook at a lower price.
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How to save money on travel
Add in high gas prices and car trips can be one of the most expensive ways to travel these days. Here are some ways to cut costs.
Use apps to find cheap gas: Apps like GasBuddy track local gas prices and can help you find the cheapest gas stations along your route.
Consider an electric vehicle: With an electric car, you will avoid paying for gas entirely. Although you may have to pay to charge it, some hotels offer free electric vehicle charging as a guest perk.
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Plan a budget itinerary: If you’re open to location, consider driving through states with lower gas prices. In the last week of July, the three states with the lowest gas prices were Georgia, South Carolina and Texas, according to AAA data.
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Why planning a trip should start with car rental prices
Before you get too caught up in the excitement of a trip, make sure you can afford it. With prices much higher than they were two years ago, you don’t want to be caught off guard. Wait to book your flights or hotels until you compare rental car prices and factor them into your travel budget.
Sally French writes for NerdWallet. Email: sfrench@nerdwallet.com. Twitter: @SAFmedia.
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