FTC FACTS for Consumers

FOR THE CONSUMER 1-877-FTC-HELP

ftc.gov FEDERAL TRADE COMMISSION

Renting a Car

R enting a car can be confusing and expensive if you don’t understand industry terms and how fees are calculated. If you have a poor driving 

record, renting a car may be next to impossible. The Federal Trade Commission 

(FTC) prepared this brochure to outline some points to consider and questions to ask 

when you reserve a rental car.

Choosing a Rental Car Company

Before you reserve a car, think about the size you want or need and how much 

you’re willing to spend. This will help you avoid making a hasty or expensive 

decision that you may regret later. At the same time, be aware that vehicle 

classification systems vary. The terms “compact,” “mid-size,” and “luxury” 

sometimes differ among companies.

Call several rental car companies for price estimates, or check rates through your 

travel agent. Ask about specials geared to the length of time you need the vehicle. 

Many companies offer weekly or weekend deals. If your plans are flexible, you 

may be able to save money by renting a car when price breaks are available. But 

be sure to ask about restrictions on special offers, including blackout dates when an 

advertised price may not be available.
Facts for Consumers 

Ask if the rental 

car company 

checks the 

driving records 

of potential customers. 

Many companies now 

check driving records when 

customers arrive at the counter. 

Some reject customers whose 

driving records don’t meet company 

standards. Even if you have a confirmed 

reservation, you may be disqualified from 

renting a car for moving violations within 

the last few years; seat belt law violations; 

accidents, regardless of fault; convictions 

for Driving While Intoxicated (DWI), 

Driving Under the Influence (DUI), 

reckless driving, or leaving the scene of 

an accident; or driving with an invalid, 

suspended or revoked license. Ask your 

travel agent or the rental car company in 

advance whether your driving record will 

be checked.

Ask if there may be charges that could 

increase an advertised base rate, such as 

Collision Damage Waiver (CDW) fees 

(in states that allow them); a deposit or 

refundable charge; airport surcharges and 

drop-off fees; fuel charges; mileage fees; 

taxes; additional-driver fees; underagedriver fees; out-of-state charges; and 

equipment-rental fees (for items such as 

ski racks and car seats). These charges are 

defined below.

Understanding the Terms

and Charges

Ask about charges before you sign your 

rental agreement. The information may 

help you save money and avoid disputes 

when the time comes to pay your bill.

Collision Damage Waiver (CDW), in 

states that allow it, is an optional charge 

of $9 to $13 a day. Rental car agents may 

urge you to buy this option. Although 

they call it “collision damage” coverage, 

it’s not technically collision insurance. 

Rather, it is a “guarantee” that the rental 

company will pay for damages to your 

rented car. By declining the waiver, you 

accept responsibility for any damages. 

However, under CDW, the company will 

not pay for bodily injuries or damages to 

your personal property. If you do not buy 

CDW coverage or are not covered by your 

personal auto insurance policy, you could 

be liable for the full value of the car. Some 

rental companies may hold you liable only 

for the first $1,000 or $2,000.

Some CDWs exclude coverage under 

certain circumstances. For example, 

coverage may be revoked if you damage 

the car when driving it in a negligent 

manner, on unpaved roads, or out of the 

state in which you rented the vehicle. 

Some companies void their CDW coverage 

if a driver drinks alcohol or if a nonauthorized driver operates the car.

The coverage offered by rental car 

companies may duplicate insurance you 

have through your auto and homeowner’s 

policies. Coverage under your medical 
Facts for Consumers

plan would offer protection that CDW 

coverage lacks. Read your insurance 

policies and medical plan for specifics. 

If you’re not sure about the coverage, 

call your insurers. If you’re traveling 

on business, your employer may have 

insurance that covers you. Also, some 

credit card companies and motor clubs 

provide members with free rental 

protection when you use their cards to pay 

for rentals.

In addition to CDW coverage, a rental car 

company also may offer:

• Personal Accident Insurance (PAI). 

At a daily cost of $1.50 to $4, it 

pays a death benefit and a portion of 

your medical expenses if you’re in an 

accident.

• Personal Effects Coverage (PEC) or 

Personal Effects Protection (PEP). At an average daily cost of $1.25, 

it safeguards your luggage against 

damage. If your homeowner’s policy 

covers your luggage and other 

belongings while you travel, you may 

not need this protection.

A refundable charge may be required 

when you pick up your rental car. The 

charge varies, but may be hundreds of 

dollars. Most rental companies make 

the charge to your credit card but do 

not process the amount unless you do 

not return the car as specified in your 

rental contract. Until you return the car, 

however, your spending limit on your 

credit card may be reduced by the amount 

of the deposit. This may be important if 

you plan to charge other items to your 

credit card and are near your credit limit. 

If you do not have a major credit card, 

or you do not want to charge the deposit, 

companies may ask for the deposit in cash.

Airport surcharges and drop-off fees can 

increase the base rental rate considerably. 

Surcharges apply when airport authorities 

impose fees for airport use even when 

rental car companies shuttle you to an offairport site. Drop-off fees refer to charges 

that some companies impose to allow you 

to drop off the car at a different location 

from the pick-up point.

A fuel charge is the amount many 

rental car companies add to your bill for 

gasoline. Some companies give you a 

half-tank at a charge of $10 to $15 and 

tell you to return the car empty; others fill 

the tank and charge for the amount of gas 

you use. Companies that do not charge for 

the initial tank may ask you to return the 

car with a full tank. If you don’t, you’ll 

be charged the rental company’s price for 

gasoline. It’s often much higher than a 

local station.

Mileage fees usually are assessed on a 

cents-per-mile basis or as a flat fee when 

you exceed the allotted free mileage cap. 

Knowing approximately how far you will 

drive will allow you to select the 

company that offers the most 

favorable mileage terms.

Taxes are levied by 

states and some 

municipalities. 

You may be 

able to avoid the 

higher tax rate of 
Facts for Consumers

1-877-FTC-HELP FOR THE CONSUMER

FEDERAL TRADE COMMISSION ftc.gov

February 2003

Federal Trade Commission

Bureau of Consumer Protection

Division of Consumer and Business Education

an urban pick-up site if you pick up your 

rental car at a suburban location.

Additional-driver fees and underagedriver fees are costs a company assesses 

when you share the driving with another 

person or when a driver is under a certain 

age (often 25).

Out-of-state charges are assessed when 

you drive the car out of the state in which 

it was rented.

Equipment-rental fees are imposed when 

you order extras such as ski racks and car 

seats. If these items are important to you, 

make sure you reserve them in advance.

For More Information

The American Society of Travel Agents 

(ASTA) offers car rental tips on its website 

at www.astanet.com/travel/cartips.asp.

The FTC works for the consumer to 

prevent fraudulent, deceptive, and unfair 

business practices in the marketplace and 

to provide information to help consumers 

spot, stop, and avoid them. To file a 

complaint or to get free information on 

consumer issues, visit ftc.gov or call tollfree, 1-877-FTC-HELP (1-877-382-4357); 

TTY: 1-866-653-4261. The FTC enters 

Internet, telemarketing, identity theft, 

and other fraud-related complaints into 

Consumer Sentinel, a secure, online 

database available to hundreds of civil and 

criminal law enforcement agencies in the 

U.S. and abroad.

Produced in cooperation with the American Society of Travel Agents