Upgrades, insurance, fees, pre-paid gas: A rental car company can sneak a lot of unexpected charges into your contract. And those items can add up a lot more quickly than you realize. To arm yourself for your next rental car experience, take a look at what goes on behind the scenes. In this Confession, a rental car agent who soured on the business and left it guides you through the rental car maze and tells you how to save money.
You see a name like Hertz or Avis and you think you are dealing with a reputable company that won't play games. But the whole rental car industry is organized chaos. There are a limited number of cars and sometimes too many drivers. But if you know how it works, you can rent a car for less and avoid the unnecessary charges that can really add up fast. I should know — I worked for a major car rental company in many different locations in the Los Angeles area. Here's my take on the business.
Rental Car Agents Have a Personal Stake in Selling You Upgrades and Insurance
Where I worked, I was paid $12 an hour, plus the promise of promotion. I started at the bottom and they promised to get me promoted to assistant manager, which is when I could begin to share in the revenue. I would make even more if I was a branch manager. So the managers pushed me, because it's money in their pocket.
Selling products above and beyond the car was essential for survival in the business. If someone walks out with a killer deal, takes the cheapest car, takes no "protection," which is their term for insurance, takes none of the other products we offer — it reflects poorly on me and ruins my likelihood of promotion. So you learn: If you want to get ahead, you'd better sell.
Where I worked, they liked to hire athletes and class clowns — real "people" people, life-of-the-party types. I wasn't a natural salesperson, and had major problems with how aggressively they expected us to sell products. We had training seminars where we learned to isolate objections, to tap into people's insecurities. I was told to ask "guided questions" to see what kind of a person I was dealing with. Were you fearful? Were you concerned about safety?
You Probably Don't Need Rental Car Insurance
I'd say that about 60 percent of the people buy the insurance. That's pretty outrageous because only about 10 percent of them need it and we charged $26 a day for full coverage. One day, 30 people came into the rental car office where I worked and we sold all 30 people insurance. We didn't think about how 30 people just got screwed — instead we went out for beers and celebrated.
The insurance we sold was an incredibly high-profit item. Actually, the insurance was provided by a third party so we paid the third-party insurer and the rest was pure profit. We offered the insurance in four components:
- Collision damage waiver, which covers any damage to the vehicle
- Personal accident insurance, which takes care of the people in the car
- Personal effects coverage, which covers your property
- Supplemental liability coverage, which covers third parties in the event of an accident
We had week-long training sessions about how to sell these products and how to add value to them. Often, people wound up signing out of sheer fear. Was there any value to the insurance we sold? Only if you didn't have your own insurance.
The most senseless product we offered was the personal accident insurance, which we bundled with the initial product, the damage waiver, for the vehicle. It was redundant — other pieces of the policy already covered you in the event of an accident. As long as I worked there, no one who bought it ever filed a claim.
Beware of Car-Category Ploys and Expensive Upgrades
We grouped the cars into semi-ambiguous categories: economy car, compact, standard, full-size car, intermediate car. To say an Altima is bigger than a G6 is dubious. It is done that way to maximum freedom for the company, so that if we had a PT Cruiser out on the lot and someone had a full-size reservation, we'd just say, "There's your full-size car!"
We were urged to try to get people to upgrade. My favorite style of selling an upgrade was to keep things vague so they wouldn't know they were agreeing to a major increase in expense. I'd ask: "So, would you like to upgrade for only $5 more a day?" When people isolate numbers, they don't understand them. So if someone has this car for two weeks, it's $5 multiplied by 14 days — that's an expensive upgrade for not too much more vehicle.
You should also know that if the rental car company offers you an upgrade, it might be because they don't have your vehicle class on the lot. Instead of admitting this, they try to sell the upgrade to you first. Say you came into our branch with an economy reservation and all I had was an Impala. I'd say, "Sir, there is an Aveo on its way back in just a few minutes. But it looks like you're in a hurry and I could get you going in this car for only $5 a day more." That's $5 I wouldn't have made otherwise. If you waited it out, I probably would have upgraded you for free.
Keep Your Eye on the Out-the-Door Total
We sold our products by keeping things vague and quoting numbers based on daily rates without referring to the total, which would include fees and extra charges. So people would walk out the door after renting a car, thinking, "Great, I'm only paying $25 a day for the car." But in reality, we had tacked on $5 extra per day for the upgrade, sold them full insurance for $26 a day and got them to pop for a full tank of gas. Now they're paying closer to $55 a day — more than double what they thought they were paying.
When the customer came back, that's when it hit the fan. Our guys would be out in the lane with the little handheld computers, saying, "Welcome back! Your total is..." And that's when you get apprehensive, because you don't even want to say the total. Finally, when you tell the customer, "Your total is going to be $600," you know you're going to get yelled at. I never had a day where we didn't have at least one very unhappy person.
Prepaid Gas Might Save Time but It Costs You Money
Prepaid gas is purely for suckers. Unless you are desperate to save a few seconds, you are wasting money. But you'd be surprised how many people buy it anyway. That's because of the way it is sold; it's never clear what you're paying for. So if you prepaid for a tank of gas and brought it back with even 5 gallons left in the tank — which is pretty typical — then you lost money. You just gave the rental car company the value of 5 gallons of gas. Unless you push the car back onto the lot with an empty tank, you lose money prepaying for gas.
Time Your Reservation To Maximize Savings
I hear a lot of advice about how it is important to make your reservation sooner rather than later. This isn't always true. For example, say there's a football game and the rental car companies anticipate a boom in rentals, so they raise their rates. But then the two teams who make it into the playoffs aren't interesting and the boom never materializes. The prices will drop significantly. The prices could go from $80 online to maybe someone walking in and paying $30 a day. And $30 will more than cover the company's cost of most rental cars.
Complain Calmly and Threaten Them With the Competition
If you don't like something about your rental car or the contract they are offering, the best approach is to be polite but firm. If I had a customer who insisted on being a jerk, I'd give him that Cobalt that smelled bad. It's the equivalent of a waiter spitting in a rude customer's soup back in the kitchen.
The rental car business is so competitive that everybody wants to build brand loyalty. To prove this, if you're not getting what you want, just say, "You know what, I'll call Hertz" or one of the other competitors. The next thing you'll hear is "Sir, we'd be happy to upgrade you for free." Or "I'll take 10 percent off that." Or, "We can give you one free day." Those kinds of freebies are handed out all the time.
Read more articles in the Edmunds Confessions Series.