How to Discover Budget-Friendly Rental Cars Amid Price Surges

Don’t overlook rental cars when budgeting for your trip; they’re becoming a significant—and persistently high—part of vacation costs alongside lodging and flights.

While prices for flights and accommodations are certainly on the rise, rental cars have experienced the steepest increases among travel expenses. Comparing rates from July 2022 to July 2019, hotel costs have risen by 7 percent, airfares by 16 percent, but rental car prices have skyrocketed by an astonishing 48 percent.

What caused rental car prices to soar?

Like many travel expenses, rental car prices plummeted in April and May 2020 as vacations were canceled. However, the trend reversed in early 2021, leading to consistent monthly price hikes that peaked in July 2021.

That summer saw a surge in road trips due to high demand, but a global semiconductor shortage and labor shortages in the tourism sector led to a significant supply crunch. As reported by the U.S. Travel Association, employment in the leisure and hospitality sector is still 7.8 percent lower than pre-pandemic levels, based on Bureau of Labor Statistics data analysis.

While prices have seen a slight decrease from the peak in July 2021, they remain significantly higher than what they were before the pandemic.

Tips for Securing Budget-Friendly Rental Cars

NerdWallet analyzed 360 rental car bookings to uncover the best strategies for finding the most affordable options. Some insights may help you save on your next rental car.

In the analysis, Enterprise typically emerged as the most affordable rental car company, while National tended to be the most expensive. The study also revealed that last-minute rentals are often less expensive than those booked well in advance. Additionally, renting from an off-airport location usually results in savings compared to airport rentals.

Understanding this information can guide you to the most affordable booking options, though sometimes your travel needs may require you to book with a particular company or location. However, these additional tips can still help you save money:

Utilize travel credit cards

Certain travel credit cards provide rental car insurance as a benefit, although this may not cover high-end vehicles or rentals in specific countries. When applicable, this can save you on the additional insurance you might otherwise purchase at the rental desk.

Enroll in rental car loyalty programs

The perks differ depending on your elite status level, with some tiers offering complimentary upgrades and waived fees. You might even qualify for automatic status through a credit card. Even the basic, free tiers often include advantages like priority access.

Book now and pay later at the counter

Many car rental companies allow you to pay at the counter. Paying upon pickup offers two key advantages over upfront payment: First, if you need to cancel your trip, you avoid the hassle of requesting a refund since no payment was made. Second, if prices decrease, you can easily cancel and rebook at a lower rate.

Tips for Saving Money on Road Trips

With soaring gas prices, road trips can be one of the priciest travel options today. Here are some strategies to help reduce your expenses.

Utilize apps to discover affordable gas

Apps like GasBuddy monitor local gas prices, helping you locate the most affordable gas stations along your journey.

Think about using an electric vehicle

By choosing an electric car, you can completely bypass gas expenses. Although you might still incur charging costs, some hotels provide complimentary electric vehicle charging as a perk for guests.

Design a cost-effective travel route

If you're flexible with your destinations, consider traveling through states that offer lower gas prices. According to AAA data, the states with the lowest gas prices during the last week of July were Georgia, South Carolina, and Texas.

Why your trip planning should begin with rental car costs

Before diving into the excitement of your road trip, ensure it fits your budget. With prices significantly higher than they were two years ago, you don’t want any surprises. Delay booking flights or hotels until you’ve compared rental car rates and factored them into your travel budget.