When budgeting for travel, don’t assume that lodging and airfare will be your biggest expense. Now, rental cars are shaping up to be one of the biggest — and stubbornly high — aspects of people’s vacation budgets.
While airfare and lodging prices are certainly near all-time highs, rental cars are among the biggest price increases of all travel spending. Comparing July 2022 prices to July 2019 (the last normal summer before the pandemic), hotel prices rose 7%, according to the latest Consumer Price Index data set released in August. of 2022. Airfares rose 16%. But rental cars have risen 48%.
Like most travel costs, rental car prices fell sharply in April and May 2020 as people put vacations on hold to stay home. But things started to change in early 2021 when prices began to rise each month, reaching a record high set in July 2021.
Road trips were especially hot that summer (hence high demand), but other factors, including a global shortage of semiconductors and labor shortages in the tourism industry, contributed to the low supply. In fact, employment in the leisure and hospitality sector remains 7.8% below pre-pandemic levels, according to an analysis of data from the US Travel Association’s Bureau of Labor Statistics. USA
Prices are down slightly from the July 2021 record, but are still well above pre-pandemic prices.
NerdWallet conducted an analysis of 360 rental car reservations to better understand the cheapest ways to rent. Some of the findings may help you save on your next rental car.
Among the car rental companies in the analysis, Enterprise tends to be the cheapest, while National is the most expensive. The analysis also found that last-minute rentals are often cheaper than those booked months in advance. And you’ll almost always save by booking at an off-site car rental location instead of at the airport.
That knowledge can help you better understand the cheapest places to book, but sometimes booking from a specific location or company may be non-negotiable with the nature of your trip. These other tricks can still help you save:
Use travel credit cards: Some travel credit cards offer rental car insurance as part of their benefits, though they may exclude certain types of expensive cars or rentals in some countries. However, when applicable, it can save you money on additional insurance that you might otherwise have purchased over the counter.
Join Car Rental Loyalty Programs: Benefits vary based on your elite status level, though some levels may include free upgrades and waived fees. You can even get automatic status through a credit card. However, even free entry levels can include perks like priority lanes.
Book now and pay at the counter: Many car rental companies give you the option to pay at the counter. Paying at pickup has two main benefits compared to paying in advance: first, if you need to cancel your trip, it removes the headache of trying to get a refund, since you won’t have put any money down anyway. Second, if rates go down, you can always cancel and rebook at a lower rate.
Add high gas prices and road 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 gasoline altogether. While you may still have to pay to charge, some hotels offer free electric vehicle charging as a perk for guests.
Plan an economical route: If you’re open-minded to location, consider driving through states with lower gas prices. During the last week of July, the three states with the lowest gas prices were Georgia, South Carolina and Texas, according to AAA data.
Before you get too caught up in the thrill of a road 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’ve compared rental car prices and included them in your travel budget.
This article was provided to The Associated Press by the personal finance website NerdWallet. Sally French is a writer at NerdWallet.
Methodology: NerdWallet conducted a 360 rental car price analysis (including taxes and fees) to better understand rental car price trends. The analysis looked at the price of a one-week rental at eight major car rental companies based on the company’s lowest-priced available car (typically a small sedan). Data was collected for 20 regions and covered both the cost of renting from an airport location and from the same company’s nearby city center counterparts.