Driving A Holiday Bargain

Renting a car for summer holidays can be an expensive proposition, but there are strategies consumers can adopt to hold down the price of the vehicle as well as the costs for fuel and insurance.

It often pays to shop around, whether the family is using a travel agent or booking via the Internet or over the phone, said Nancy Dunnan, editor of TravelSmartNewsletter.com.

Sometimes packages including both air tickets and car reservations are available through major travel sites such as www.travelocity.com, www.orbitz.com or www.expedia.com. Or travel agents may have access to discounted car rental deals.

But consumers always should check directly with car rental companies to see if they're getting the best estimate, Dunnan said.

"If you ask a car rental agent 'Is this your best price?' the agent sometimes can come up with a cheaper price for you," she said.

And, she added, most companies offer membership discounts.

Among the affiliations that car renters should mention are memberships in AAA, the travel and leisure group, or AARP, which caters to individuals 50 and older. There also may be discounts for government employees or people in the military.

Cars often are more expensive to rent from an agency located at an airport than from one in town, in part because of excise taxes charged by county and municipal governments on airport properties.

But it's not always practical to get to the in-town site, she warned.

"I'd look at this option only if they have free shuttle service," she said. "If you have to pay for a taxi or spend a lot of time, it probably isn't worth it."

According to a recent American Express Survey, car rentals averaged $69 a day in 2006, up 4.5 percent from 2005.

Dunnan noted that it's often cheaper to rent by the week rather than for several days, especially if it's over a weekend.

Mike Pina, a spokesman for AAA, noted that the travel organization has had a 28-year partnership with the Hertz car rental company that provides special discounts and perks to its members. AAA members also can get discounts from other car rental agencies, he said.

Although there has been some consolidation in the car rental industry that has reduced competition, Pina believes the more important trend affecting consumers is that financially troubled U.S. automakers are making fewer low-profit, bulk sales to rental companies. That has forced the car rental companies to compete in the open market for vehicles, raising their costs to purchase the popular mid-size cars.

Also, hybrids and other fuel-efficient cars are costlier for the agencies to lease or buy, he added.

"As a result, we've seen prices go up in these categories" more than in others, Pina said.

So consumers who can't get mid-size cars but want leg room may have to "buy up" to the luxury class, he said. On the other hand, consumers can get a relatively better deal on small cars – and likely enjoy lower gas bills - "if they're willing to forgo the leg room," he said.

The size of the car obviously can matter when it comes to things like fuel costs, with bigger vehicles often logging fewer miles per gallon.

And consumers need to decide whether they're going to buy their gasoline on the open market or from the car rental agency. In most cases, the car comes filled with gas, and the consumer either returns it filled or pays the agency - generally at a premium – to fill it up.

"You definitely do better buying your own gas," Pina said. "The only time it makes sense to return the vehicle with an empty tank is if you risk missing your flight or it's a huge inconvenience to buy gas yourself."

When it comes to insuring the car, both Pina and Dunnan point out that consumers have several options.

Most insurance policies that car owners buy provide full coverage when they rent cars, Pina said. But he advises that consumers check their policies "or call their agents" to make sure.

Dunnan said that consumers also can get some insurance coverage - especially for collision damage - if they use their credit cards to pay for the car rental booking.

But credit card companies these days issue a variety of cards - for example, platinum, gold and standard - and not all of them may carry the same benefits, she noted.

"If you're not sure about your particular card, call the card company's 800 number and ask, 'What is my insurance coverage when I rent a car,"' Dunnan said.

She pointed out that some of the cards exclude insurance coverage of certain rental vehicles, such as large vans, expensive brands such as Mercedes or sports cars.