Why You Should Never Prepay for a Rental Car

If you’re thinking about renting a vehicle for an upcoming trip, one thing you do not want to do is prepay. You have to protect your right to comparison shop.

For money expert Clark Howard, the way he saves money on rental cars is by re-shopping them after he’s booked the best price at the time that offers free cancellation. The reason he does this is because he knows that rental car prices are fluid. It’s easy to pay a premium for a vehicle at one time and then get it much cheaper later on.

Prepaying for a Car Rental? Read This

This strategy is time-tested and works well for Clark — as well as Team Clark. But one way it won’t work is if you prepay for the rental car ahead of time.

A listener to the Clark Howard Podcast got hit by a change fee when they tried to re-shop their car rental after they booked it with Expedia. The issue here most likely is that the customer prepaid.

“I never prepay for a car rental. Never,” Clark says.

Once you prepay for a rental car, it becomes much more difficult to get your money back if you change your mind or find a better deal. Additionally, many car rental companies charge a cancellation fee to get out of your agreement.

How Clark Books and Saves on Car Rentals

Clark’s rental car-booking process is as follows:

• Find affordable rental cars at Priceline, Hotwire or another travel site.
• Book a free cancellation car rental online well in advance of your trip.
• About a week out from the trip, re-shop the car rental on the sites mentioned above.
• If you find a better deal, rebook it and cancel the original booking.

Because Clark initially books rental cars that offer free cancellation, he avoids any fees from the car rental company.

Top Car Rental Company Cancellation Policies

The cancellation policies of the top car rental companies vary depending on the type of vehicle, how you pay, as well as whether you paid directly or through a travel service provider.

 Here are the cancellation policies of a few of the top rental car companies when it comes to direct bookings:

• Expedia says, “A pre-paid Standard car rental in Rule will most likely be non-refundable. We recommend filtering by ‘free cancellation’ to see the most flexible options.”
• Hertz says, “If a prepaid reservation is canceled more than 24 hours before the pickup time, a $100 cancellation fee will be assessed. If the prepaid reservation is canceled within 24 hours before the pickup time, a $200 fee will be assessed.”
• Avis says, “You will incur a $50 processing fee if you choose to cancel a prepaid reservation 24 hours prior to the rental pickup time. If you need to cancel, we will refund the full prepaid amount less a $150 USD processing fee, during the 24 hour period prior to the scheduled pick-up time.”
• Enterprise (which owns National and Alamo) says, “If you cancel your booking more than one day (24 hours) before your specified pick-up time, you will receive a full refund minus a cancellation fee of USD $50.”

Bottom Line

What’s the moral of this story?

Never prepay for a rental car. If you do, you expose yourself to being taken advantage of by the rental car company.

“I would say almost every car rental I’ve ever booked, I’ve re-shopped all of them and almost always I got a lower rate when I re-shop,” Clark says. “I’ve never had a fee for canceling.”