The Fee Detective is back but that raises one question: If AutoSlash offers guaranteed rates, why is there a need for a Fee Detective? Well, there are three different types of fees one encounters on rental cars, two of which are included in the guaranteed rates we provide.
Types of Taxes and Fees
AutoSlash guaranteed rates always include the vehicle and the required taxes and fees. The fees may be:
- Required by the government (taxes, whether called a tax, surcharge, fee or any other term), or
- Required by the rental car firm itself (designed solely to show lower base rates).
Governments and rental car firms are creative in their fee generation. In order to help renters avoid the sting of these taxes and fees, we send out guaranteed rates including these fees, which can be far more than the cost of the vehicle being rented!
How a $17 rental becomes a $55 rental (before "sales tax") after various fees.
The Government's Made-Up Fees (Taxes by Any Name)
Included in the guaranteed AutoSlash rate are the legally mandated taxes and fees on the rental, which tend to be much higher at airports than at neighborhood locations. States and cities are happier when theoretically taxing visitors (arriving at airports) than when taxing local citizens (picking up at neighborhood locations).
The major rental car firms (except the fee-loving Payless) have formed the trade organization Curb Automobile Rental Taxes (CART), claiming that the mandatory rental car taxes and fees as currently contrived are "unconstitutional, discriminatory, regressive, and just bad policy." Those are strong words and we agree that rental car taxes and fees imposed by governments are often just poor forms of revenue-seeking policy.
About These Government Fees …
Many of the required taxes and fees can seem fake when a customer looks at a rental car contract. And they are indeed made up by governments and airport authorities seeking sources of revenue. We routinely find rates so low that the required taxes and fees can exceed the cost of the car being rented.
Renting a car at an airport requires that a customer pay for the privilege of getting the car at the airport (Airport Concession Recovery Fee), the rental car facility itself (Customer Facility Charge), the registration of the vehicles (Vehicle Licensing Fee), and often even the electricity (Energy Surcharge).
The Vehicle Licensing Fee (VLF) collaboration (between tax authorities and rental car companies) is viewed with great skepticism by all of those with rental car experience at AutoSlash. All cars on the road have to be licensed.
Around the country, many states and cities have realized that airport rental car customers (theoretically "visitors") can be used to pay for new stadiums or convention centers without directly raising taxes on the local taxpayers who want the stadiums. The trade group CART complains that 33 professional sports stadiums have been funded through various taxes/fees added to vehicle rentals.
Elsewhere around the country, tax authorities have decided to foist state-by-state charges on car renters. Travelers in New Jersey pay a $5 per day Domestic Security Fee to the state; that fee even applies to car-sharing firms like ZipCar. Alabama renters are subjected to an additional surcharge from the state government with the vague title of ... Additional Surcharge.*
* "Additional Surcharge" is a real tax. We can only imagine the discussions on the day the revenue bill was written.
The Rental Car Firm's Made-Up Fees
Also included in the AutoSlash guaranteed rate are mandatory fees created by the individual rental car firms. As these fees were created by the rental car companies themselves (rather than government), CART has no opposition to these fees. We also oppose these fees, as they frequently confuse consumers.
Are Fees Really Pervasive in the Rental Car Industry
How does fee revenue play out for rental car firms? AvisBudget Group (owner of Avis, Budget, and Payless) had $4.124 billion in total revenue for the first six months of 2016. Of the total revenue, $2.901 billion is labeled as derived from "Vehicle Rental" while $1.223 billion is labeled as "Other".
Let that sink in - a rental car company owned by shareholders declares to those same shareholders that 70% of the revenue comes from renting cars while 30% comes from "Other".
AvisBudget Group may have valid reason for being vague with "Other", as a September 2016 class action alleges the Payless subsidiary was intentionally designed to disproportionately collect fees.
Included Fees from the Rental Car Companies
Where allowed, rental car companies - while railing against the government's taxes and fees - add their own fees to rentals. A frequently absurd example of this practice is Sixt, which reserves the rights to charge fees such as:
Hotel Concession Recovery Fee, Courtesy Shuttle Recovery, Vehicle Upkeep Recovery, Facility Recovery, Counter Processing Recovery, and AVI Recovery Charge.
Right now, you might have questions about:
- A mandatory fee for courtesy shuttles? Welcome to Tampa!
- A fee related to maintaining and cleaning rental cars? Welcome to Phoenix!
- A charge related to the staff at the rental car counter? Welcome to Miami!
- A charge for AVI? Welcome to Las Vegas! And what's AVI …
Think That's Pretty Bad? Wait - There's More!
Drivers should expect to be charged by the rental car companies for any parking/speeding tickets accrued - in fact, the rental car companies then tack on service fees. Yet in some areas, every driver (even the most responsible) gets stuck paying a "parking ticket surcharge"!
Traveling in Ireland? Although your rental car company requires a credit card in order to pick up the car, you might be charged a fee for using the credit card to pay for your rental!
And the worst part? The fees created by the rental car companies are then subjected to the state and local taxes opposed by CART!
We always provide total rates (including the myriad taxes and fees) so renters don't get stuck with "low rates" that end up costing more than competitor rates.
Not Included in the AutoSlash Rate
The fees not included in our guaranteed rates are:
- Additional/optional products/services added by renters to the rental agreement,
- Picking up and/or returning earlier or later than the originally reserved time(s)
- Vehicle changes/upgrades
- Insurance coverage that can be avoided with sufficient documentation of coverage or mandatory requirements as stated in the published terms and conditions for the rental.
Important note: Renters in many countries outside North America - including Ireland, Israel, and Mexico - often will encounter insurance requirements that can be waived if (and only if) several documentation requirements can be met. In these countries (and others), even if you can provide sufficient proof of coverage, this may result in a surcharge. This surcharge may take the form of an administrative fee or even a different mandatory coverage product (often third-party liability) that can be almost as expensive as just buying the full combined coverage from the rental company. Ireland and Israel are also frequently excluded from rental car coverage provided by credit card companies. Without following the "Rules" of the rental as laid out in the terms and conditions to the letter, the car rental firm is unlikely to rent without tacking on extra fees for insurance coverage. Again, it's important to review the terms and conditions for your rental before you leave for your trip to make sure there are no surprises.
In future Fee Detective articles, we'll demonstrate how these add-on products and services are almost pure profit for the rental car company. The helpful rental car counter agents looking out for your best interest? Those staff members are partially paid on commission.
Fees, facility charges, and taxes got you confused and/or down? The Fee Detective can explain. Send your query to firstname.lastname@example.org and we'll feature your question in an upcoming post.