How to save money on your holiday car hire

Knowing the tips and tricks to save money on your holiday car hire means you’ll be left with more spending money for your holiday

Parents with children enjoying vacation on beach
(Image credit: Getty images)

Knowing how to save money on your holiday car hire is essential seeing as car hire in Europe has doubled compared with pre-pandemic times. So while you may feel financially savvy for having found a cheap flight (opens in new tab), cheap airport parking (opens in new tab) and taken out the right travel insurance (opens in new tab), you may struggle to do the same when it comes to hiring a car - but there are ways.

Experts say soaring prices are due to rental firms being hit by the global shortage of new motors. It means the cars that hire firms have managed to secure simply cost more. Ernesto Suarez (opens in new tab), chief executive of iCarhireinsurance.com (opens in new tab), explains: “Many rental fleets were depleted during the pandemic as demand dried up, and whilst rental companies are trying to build these back up, there is a worldwide shortage of new cars.”

One week’s car hire in a popular European holiday destination at the end of July costs an average of £675 - double the £339 it cost in 2019. And costs increase significantly in particular destinations: for example, hiring a car in Nice in the first week of August can cost £731, while you’ll pay £784 in Faro and £933 in Geneva. 

And adding ‘extras’ to your car hire, such as adding a second driver can boost the overall cost by hundreds of pounds.

To avoid this, we explain all the ways to save money on your holiday car hire - or at least get the best deal.

Always shop around to save money on your holiday car hire

This is a no-brainer but the starting point when looking to keep your holiday car hire costs low is to shop around. Price comparison sites like Zest (opens in new tab) or Skyscanner (opens in new tab) check deals across the big companies including Hertz (opens in new tab), Sixt (opens in new tab), Europcar (opens in new tab) and Alamo (opens in new tab).

Don’t automatically book the hire car deal offered by your travel firm as these are often far more expensive. 

If you only need a car for the odd day trip, maybe use a local car hire firm. Speak to your hotel or resort as they will often partner with local firms.

Find the booking window sweet spot

Holiday car hire always suggests booking your car as soon as you can, even up to twelve months in advance. This is especially the case if you want to get the lowest price for peak travel periods like the summer holidays and secure the type of car you want.

However, the conundrum here is that you may also be able to find cheaper prices booking nearer the time. Experts say booking seven to 13 days in advance can save around 27% off the price you would pay if you book too far in advance or just turn up on the day.

So what should you do? If you find a provider offering free cancellation - Avis (opens in new tab), Hertz, Zest and Budget (opens in new tab) all offer free cancellation 48 hours before arrival - it could pay to snap up a rate when you can, and then shop around again before you travel, knowing you can cancel your first booking fee for free. Yes, it’s extra effort - but extra effort that will hopefully make you a saving!

With some firms, like Zest for example, you can pay an extra fee to cover cancellation up to the day of booking - you need to weigh up if it’s worth paying that extra and the chances of bagging a better last-minute deal.

Book the smallest car you can

Hiring a small car when you have children and lots of luggage doesn’t sound like a good idea (or fun) but there’s some logic behind booking the smallest car you can ‘comfortably’ fit in. 

Firstly, you may get a free upgrade. Smaller cars tend to be most popular among tourists and go first, so if there’s none left when you go to pick up your hire car at the rental desk, you can get a free upgrade on the next model up.

Secondly, if you plan to drive a lot of miles, a smaller car is more likely to be easier on fuel costs than a larger car with a larger engine.

Beware extras that’ll bump up the price

Extras can bump up your overall costs by hundreds of pounds. For example, an extra driver on the rental agreement will cost an average of £71, a sat-nav will cost £95 while a child car seat will set you back £74. 

Could one person take on all the driving duties to save money? If that’s not appealing, look into special ‘free additional driver’ on insurance policies - this can make a difference to the overall cost. Could you use a GPS on your phone instead of a sat-nav? Google Maps could help you navigate your holiday free-of-charge (although make sure you are aware of any roaming charges (opens in new tab) you might incur by doing this). 

Similarly, would it be cheaper to transport a child car seat rather than rent it? Look into how much rental companies charge and compare it to extra-luggage charges with your airline.

Ignore the ‘hard sell’ when it comes to insurance

You’ll want to avoid the inevitable ‘hard sell’ of excess protection insurance at the counter on the day you pick up the car. 

Ed Sharpe, head of car hire partnerships at TravelSupermarket (opens in new tab), warns: “You may be ripped off at the car rental desk. So pre-purchase your policy from a standalone provider.”

Make sure to buy excess insurance when you book the car or use an independent firm - either will be less expensive than buying it at the counter on the day you pick up the car. For example, a policy with carhireexcess (opens in new tab) or iCarhireinsurance can cost from as little as £2.50 per day for European cover, compared with £20 per day at the car pick-up counter.

Make sure you read the hire car rental agreement

Reading the hire car rental agreement is vital -  it’s the best way to avoid being caught out by any unknowns or little-thought-about costs. For example, double-check for late drop-off charges and where to park if you’re returning the car after the rental office is closed. Park in the wrong place and it can mean hefty car park charges or penalties being added to your bill. 

Be wary of the ‘leave the keys under the mat’ scenario too, in case the car is damaged after you leave. Also check the cancellation details, in case your plans change. Plenty of firms, like Avis and Zest, allow free cancellation up to 48 hours beforehand.

If you don’t turn up on the day to collect your car, there may be a ‘no show’ fee. For example, Hertz charges a ‘no show’ fee of around £80 within Europe - yet its terms and conditions say you may be able to reclaim the pre-paid cost of your rental minus the ‘no show’ fee if you write in within 90 days.

Smiling girl standing in car during road trip

(Image credit: Getty images)

Pay by credit card for your hire car

This is an easy win. Paying for your car hire with a credit card means automatic legal protection under section 75 of Consumer Credit Act. 

It means that if your car hire bill is £100 or more, and you pay for at least £1 of the bill with your credit card, you can ask your credit card company to reimburse you should the hire car company go bust, or there’s a problem with your car.

Choose the right fuel policy

Car hire usually expects you to pick the car up with a full tank and return it with a full tank - this is known as ‘full to full’ fuel policy. It’s usually the cheapest option as you only pay for the petrol you use. 

However, if you don’t fill up the car before you return it, you’ll be charged inflated petrol or diesel costs. With soaring fuel prices, it may not be easy to save much money here but you’re better off looking out for better-priced fuel while you are out and about driving than being at the mercy of eye-wateringly high charges.

Be sure to avoid the more expensive policy which is the ‘full to empty’ policy where you don’t have to refill the tank. It’s more expensive as the rental firm charges service fees on top of the fuel price!

Don’t pay for dents or scratches that weren’t your fault

Always look over the hire car before you jump in to inspect it for any damage and avoid paying for unnecessary repairs or repairs that are not your fault.

It can happen that when you return the car, the rental firm will note a minor scratch, then inform you that the entire bumper or car part needs replacing.

You should get shown round the car first so you can check for damage and make sure any scratches or dents are already noted on the contract. Document the condition of the car with your phone camera before and after you use the car - that way you have complete proof of its condition.

Katie Binns is Staff Writer for The Money Edit (opens in new tab). She spent 10 years at the Sunday Times where she covered news, culture, travel and personal finance. She’s interviewed high-profile individuals such as Spice Girl Mel B, Maria Sharapova, Lord Sugar and Stella Creasy MP to discuss personal issues such as financial abuse, bankruptcy, gambling addiction and debt. She loves helping people feel more confident about their finances and has experience mentoring people on learning to budget, save and invest. Her investigative work on financial abuse has resulted in a number of mortgage and debt prisoners being set free - and nominations for the Best Personal Finance Story of the Year in the Headlinemoney awards in 2021 and 2022. She was awarded Personal Finance Journalist of the Year at the British Bank Awards in 2022. She can be found on Twitter @kt_binns talking about finances, food and swimming.