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Car rental rip-offs post COVID

Current prices for rental cars are of the order of $200 per day. Pre-Covid I would have expected to pay no more than about $60 per day.
Now I find that my car insurance company is paying only $40 per day (all inclusive) for the car which they have provided while mine is being repaired.
When I asked about the very high rates I was informed that it is because of the high demand.

This seems like highway robbery!!!

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Welcome to the Community @Indro

That price level has been widely reported in the press, causing some to cancel holidays because even at those prices there were no rentals available at their destination.

Depending on which insurance company you are with, some of them will arrange a vehicle using their corporate contracts at no out of pocket for a prescribed period, and others will only reimburse/cover to a limit, eg up to the $40 you mention for your policy, more common than the former.

It is, and it appears to be. One of many typical reports in recent press.

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Often in Holiday destinations there are peak, shoulder and off peak rates for many things including car rentals. Pick you time in Cairns as an example and in peak it can be $200 a day yet in shoulder and off peak season it is far less. With off peak being as cheap as $25 a day.

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Most of the car rental companies sold off their stock during the early stages of COVID-19 to save costs…not having to pay ongoing costs for a non-income generating assets. In many areas the fleets were halved by these companies to try and survive the travel freeze caused by government Covid-19 controls.

Now that domestic travel is possible, these companies have been trying to replace the fleet sold off about 12 months ago. If you are trying to buy a new car with a specific specification, you would know that there is many months wait for new vehicles. This has created a significant shortfall between available vehicles and demand.

As rental companies are back in full swing, there fixed costs are the same as pre-Covid but spread over smaller number of vehicles. With demand pushing up prices, the spread of fixed costs over a smaller base has exacerbated the price problem.

This would have been outlined in the PDS when taking out cover.

Some insurers offer $40/day allowance, some offer $100/day or more. It is likely the $40 is offered by budget type insurances to save the cost of the premiums. Unfortunately cheaper or restricted insurance cover to save money may come unstuck when a claim is needed against the insurance.

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Hiya Indro and welcome to the Choice Consumer Forum.

I totally agree with you on all of your points about rental car prices. It seems that Dealers have quite sharply increased their Car Rental Prices right across the board to try and make up for their lost income during Covid-19 Lockdowns.
It all sounds very suspicious to me…

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Be careful if you ever prepay a booking with AVIS. A couple of months ago I booked and paid for an AVIS hire car from Hobart Airport for travel mid-July. I cancelled the booking last week and have been hit with a cancellation fee of $82.50. AVIS has had the use of my money $456 for at least 2 months and yet they have charged me a cancellation fee. I hire cars on a regular basis from other companies particularly Thrifty and have never been hit with a cancellation fee even when I have prepaid.
I will never use AVIS again and will encourage all my extended family to do the same.
Cheers
Harry

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I suspect that was in the finer print when you booked, but if you did not expect it, it might have been easy to overlook.

From the AVIS web site:

Is there a cancellation fee?

*For cancellation policy in response to Covid-19, please click here.

At Avis we realise that plans can change so if your reservation has not been pre-paid, generally no cancellation fee will apply.

If you have pre-paid your booking a cancellation fee applies:

  • If you cancel at least 24 hours prior to your scheduled pick-up time, there is a $82.50 (inc. GST) cancellation fee.
  • If you cancel within 24 hours prior to the scheduled pick-up time, there is a $165.00 (inc. GST) cancellation fee.
  • If you fail to cancel your reservation prior to the pick-up time and do not collect the vehicle on the pick-up date, the entire pre-paid amount will be forfeited.

If the value of your reservation is less than the cancellation fee, you will not be charged any further amount and will not be entitled to any refund.

It is mind boggling they charge a fee for a prepaid booking, but not for non-prepaid, noting prepaid usually includes a good discount on the rack rate or pay on the day rates, yet they need to reserve a vehicle for you that might or might not be rented on shorter notice.

If a booking is not prepaid they can ‘welcome’ you to their counter and offer apologies there are no vehicles available, not so easily done once the customer has paid.

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Good points PhilT, I never read the fine print when using websites and like most others I just tick yes to the terms and conditions. My logic would not have prepared me for a cancellation fee this far out from the pick up date and the fact that they had the use of my money. The discount for prepayment was not in any way substantial. Never again.

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And it would still be $456 after 2 months in a zero interest environment. It is most likely they put a pre-authorisation on your card for the total amount, so they knew payment could be guaranteed. This money doesn’t go to AVIS, but available to draw on if needed. This is standard hire car practice.

Even if they didn’t do a pre-authorisarion (which most likely they would, but lets assume they didn’t), they would take credit card details to secure the booking. You still would have been hit with cancellation fees.

Cancellation fees are now common with car hire companies…

and the list goes on. It is now standard practice because of Covid and something to be aware of when booking a vehicle. One should read the cancellation policy and associated fees before committing to a hire contract.

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A suggestion: perhaps you may get a more acceptable response if you air your complaint on their FB page… https://www.facebook.com/AvisAustralia

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In my experience pre-paid bookings have been charged (not just authorised) when or shortly after made, more often than not.

That is because they have reduced their rental fleets, have fewer cars to rent, and even if 100% booked out their revenue is but a fraction of what it was pre-COVID so they try to make some of it up.

The Thrifty site does not provide much detail except ‘cancellation fees may apply’ but under what conditions is more than just light on, to be polite. Hertz is as up front as Avis.

CANCELLATION

If you cancel your reservation within 7 days of the date of this Reservation Confirmation a full refund will be made to you.

If you cancel your reservation after the 7 day period, we will charge a Cancellation Fee of AUD$70 including GST (GST only applicable for Australian domestic rentals) to cover our administration costs. For all bookings to rent overseas we will refund your prepayment, less the Cancellation Fee. For bookings made to rent in Australia, we will refund your prepayment in full and the Cancellation fee will be charged to your preferred method of payment within 14 days from the cancellation date.

NO SHOW/LOST RENTAL

If you fail to cancel your reservation prior to the Pick Up Time and do not collect the vehicle on the Pick Up Date, or if you fail to comply with the Pick Up terms (see below), we will charge a No Show/Lost Rental Fee of AUD $150 including GST (GST only applicable for Australian domestic rentals), which recovers our administration costs and compensates us for our inability to rent the vehicle when it was reserved for your use. For all bookings to rent overseas we will refund your prepayment, less the No Show Fee. For bookings made to rent in Australia, we will refund your prepayment in full and the No Show Fee will be charged to your preferred method of payment within 14 days from pick up/no show date.

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As the discussion related to your experience has expanded to include other car rental firms, I have moved your post to an existing relevant thread.

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Looks like some people are trying do-it-yourself.

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In Tassie it is encouraged…

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Hopefully, Car Next Door is excluded unless Tassie wants to risk their tourism reputation being thrashed.