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A car rental or car hire agency is a company that rents automobiles for short periods of time (generally ranging from a few hours to a few weeks) for a fee. It is an elaborate form of a rental shop, often organized with numerous local branch (which allow a user to return a vehicle to a different location), and primarily located near airports or busy city areas and often complemented by a website allowing online reservations.

Car rental agencies primarily serve people who have a car that is temporarily out of reach or out of service, for example travellers who are out of town or owners of damaged or destroyed vehicles who are awaiting repair or insurance compensation. Because of the variety of sizes of their vehicles, car rental agencies may also serve the self-moving industry needs, by renting vans or trucks, and in certain markets other types of vehicles such as motorcycles or scooters may also be offered.

Alongside the basic rental of a vehicle, car rental agencies typically also offer extra products such as insurance, global positioning satellite (GPS) navigation systems, entertainment systems, and even such things as mobile phones.

Business models

Car rental companies operate by purchasing or leasing a number of fleet vehicles and renting them to their customers for a fee. Rental fleets can be structured in several ways – they can be owned outright (these are known as ‘risk vehicles’ because the car rental operator is taking a risk on how much the vehicle will be sold for when it is removed from service), they can be leased, or they can be owned under a guaranteed buy-back program arranged directly through a manufacturer or manufacturer’s financial arm (these are known as ‘repurchase vehicles’ because the manufacturer outlines the exact price of original sale and of repurchase at the end of a defined term).

At the end of a rental vehicle's useful life, rental companies will often sell them into the used car market to dealers across the country via several methods, including direct-to-dealer and via specialized wholesale auctions companies (such as Manheim Auctions in the USA). Dealers generally will go through an inspection of the vehicles to make sure they comply with the safety standards of that dealership and then sell the car to the public. Many of these are known as program vehicles in the representation by the selling dealer.

Rental conditions

Car rentals are subject to many conditions which vary from one brand to another. The vehicle must be returned in a good condition and must not exceed a maximum driven distance, otherwise extra fees may be incurred. Additionally, some companies set a minimum age for the vehicle driver, which in some cases is as high as 25, even in countries where the minimum legal age to hold a driver's license is much lower. In all cases a valid, current driver's license is required in order to rent a vehicle.

Recent conditions have utilized GPS technology to limit maximum speeds or driving to specific regions. Renewable fuel vehicles are available in certain areas.

The vast majority of car rental companies require the use of a credit card to make it easier for them to trace a person should they attempt to steal a car, or to charge additional fees at will if a defect is later found with the car.

Insurance / Waivers

It is typical, when renting a car, to be offered various forms of supplemental insurance and/or waivers as an optional extra at additional cost. There are several types of coverage:

  • Loss Damage Waiver (LDW) - sometimes also referred to as Collision Damage Waiver (CDW) - covers the costs of damage to a vehicle in the event of an accident. In some countries the purchase of LDW covers all costs after an "excess" fee has been paid (e.g. all costs are covered after the first $500). Often a "Super" insurance product may be available which makes this excess amount zero. Note that LDW/CDW coverage is not insurance and does not offer the same coverage as a damage insurance policy .
  • Supplemental Liability Insurance (SLI) - a product often sold in the USA which provides coverage in the event of an accident causing bodily injury or property damage to someone other than the renter and passengers.
  • Personal Accident Insurance (PAI)- covers medical costs and accidental death for the renter and passengers in the event of an accident during the rental.
  • Personal Effects Coverage (PEC) - insures against risk of loss or damage to the personal belongings of the renter (and sometimes the members of the renter's family while traveling with the renter) during the period of the rental.
  • Excess Insurance - When a car is hired in the UKmarker, Irelandmarker, Europe, Africa, New Zealandmarker, Australia, and most of the Middle and Far East, CDW, Theft and Third Party Liability are generally included in the car rental price. There is almost always an Excess (also referred to as Super CDW, Non Waiver or Deductible) on the CDW and Theft portions of the rental. The Excess can range from about £500 to £1,600 and is the portion of the loss that that the renter is responsible for, regardless of which supplemental insurance / waiver products have been purchased. Excess is just starting to be charged in the USAmarker, it is sometimes charged in Canadamarker, and it is generally charged in the Caribbeanmarker, Central and South America. Excess insurance is a secondary insurance (only in place with the CDW and SLI cover) and provides coverage to the renter for the excess amount.


In the USA, the sale of these supplemental insurance/waiver products may be regulated by each states' insurance departments and a special limited license may be required by the rental company in order to sell them. The specific coverage offered can differ substantially depending on the State or Country in which the car is rented.

Car classification

To allow for a uniform classification and easy comparison of car rental prices, the Association of Car Rental Industry Systems and Standards (ACRISS) has developed the ACRISS Car Classification Code coding system. This describes the size, door count, gearbox type (manual/automatic) and whether the car is air-conditioned, encoded into four letters.

See also



References

  1. http://www.autorentalnews.com/t_inside.cfm?action=article_pick&storyID=1164
  2. Car Rental Agency Is Ordered to Stop Charging Speeders Fines - New York Times
  3. AmeriScan: May 1, 2006
  4. http://www.alamo.com/itemDetails.do?HelpItemID=CDW
  5. http://www.insurance4carhire.com/FAQs.asp?subRefID=0&pageID=79&langID=1&refID=100&curID=1
  6. http://www.autorentalnews.com/t_inside.cfm?action=article_pick&storyid=567&pgNum=1



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