Tuesday, 21 July 2015

Why Do Rental Vehicles Have Mileage Restrictions

Car rental is an absolute necessity whether you plan a trip or want a replacement for your car, which has landed up in the repairs shop. There are numerous benefits of renting a car; however, the most basic one is that it is a cost-effective way to add mobility to your daily life. Most of us have the impression that the only things we have to consider while renting a car are paying the rental amount (whether daily, weekly or monthly), return the car with a full tank, pay the taxes and in some cases buy an insurance, even if you have one in place.

What we don’t consider is the mileage charge.

Most of us have the impression that car rentals with unlimited mileages is standard, but that’s far from true. Not very long ago, it was almost impossible to rent a car without buying a CDW (Collision Damage Waiver, an insurance that car rental companies provided). In most cases, it was not required since the travellers or renters had their own car insurance policies, which covered rental cars or the credit cards they used to hire the car offered them this coverage. Soon the car rental companies understood that this way of making profits were turning sour and they made the insurance optional. Only people who did not have car insurance or those who were not covered by their credit card companies were required to buy insurance from the car rental companies.

The profits of the car rental companies lowered further since the renters look advantage of unlimited mileage. This resulted in lower resale value of the vehicles since the resale value is determined based on condition of the car, mileage, age of car, etc. Consequently the car rental companies were not getting enough return on investments and it was essential for them to find out ways to improve profits. Soon the rental agencies imposed free mileage caps on their rental vehicles. In most cases, they offer free mileage till 100 miles and after that it becomes chargeable. This enabled car rental agencies to recover their losses and improve their return on investments.

Do You Really Pay for Mileage When Renting a Car?

When you hire a car you have to pay more than just car rental. If you are hiring a car for the first time, chances are you might frown at the rental charges and will be busy comparing the rates with different agencies. Once you find an agency that boasts of offering the lowest rental charges, you surely will feel elated, since you have got the best deal ever! But wait, have you considered the taxes, the gas charges, early return policy and most importantly the mileage charges?

These can add a twist in the story and what seemed to be the best deal can turn out to be a rip-off! The worst part – there is no hard and fast rule about the mileage charges. It can vary with each state and it is solely up to the car rental company to decide how much they are willing to charge you. Different locations of the same car rental agency may charge differently. So be very careful when calculating the cumulative amount for your car rental.

Here are a few things you should consider when hiring a car:

Mileage Fees

With each mile the value of a car is depreciated. Whether it is your own car or a rental car, this is true. The resale value of the vehicle gets lowered with each mile it travels. Car rental companies take this into consideration and compensate the depreciating value by charging you for the mileage you drive. The charges vary with individual companies – while some agencies would offer unlimited mileage for a flat fee, other would charge you on a per mile basis. Some would offer a free mileage and charge for miles above that.

Hiring Contract

The rental agencies will make you pay for the mileage whether you pay it separately or the charge is part of the rental fee. A few car rental companies will let you choose an unlimited mileage plan with high rate or charge on a daily basis with lower rates. The plan most suitable for you will depend on your travel requirements.  

Unlimited Fees

If you are not certain of your driving needs, an unlimited plan is suitable for you. Unlimited mileage plans are not the same with all car rental agencies. Some would offer you to drive unlimited miles within the same state while others will allow you to go cross borders. Many companies charge a onetime fee for unlimited mileages. The GPS system provided within the rental car helps the agency to track where the vehicle is being taken. Any suspicious act can attract unpleasant consequences.

Mileage Caps or Allowances

If you are not choosing an unlimited mileage plan, the rental agency will restrict the number of free miles per day or over the entire rental period. You will have to pay extra for each mile over the mileage cap. The vehicles are provided with an intelligent system that gives the rental agency every detail about the miles covered. The mileage cap or allowance differs with each car rental company.

Hiring Luxury Vehicles

If you choose to hire a luxury or specialty vehicle be prepared to pay the premiums rates. The charge per mile also goes up depending upon the type of car. Don’t be surprised if the mileage allowance is diminished and the per-mile charges are hiked for specialty vehicles.

Consider Your Driving Plans

Chalk out your driving plans well ahead of time so that you can choose the mileage plan wisely. Planning to drive cross borders will require you driving long hours and you will cover great distances at once.  But if you want to hire a car just for airport transportation or some sightseeing, you may opt for limited mileage plans.

Compare Costs

As said earlier the charges per mile vary with individual companies so make sure you check the rates with many companies before finalising. In many cases, where the rental company charges high rates for limited mileage plans, choosing an unlimited plan might save you a lot of money. So make sure you make an informed choice.

You got to have a plan so that you don’t end up paying all your savings for the car rental. You can hire a car on the weekends when the car rental fee is less compared to that on weekdays. If you save on the car rental you can use that money for paying for the extra miles. In some cases, hiring for long term proves to be less expensive than hiring on a daily basis. Make sure you talk about the packages the car rental agencies offer. Look for deals and discounts and check whether they are valid on the mileage fees or not.
You can negotiate with the mileage cap and have it extended to some extent, so that if you are not on a tight schedule you can cover the free miles and then wait for the next day. Though it might not be suitable in all cases, you can give it a try. There’s nothing better if you can save money. One other way to save on the extra miles is, take the short route to the destination. Take help from the locals and ask about the shortcuts. Refer to Google maps and find out if there are other routes to your destination.

Choosing Between Limited and Unlimited Rental Car Mileage

Confused about which car rental plan to choose? You’re not alone, many travellers and renters have to go through the same dilemma. With so many factors to take care of – insurance, mileage charges, extra charges, gas charges, etc it is quite natural to get messed up. To able to make the right decision you should know the various plans in details.

When you’re renting a car, the agency will set a maximum mileage limit per day or total mileage for the entire tenure. Once you go across this mark you’ll have to pay for the extra miles. You therefore have two options, either choose for a cap on a daily basis and pay for extra miles or go on for an unlimited mileage plan with a flat fee.

While limited mileage tends to be cheaper than the unlimited plan, there will be situation when the latter will be more cost-effective. Think about travelling cross-borders – you’ll have to drive long distance at a time so the unlimited plan would be apt. Unlimited plan is also suitable for people who are unsure about the distances they have to cover during their trip.

To make things easier for you, here are some tips that will help you to identify which plan suits you the best.
·         How Far Will You Travel: In most cases we focus on the places we’ll be visiting but never take into account the distances to be covered. In order to determine the best plan, this is vital. Calculate the distance you’ll travel throughout the renting period and add some extra miles, just in case you get lost. Now if you see you have to cover long distances, an unlimited plan would be suitable. If the distances are not too much, a limited mileage plan would be fine.

·         Check Whether Unlimited Travel is Available: If you’re renting from a local car rental agency chances are that they won’t allow you to drive their cars out of the borders. In such cases, you’ll not be able to get an unlimited mileage plan. Once you know the travelling needs, go around and check the packages available with the car rental companies.

·         Extra Charges: Limited mileage plans have a flat fee for each day and you pay extra for the extra miles. But in case of unlimited plans you may have to pay extra charges to have peace of mind. So make sure you know about all the charges that would be levied.

·         Check The Fine Prints: It is necessary to go through the contract and read the fine prints, especially if you are taking a limited plan. Check the number of miles you’ll be getting free every day. Also check what amount will be charged for the extra miles. If you fail to check these details before driving away the car you can land in trouble. If you have negotiated the price or the number of free miles, make sure they are included within the contract.

·         Go Along with Your Gut Feeling: Don’t let the car rental companies persuade you to take a particular plan. Evaluate your requirements and rent accordingly. It is evident that car rental agencies are out there to make money, so they’ll offer you the most expensive packages. Consider the limited package and see how much it costs and then see how much you have to pay for the unlimited package for the same trip. Now whichever is lower, go ahead with that package! If you see that both are pretty equal, then it is advised to go along with the unlimited plan, since you don’t have to worry about paying for the extra miles.
It is good to get quotes from various car rental agencies and then compare then to find the most suitable plan. You can also ask for quotes from one agency and show it to the other agencies and negotiate the price.

Avoid Paying Mileage Overages

Many people choose leasing over buying due to the fact that they can drive a new car every few years and leasing on all situations is cheaper than buying. You pay a flat fee for the leasing and the miles you are allowed to drive. The monthly payments would be lesser and you will not have to worry about repair and maintenance issues. That’s all, it’s that easy!

Actually it’s not. Say you rented a car to commute to your office and back home and the round trip takes 10 miles. So you hire a car based on that and then suddenly you get a better job offer which is 20 miles from your house, so now the round trip takes 40 miles. As you know, you will pile on extra miles and you’ll have to pay a hefty amount for that. Not only you, many others like you have faced the same dilemma! The first thing that pops up in your mind is, why do car rental agencies have limited mileages?

Here is the answer: Right from the moment a car is being driven, it starts to depreciate both in condition and in value. The more the car is driven the more will be the loss in value. Car lease payments are based on the expected depreciation during the lease tenure. The lesser the car is driven; the higher will be its lease-end residual value. If the leased car travels more than the allotted miles, the depreciation will be higher and thus you will have to compensate it by paying extra. Lease mileage allowances are measured in annual miles, say for example you lease a car for 12,000 miles per year, so you have a cap of 1,000 miles each month and you must be able to restrict the total lease-end miles to prevent yourself from paying extra. The mileage rates are specified in the lease contract and they cannot be negotiated.
Now if you are already expecting to exceed the annual cap, here are a few obvious options you have:
·         Pay for the extra miles. The amount charged for the extra miles differs with each agency, so be prepared.
·         Park the car and look for other means of transport. If you are expecting to exceed the allotted mileage, park the car once the allotted mileage has exhausted. To avail this option, you should have friends who are willing to drive you everywhere or consider carpooling.
      Start saving so that by the end of the lease you are in a situation to pay the extra money. You have already signed the contract and there’s no way out. You’ll have to stick to the terms and conditions and if you’ve already exceeded the mileage limit be prepared to pay extra.
If you’re not willing to do any of the above, here are a few tips how you can save yourself from paying mileage overages.


There’s enough room for negotiation. When you lease a car from a dealer make sure you discuss the lease terms and ask for higher limits. You may have to pay some extra money but at the end of the lease you’ll be a winner. Though you’ll not get a refund if the total mileage is not covered, you don’t have to pay extra, that’s a big perk. Calculate the miles you’ll be driving on an average per month, multiply it with 12 to get the annual miles and add some extra miles to be safe. Now negotiate with the dealer based on this number.

Budget Miles

Just like you save some money for emergencies, you should save some miles for future. Divide the total allotted miles by 12 to get the monthly allowances. Now make sure you save some miles each month, so that in case you have an emergency you can use this log. The car agency will not check whether you are using up all the monthly allowances, they will look at the mileage at the end of lease. How and when you use is totally up to you.  

Have Other Transportation Choices

If you find that you are piling up extra miles, look out for other transportation methods for a few days to get back on track. Consider carpooling to your office or take a public transport like bus or train. Once you’re back on track and have a few extra miles in hand you can start driving your car again. One effective way of saving miles is by taking turns to drive to the office along with friends. This way you’ll save fuel costs, save miles on lease and the carbon footprint will also be lower. Travelling like this will be cost-effective and environment friendly as well.

Purchase the Car

At the end of your lease term you’ll have an option to buy the car. This can be good since you know the car, the way it has been handled and the amount of depreciation it has already gone through. This can be a smart financial move as well, since you don’t have to pay for the extra miles that you have piled on and you’ll not be charged for excessive wear and tear, if there are any.

When leasing you agree to pay for the depreciation of the vehicle, now if you choose to buy it you have to pay the residual amount (part of the car’s actual price) that you’ve not already paid. So if you had leased a car with 12,000 miles and ended up using 20,000 miles and then you choose to buy the car, you pay the price of a car that has travelled 12,000miles rather than paying for the 20,000miles. So it becomes a bit tricky here. Have all the calculations done and then make the final decision.

Many people think of ending the lease early to avoid paying for the extra miles, but that’s never recommended. Early lease ending might get expensive. Many car rental companies charge a hefty amount as penalty of you end the lease early. Buying the car before the lease ends is also not a good options since the overall cost increases. The leasing company calculates the early buyout price which is higher than the purchase price on lease end. That added with the car loan, sales tax can become a hefty amount. So it’s wise to wait until the lease ends.  

If the situation is opposite, that is you have extra miles in hand at the end of the lease, you won’t get a refund unless you have bought miles upfront. In most cases the lease company refunds the unused miles if it is purchased upfront.

To avoid all the unpleasant situations, it is essential that you keep a track of the miles used and resort to methods that will prevent extra miles from piling up.

Beware of Unlimited Mileages Plans

Unlimited mileages can make you feel great since you can drive as much as you can, go wherever you wish to. Car rental companies advertise rental and leasing plans in such a manner that people get delighted and sign the contracts without going through the contract or reading the fine prints. But before you actually plan road trips and long vacations, make sure the unlimited mileages actually apply. 

Most of the car lease contracts have restrictions on the areas you can drive. If you ever drive outside these areas, you have to face unpleasant consequences. If you have plans to drive cross borders make sure you let the agency know that beforehand. Also before getting overwhelmed with the unlimited mileage plans read the fine prints carefully.

If you fail to stick to the area limitations you may have to face one or combination of the following consequences:
      Reversion of the entire rental or lease plan from the overwhelming ‘unlimited plan’ to a strict flat fee. This can range from 75 cents to $1 per mile, which is huge.
       In case you have a breakdown, you may have to pay a hefty amount which is higher than double the actual cost.
      The extra insurance that you bought while leasing or renting the car might be cancelled. This means extra burden on you if you face mishaps.

Another Big Alert: The GPS Tracking System
In the past when tracking systems were not very advanced, renters took minor risks to deviate from area restrictions. But in today’s world technology has made it possible to track every inch you drive. With the advent of GPS tracking systems, the rental agency is able to track the exact location of their vehicle and there is no way you can stop this.

More and more rental companies are equipping their vehicles with such advanced tracking systems. GPS systems are also used to keep a track of the driver’s driving behaviours. Many car rentals prohibit racing, excessive speed, and other such driving malpractices. Two most common prohibitions imposed by car rental companies are:
      No one other than those signed as ‘additional drivers’ can drive the car. This applies to your spouse, adult children and even a valet who parks your car. So make sure you read the contract well, even though this seems to be a rare problem.
      You may be restricted from driving on paved roads. While you can never anticipate a paved road, the contract restricts you from driving on paved road.

The bottom line is before you rent a car carefully read the contract and the fine prints. If you have special requirements like you have plans to drive in a rural area where you expect paved roads, let the company know beforehand. Any other such requirements should be sorted out before signing the contract. If special modifications are made to the contract, they should be included in the contract with a seal or signature of the car rental staffs.

One Way Car Rentals
When you go ahead with a car rental you’ll be offered with a lot of choices – daily, weekly, monthly packages, mileage options, and choice of returning car with full gas tank or paying upfront and more. To make the travelling smooth and comfortable, it is essential that you choose the right packages so that you don’t have to pay hefty fees.

One way car rental is becoming popular these days with travellers across the world. If you choose a one way car rental you are allowed to pick up the car from one location and return it on another location. This gives you flexibility and you can also get deals and discounts to make your travelling even more soothing. 

Choosing a one way car rental often eases the mileage restrictions so you don’t have to worry about paying extra when you return the vehicle.

Why choose One Way Car Rental?
It may seem weird but being able to drop the car at a different location proves to be beneficial at some situations. One way car rentals would be your perfect choice when:
      When Moving Base: If you are moving to a new city and have plans to drive, a one way rental would be ideal for you. You may want to return the car at your destination without having to drive back to the point from where you picked up the vehicle. One way rentals will also provide you with the necessary transportation facilities. Once everything is in place, you can return the car to the desired location.
      Moving for Business Meetings: Many people have to travel around the world for attending meetings and conferences. A one way rental is ideal for such people, since they are able to pick up a car when they arrive to the city and leave it at the airport site or a location close to the airport before leaving. This is cost-effective as well as the most suitable way of moving around.
       Planning a Vacation on Cruise: if you have plans to take your family on a cruise you can hire a car and drive to the embarkation port and leave the car in the nearest site. If you choose to hire a car throughout the vacation you may have to pay huge parking charges and the chances of wear and tear are high. Instead if you opt for one way travel you don’t have to worry about the wear and tear and it will be less expensive than flying. When you return hire a car and leave it close to your home.

One way rentals are perfect when you want to drop your children to a new college in a new city. So when you wish to have a car for a limited period of time and want to save on your flight expenses consider a one way car rental. This way you won’t even pile up extra miles and you don’t have to pay extra money. One way car rentals prevent you from retracing the steps on your vacation.

Things to Consider When Opting For One Way Car Rentals
Most of the major car rental companies offer one way car rental, though you should check the availability before booking. It is essential that the car rental company has a branch in the location you are willing to drop the car. Some small car rental companies also offer one way rentals but chances are rare since they do not have too many car rental locations. So it is best to get in touch with a number of car rental agencies and see what they have to offer. Before you sign the contract you need to consider the cost of hiring a car for one way car rental.

Cost of One Way Rental
Even though one way car rentals offer many benefits, it may be expensive but less expensive than taking a flight. This way of travelling is expensive than normal car rental because of high base rates and drop-off surcharges. The drop-off surcharge if levied since you leave the car at a different location and the agency has to get the car back to the original point. Even if you find a leasing agency that does not charge you the drop-off surcharge, the base rates would be higher compared to the normal car rental charges. Even though there is not much you can do about the rates, here are some tips that will help you to lower the base rates to some extent.

Shop Around for Choices: it is always recommended to go around take quotes from various car rental agencies. Discuss about travelling needs and ask how much they are willing to negotiate. Check rates on online travel websites which offer car rental services. Some websites will allow you to compare the values side by side. Match, compare and then go for the best deal.

Coupons and Discounts: Many car rental companies offer coupon codes which can be used during booking to save on your one way car rental. Many car rental websites also offer coupon codes and discounts which can help you save a lot on car rentals. Check websites of leading car rental companies and see whether they are offering special discounts.  

Look for Seasonal Discounts: At certain points of the year the car rental companies move their vehicles from one point to another for various reasons. If it so happens that the destination for the fleet of cars and yours is the same, you might be lucky to get good rates for the one way rental. Make sure you call the car rental companies and ask whether they have any such offers in store.

Consider Driveaways: In many cases, a car owner pays a driveaway company to move his vehicle from one point to another. Driveaways are great options for people willing to drive a car at low cost without having to rent a car or piling up miles for their own cars. You need to pay fuel costs after the first tank gets exhausted along with the tolls. To take advantage of such driveaways you should be above 25 years of age and should have a clean driving record.

You also need to deposit some cash which will be refunded when to deliver the car at the final destination. Driveaways are great for people who are flexible with their driving needs and are able to plan last minute. You can search for driveaway companies online or check the yellow pages.

No matter which plan you choose, whether limited, unlimited or one way rental make sure you take care of the other factors also. It’s not just the extra miles, there are various other factors that can make your rental bill go skyrocketing. Many car rentals employees feel guilty about the rip-offs but they get paid for it. Here are some confessions of a former rental salesman about the various ways in which the car rental agencies suck out money from their clients.
     Rates are not fixed: In most cases the rates offered are not fixed. The staffs are trained in a manner that they offer the rates as per the requirements of the clients. If someone is out there to hire a car no matter what the rates are, he would be offered double the actual rates. On the other hand if there are too many cars in-house they may offer you base rates.
           Rental Insurance: Most of us know we don’t need extra rental insurance, but the staffs at the rental agencies would persuade you to take one until you sign the contract. Once you are roped in to add extra coverage the profits for the car rental company doubles.
           Weekend Special Prices: Car rental companies offer special weekend rates since there are too many cars and to maintain the reputation and cash flow, they offer you base rates. Places which attract too many tourists or agencies located close to a busy airport won’t offer you discounts even on weekends since most of their cars would be out.
         Rates Depend On The Staff’s Mood: You will get a great deal if the employee is in a good mood – believe it or not. All negotiations depend on how the employee is feeling when you’re negotiating. The chances of having a good deal with better rates increases if you walk up to the agency to drive the car rather than having you picked up from a point. So if you can save money and have a cheap deal, it is worth taking the pain.

Hiring a car can be very tricky and if you miss out on anything, be assured that you’ll have to spend all your savings paying the rental bills. Right from the duration of renting, to the rental policies and specially the mileage restrictions, all have to be taken care of at a time.

It is true that the type of car rental plan you need depends on your travelling requirements, but being able to plan ahead and take out time to research on various factors that affect the rental plans, can actually help you save a lot of time and money. There are pitfalls at every inch and it is up to you to save yourself from these traps. Next time you plan to go out on a vacation or on a long trip, make sure you get the best car rental deal!

Author Bio: Vineet Agarwal has been long associated with V1 Technologies which offers world class Website Design, SEO & PPC, Domain & Hosting, Mobile AppDevelopment and other similar services. Aside from being a dynamic entrepreneur, Vineet is an avid traveller and loves exploring new countries and culture. Discount car rentals interest him largely and he has been extensively sharing his knowledge with friends and peers about discount car rentals and mistakes to avoid when hiring cars. 

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