Hidden Fees Add Up in Car Rentals

QUESTION: I rented a car last week for the first time in over 10 years and was very surprised to learn that car companies now charge by the mile in addition to their advertised flat fee. Anyway, that is the story Hertz gave me. Is it true that this is now an accepted practice or did I get taken?--B. G.

ANSWER: Most of the big national car rental companies now offer 75 or 100 “free miles” for each day the car is rented and then charge by the mile if you drive farther. The usual extra-mileage charge: between 30 cents and 35 cents depending on the car rental company and the location. Hertz, for example, charges 35 cents for every mile over the first 100 driven in New York--generally the city with the highest car rental rates--but only 30 cents per mile over the first 100 in Orlando, Fla., currently the U.S. city with the lowest rates for car rentals.

This is not to say that unlimited mileage is completely a thing of the past. Smaller companies lacking the name identification of a Hertz, Avis or Budget almost always offer customers unlimited mileage. And even the major companies occasionally resurrect their more generous deals of old--as promotional devices or as business generators in especially competitive cities.

If you were in the dark about the new mileage charges, you also might be unaware of a bevy of other fees some car rental companies charge--or try to charge. The costliest, and most confusing, is a charge for insurance. This so-called “collision damage waiver” costs anywhere from $3 to $10 per day--that’s a whopping $1,080 to $3,600 per year when you annualize the cost--and exempts you from paying repair expenses if the car is damaged.

It is a lucrative business for the car rental companies, so they don’t like to disclose that most drivers are already covered in the event of such accidents by their own car insurance policies or by those taken out by their employer if the car is rented for company business. Instead, they are apt to argue that they handle accident claims quicker than your own insurer will and that your insurance rates will rise if you have an accident in a rental car and didn’t pay extra for insurance.

Also, be on the lookout for unexpected fees some smaller car rental firms charge to offset their lower flat rates. Some charge a few extra dollars if there is a second driver, for example, and others will charge you for a tank of gasoline--even if you only use a gallon of it.

Q: I am a few years away from retirement and I’m scared about where the money will come from. I put some money into an IRA while I could and the company I work for has a pretty good retirement plan. But I can’t believe that will be enough to get by on. Do you know what other retired people use for income?--F. R.

A: Don’t forget about Social Security. As maligned as it has been, the Social Security program accounts for about 34% of the income of all U.S. retirees, according to figures provided by the Social Security Administration and by independent financial advisers.

The remainder, you might be disappointed to hear, comes largely from part-time income. Some people prefer to keep working beyond age 65 but, like you, many simply realize they can’t make ends meet otherwise. Hence, about 29% of the income of people age 65 or older comes from earned income, according to the Social Security Administration.

The next largest portion--an estimated 15%--is derived from savings and other so-called “accumulated capital.” And the remainder is fairly evenly divided among public and private pensions and gifts.