Why Are Rental Cars So Expensive? (11 Reasons Why)

Renting a car is one of the most common ways for tourists to travel across the country, while it may also be one of the most expensive.

Although the increasing cost of rental cars may not be noticed when making other choices, it dramatically impacts travel plans. Here’s what we’re going to expose about why rental cars are so costly!

Why Are Rental Cars So Expensive?

1. Travel Destination

If you travel to an area popular with tourists, like New York City or Los Angeles, you’ll have higher costs due to the demand for rental cars in those cities.

Also, the more expensive your destination, the higher your car rental fee will be.

Additionally, if you’re traveling at peak times, you’ll likely find that the same car that would have cost $21 per day in February will cost $50 or more in January.

As a result, the cost of renting a car varies where you’re traveling from and where you’re going.

2. Surge In Fuel Costs

As fuel prices rise, it becomes less economical for companies to purchase new vehicles and opt for older ones that have already been driven quite often.

As well as that, when gas costs rise, a higher portion of household budgets are likely to go toward paying for it.

Therefore, car rental companies charge you for the fuel used to drive your vehicle. When gas prices rise, so do the prices you pay for a rental car.

3. Vehicle Model

If you choose a vehicle model that’s more expensive to maintain than others, such as an SUV or luxury sedan, those costs will be added to the price of your rental car.

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Along with this, you might have to pay more to rent a car of a more expensive class or rarer type, such as a limo.

Generally, you’d have to pay extra, but your rental costs will be considerably higher because premium cars are not entirely available.

4. Car Rental Shortage

Rental vehicle firms predicted that tourists would not travel frequently early in the COVID-19 pandemic.

However, it appears that the shortage will continue through the second half of 2022, according to specialists.

Although some auto industry officials predict that pre-pandemic levels of manufacturing won’t be reached until 2023. Overall, there is still a shortage, so rental prices are still high.

5. Inadequate Supply Of Semiconductor Chips

Most vehicle development advancements are made possible by semiconductors, which act as a demand-driven growth engine.

On the other hand, these chips are required by so many different businesses that the supply cannot keep up with the demand.

Because of that, there was a limited supply of semiconductor chips, so car rental is more expensive.

6. Location


Your location has a role in the price of rental cars as well.

For example, in rural areas of the country where there aren’t as many people seeking rentals, you’ll spend more than you would elsewhere to secure a car close to your home.

Further, it may be because there are fewer rental car agencies in other locations, or they may charge higher rates because they anticipate more business from clients who live in cities!

7. Shipping Provision

It takes time for new cars to be delivered from factories, and there is also the need for maintenance services and repairs which increases the costs further still.

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In fact, you need to pay for shipping your rental car to its place of use, depending on where in the country you’re renting it from.

Consequently, it can be pretty expensive if you’re renting a car for a few days or weeks because it is not uncommon for people to return their vehicles after they’ve finished with them.

8. Electric Cars

Electric cars have more features than traditional vehicles and can be very expensive to maintain and repair because they don’t have many moving parts like classic cars.

Furthermore, e-cars are fancier to ship than conventional cars because they require more power to operate and therefore require larger batteries.

Because of that, electric vehicle maintenance will be more extraordinary. Thus, resulting in higher premiums for these kinds of electric cars.

9. Insurance Coverage

Rental cars use their insurance policies and do not have any coverage or reimbursement from the rental company.

Accordingly, when you are driving a rental car, you are responsible for paying for any damage or loss caused by your actions.

For that reason, if something happens during your rental period, it is up to you to pay for it out of pocket.

If anything happens, the rental company will usually cover any damage or loss caused by your actions.

10. Maintenance And Repairs

When you rent a car from a company like Thrifty, etc., they’ll take care of all maintenance and repairs—including oil changes—for the duration of your stay in the country where it is located.

However, with other companies such as Enterprise or Budget, which foreign travelers use more often, there may be an additional charge for this service if needed during your stay abroad.

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In addition to garage fees and parts, you may be charged for labor or claims that the rental company itself can’t replace.

11. Global Inflation

Worldwide inflation has become firmly entrenched as a result of Russia’s invasion of Ukraine.

At this time, prices increased last year due to supply chain bottlenecks, COVID-19-related shutdowns, and rising energy prices.

However, these issues were predicted to disappear in 2022.

Above all, rental car companies experience inflation in their costs because they must cover their fixed overhead costs and pass on the increases to consumers through higher prices.

To know more, you can also read our posts on why you should lease a car, why comprehensive is more than liability, and why motorcycles are better than cars.


Rental cars are notoriously expensive, and it’s not just because the recession made them more exorbitant to operate.

As you can see, the cost of hiring a car depends on various variables, including the location of the trip, an increase in gasoline prices, and the type of vehicle.

Ultimately, they are not just used for transportation but also for pleasure and relaxation. However, it’s not always as simple as finding the cheapest option!

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