Car rental
Encyclopedia
A car rental or car hire agency is a company that rents
Renting
Renting is an agreement where a payment is made for the temporary use of a good, service or property owned by another. A gross lease is when the tenant pays a flat rental amount and the landlord pays for all property charges regularly incurred by the ownership from landowners...

 automobile
Automobile
An automobile, autocar, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor...

s for short periods of time (generally ranging from a few hours to a few weeks) for a fee
Fee
A fee is the price one pays as remuneration for services. Fees usually allow for overhead, wages, costs, and markup.Traditionally, professionals in Great Britain received a fee in contradistinction to a payment, salary, or wage, and would often use guineas rather than pounds as units of account...

. It is an elaborate form of a rental shop
Rental shop
A rental shop, also known as a video library, is a business that allows a consumer to temporarily obtain a reusable good or product for a specified period of time in exchange for payment, a process known as renting...

, often organized with numerous local branches (which allow a user to return a vehicle to a different location), and primarily located near airport
Airport
An airport is a location where aircraft such as fixed-wing aircraft, helicopters, and blimps take off and land. Aircraft may be stored or maintained at an airport...

s or busy city areas and often complemented by a website allowing online reservations
Computer reservations system
A computer reservations system is a computerized system used to store and retrieve information and conduct transactions related to air travel. Originally designed and operated by airlines, CRSes were later extended for the use of travel agencies...

.

Car rental agencies primarily serve people who have a car that is temporarily out of reach or out of service, for example travel
Travel
Travel is the movement of people or objects between relatively distant geographical locations. 'Travel' can also include relatively short stays between successive movements.-Etymology:...

lers 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 van
Van
A van is a kind of vehicle used for transporting goods or groups of people.In British English usage, it can be either specially designed or based on a saloon or sedan car, the latter type often including derivatives with open backs...

s or truck
Truck
A truck or lorry is a motor vehicle designed to transport cargo. Trucks vary greatly in size, power, and configuration, with the smallest being mechanically similar to an automobile...

s, 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 system
Global Positioning System
The Global Positioning System is a space-based global navigation satellite system that provides location and time information in all weather, anywhere on or near the Earth, where there is an unobstructed line of sight to four or more GPS satellites...

 (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
Fleet vehicles
Fleet vehicles are groups of motor vehicles owned or leased by a business or government agency, rather than by an individual or family. Typical examples are vehicles operated by car rental companies, taxicab companies, public utilities, public bus companies, and police departments...

 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
Manheim Auctions
Manheim, Inc. is an automobile auction company. It is the largest one in the world by volume of trade. As a subsidiary of Cox Enterprises, Inc., Manheim provides services including financing, title work, transportation, recovery, auto body repair, dealership management systems, dent repair and...

 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.

Types of vehicles

A typical car rental agency offers average-priced vehicles, however some facilities may offer higher-end models of a particular manufacturer, such as Lincoln Town Car
Lincoln Town Car
The Lincoln Town Car is a full-size luxury sedan that was sold by the upscale Lincoln division of Ford Motor Company; it was produced from 1981 to the 2011 model years...

 or Cadillac DTS
Cadillac DTS
The Cadillac DTS is a full-size luxury sedan produced by General Motors, an American automobile company. The DTS replaced the Cadillac DeVille as General Motors' largest luxury car for the 2006 model year...

 in the US. Some may also offer vehicles like Jaguar
Jaguar
The jaguar is a big cat, a feline in the Panthera genus, and is the only Panthera species found in the Americas. The jaguar is the third-largest feline after the tiger and the lion, and the largest in the Western Hemisphere. The jaguar's present range extends from Southern United States and Mexico...

 or Mustang
Ford Mustang
The Ford Mustang is an automobile manufactured by the Ford Motor Company. It was initially based on the second generation North American Ford Falcon, a compact car. Introduced early on April 17, 1964, as a "1964½" model, the 1965 Mustang was the automaker's most successful launch since the Model A...

 to attract a specialty market. Most also offer SUVs in addition to passenger vans. At major airports or in larger cities, some independent car rental agencies offer ultra high-end vehicles for rent. These models can include Mercedes Benz, Porsche
Porsche
Porsche Automobil Holding SE, usually shortened to Porsche SE a Societas Europaea or European Public Company, is a German based holding company with investments in the automotive industry....

, Ferrari
Ferrari
Ferrari S.p.A. is an Italian sports car manufacturer based in Maranello, Italy. Founded by Enzo Ferrari in 1929, as Scuderia Ferrari, the company sponsored drivers and manufactured race cars before moving into production of street-legal vehicles as Ferrari S.p.A. in 1947...

, and even Rolls Royce
Rolls-Royce (car)
This a list of Rolls-Royce motor cars and includes vehicles produced by:*Rolls-Royce Limited *Rolls-Royce Motors , which was owned by Vickers between 1980 and 1998, and after that by Volkswagen...

. This market is usually too cost prohibitive and unnecessary for the average car renter. Rent-a-Wreck
Rent-A-Wreck
Rent-A-Wreck is a car rental company that is primarily known for renting used cars at discount prices. The cars may have been personally owned, or they could have been owned by another rental car chain company. They are also known for accommodating younger drivers to whom many other car rental...

 got started by offering older vehicles at reduced prices.

Rental conditions

Car rentals are subject to many conditions which vary from one brand
Brand
The American Marketing Association defines a brand as a "Name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers."...

 to another. The vehicle must be returned in a good condition and sometimes 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
Driver's license
A driver's license/licence , or driving licence is an official document which states that a person may operate a motorized vehicle, such as a motorcycle, car, truck or a bus, on a public roadway. Most U.S...

 is much lower. In all cases a valid, current driver's license
Driver's license
A driver's license/licence , or driving licence is an official document which states that a person may operate a motorized vehicle, such as a motorcycle, car, truck or a bus, on a public roadway. Most U.S...

 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
Credit card
A credit card is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services...

 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

Although frequently not explicitly stated, US car rental companies are required by respective state law to provide minimal liability coverage. This covers costs to a third party in the event of an accident. In most states it is illegal to drive a car without liability coverage. The rental car companies have liability with their vehicles, however some companies will charge for this should you not provide your own insurance. As an example, in Maryland the minimal level of liability coverage is $20,000 for bodily injury and $15,000 for property damage.

It is typical, when renting a car, to be offered various forms of supplemental insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...

 and/or damage waiver
Damage waiver
Damage waiver, or as it is often referred to, collision damage waiver or loss damage waiver is an optional damage coverage available while renting a vehicle. It covers the rental vehicle. Some companies also offer liability insurance and towing coverage.Terms and prices vary among car rental...

s as an optional extra at additional cost. There are several types of coverage:
  • Loss Damage Waiver
    Damage waiver
    Damage waiver, or as it is often referred to, collision damage waiver or loss damage waiver is an optional damage coverage available while renting a vehicle. It covers the rental vehicle. Some companies also offer liability insurance and towing coverage.Terms and prices vary among car rental...

     (LDW)
    – sometimes also referred to as Collision Damage Waiver (CDW) - covers the costs of damage to the rental 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 Europe, Africa, Australasia, and most of the Middle and Far East
    Far East
    The Far East is an English term mostly describing East Asia and Southeast Asia, with South Asia sometimes also included for economic and cultural reasons.The term came into use in European geopolitical discourse in the 19th century,...

    , 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
    Theft
    In common usage, theft is the illegal taking of another person's property without that person's permission or consent. The word is also used as an informal shorthand term for some crimes against property, such as burglary, embezzlement, larceny, looting, robbery, shoplifting and fraud...

     portions of the rental. A higher excess usually results in a lower premium on the insurance. Excess is used to discourage drivers from making insurance claims for small damage. If the damage is cheaper to repair than the excess then generally the driver would not claim and the insurer is saved the cost of the repair. The Excess can range from about £500 to £1,600 and is the portion of the loss 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 USA, it is sometimes charged in Canada
    Canada
    Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...

    , and it is generally charged in the Caribbean
    Caribbean
    The Caribbean is a crescent-shaped group of islands more than 2,000 miles long separating the Gulf of Mexico and the Caribbean Sea, to the west and south, from the Atlantic Ocean, to the east and north...

    , Central and South America
    South America
    South America is a continent situated in the Western Hemisphere, mostly in the Southern Hemisphere, with a relatively small portion in the Northern Hemisphere. The continent is also considered a subcontinent of the Americas. It is bordered on the west by the Pacific Ocean and on the north and east...

    . Excess
    Excess
    Excess may refer to:* Angle excess, in spherical trigonometry, quantity, used to calculate the area of polygon on a sphere* Excess, in insurance, similar to deductible* Excess, in chemistry, describing any reagent that is not the limiting reagent...

     insurance is a secondary insurance
    Insurance
    In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...

     (only in place with the CDW and SLI cover) and provides coverage to the renter for the excess amount. The majority of car-rental companies in Europe
    Europe
    Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...

     will sell this cover as a 'top-up' insurance to cover the excess on their standard damage and theft insurance. Hirers should be aware that not only can this work out quite expensive, it is likely to exclude cover for damage to the windscreen, bodywork, roof, tyres or undercarriage leaving the hirer of the vehicle liable to pay out if damaged. There is however, another insurance alternative that can reduce these risks and costs. Specialist excess protection insurance from a number of other insurers can offer excess protection, much broader coverage and may include cover for those areas often excluded. In the event that the vehicle is damaged or stolen, the rental company will charge your credit card for the excess amount and you then claim for reimbursement on your vehicle hire excess protection policy.


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
ACRISS Car Classification Code
The ACRISS Car Classification Code is a code used by many car rental companies, including Sixt, Avis, Auto Europe, Budget, Alamo, Europcar, Hertz and National, for classifying vehicles...

coding system. This describes the size, door count, gearbox type (manual/automatic) and whether the car is air-conditioned, encoded into four letters. Additional classifications based on seat numbers and trunk volume were also set by the Belgian Rent a Car association in order to provide a unified system for assessing the car types in online reservation systems such as Amadeus or Argus.
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