Millennial’s Car Rental Issues & Alternatives
We can drive a car at 16, vote at 18, drink at 21, but until recently, we couldn’t rent a car until 25.
Fortunately for the 25-and-under crowd, those rules have changed … slightly.
Most car-rental agencies now rent to anyone 21-and-older, but there’s a catch, or rather a surcharge. They hit us with a $25-$30 fee each day (as much as $50-$75/day in larger cities like New York and Los Angeles).
The cheapest rental options on Kayak.com range from $40-$50/day in a modest-size city like Jacksonville, FL or Kansas City, Mo. It’s a whole lot more in larger cities like Seattle, Chicago or Denver, where it takes somewhere around $150 for a Millennial to get behind the wheel of an economy rental car. Almost half that rate in the big city is the underage surcharge fee.
So, what’s with the age discrimination?
Millennials may be ashamed to find out they drive like a really old grandma. To put it another way, a study by the AAA Foundation for Traffic Safety found that drivers age 20-24 get in the same number of accidents per mile driven as drivers that are 85+ years old.
And teenage drivers had more crashes per mile than everyone age 25-84 combined!
That’s a huge amount of risk for anyone, so it comes as no surprise that rental agencies won’t rent to teenagers and are reluctant to rent to anyone under 25 years old. The solution lies inside our phones, as does everything else these days, and these solutions aren’t just for Millennials.
If you have a smartphone, you are half way to saving on your next car rental.
Alternatives to Rental Agencies
Uber and Lyft
Consider taking the money you would have spent for a rental car and using it on ridesharing apps like Uber and Lyft.
Vacationing without a car has its advantages. For starters, an allowance of $75/day can get you pretty far, especially if you plan to visit a city that offers restaurants and shops in walking distance. You can skip the routine of shuttling to a rental agency, standing in line and filling out all that paperwork. There’s no need to worry about parking, and if you plan to see the nightlife, you’re probably taking Uber or Lyft anyway.
This might be the only option for anyone under 21 years old, aside from local rental companies that might have other standards and Hertz, who will rent to 20 year olds.
Uber and Lyft are essentially a private cab service that allows everyday people to use their cars as taxis. A cab can sometimes be cheaper for shorter trips, but nothing beats the convenience of Uber and Lyft. Open the app, tap a button to request a ride and the nearest driver will show up to your location in minutes. The fares are estimated beforehand, so you know how much it will cost to get from point A to point B. Plus, once you factor in the customary tip for a taxi driver, even the shorter fares tend to favor Uber and Lyft.
When You Really Need a Car
Occasionally, you need a car to run around town and do errands or take a driving vacation where you plan to do some site-seeing at places hundreds of miles away. Traditional car-rental agencies aren’t the only option anymore.
Turo, formerly known as RelayRides, offers peer-to-peer car rentals similar to how Airbnb functions. Turo claims it is 35% cheaper than traditional car-rental companies, and they operate in over 4,500 cities and more than 300 airports. A quick browse of their listings seems to back that claim up. Most cars are available for $25-$40/day.
However, they also charge a fee for anyone under 25, either 30% of the trip or $10 (whichever is greater). That’s not bad considering their rates are much cheaper than other rental agencies. By comparison, Turo’s $10-$15 underage fee is less than half the $25-$30 charge for the traditional rental companies like Hertz, Budget or Enterprise.
Renting a car from a total stranger sounds crazy, orat least it did a decade ago. That was before you could buy things from a total stranger on Ebay, stay in a stranger’s room with Airbnb or ride in a stranger’s car with Uber.
The sharing economy has fostered a new level of trust between complete strangers, and if you break that trust on Turo, they have a pretty good insurance policy to bail the owner out.
ZipCar is a car-sharing membership club. It’s not ideal for a one-time vacation car rental. This is more of an in-town alternative to owning a car. Rates are $7/month plus a $25 application fee. Then you pay $8.50/hour or $69/day to use a ZipCar. ZipCar has a fleet of vehicles parked around cities and near universities that are unlocked with a membership card, and the keys are inside.
You need to be 21 years or older to be a member, 18-20-year-olds can join if they are affiliated with a college or university, but they can only use ZipCars in their home location, which eliminates the travel option.
The appeal of ZipCar is that insurance is included (with a $1,000 damage fee) and gas is free (up to 180 miles, then $0.45/mile after). ZipCar operates in nearly every major city and university.
I don’t see this as a viable option even for alternative car ownership. Let’s say you use a ZipCar four hours per week for groceries and running errands and take an overnight trip once a month to go see your parents or friends. That’s really light use and it’s still going to run you $2,703/year. That is a big investment on something that you won’t own to resell or have available 24/7. There are better ways to get a car for a few hours a week.
GetAround is another peer-to-peer car-rental app similar to Turo, but GetAround offers hourly rates as well as daily rates.
There is no membership fees—unlike ZipCar—and their hourly rates are lower. The owner prices their own rate as they do on Turo. Of course, you’re driving a stranger’s car, but it is a more affordable option to ZipCar.
The only drawback is that, as of today, GetAround is operating in only eight cities (San Francisco, Berkeley, Boston, Chicago, New Jersey, Oakland, Portland and Washington D.C.).
Car2Go is more of a luxury option similar to ZipCar. It has a fleet of Smart Cars and Mercedes SUVs and sedans.
There is no annual fee, but there is a $5 registration fee. Rates are set at $15/hour and $85/day. They also have per-minute rates for $0.41/minute. Gas is free, insurance is included and parking is also free thus the higher rates.
To end a trip, you simply park the car legally anywhere inside the car’s designated home area. That could be right outside your house or anywhere on the city’s streets. These cars don’t have to be returned to a designated parking space like ZipCars, which allows for one-way trips inside the home area.
Again, the only drawback lack of availability. Asof today, Car2Go is operating in only seven cities in the U.S. (Austin, Columbus, Denver, New York, Portland, Seattle and Washington D.C.).
Traditional Car-Rental Agencies Catching On
Enterprise is the first traditional car-rental agencies to try and tackle the car-sharing market with Enterprise CarShare.
The business plan is nearly identical to ZipCar. Cars are parked around town, 18-year-olds can join if affiliated with a university, you unlock the car with a membership card, gas is free (up to 200 miles, then $0.45/mile) and insurance is included ($1,000 damage fee). Annual membership is $40/year, but the first year is free. Rates start at $8/hour and $70/day for the economy cars.
Enterprise CarShare is operating in only 27 cities for now.
Millennials have embraced the sharing economy, allowing these car-rental alternatives to flourish. But everyone loves to save money.
So, if you’re a Millennial trying to beat the 25-and-under charges or just someone planning a cheap family vacation, it’s nice to know you have options for a change.
About The Author
Max Fay has been writing about personal finance for Debt.org for the past five years. His expertise is in student loans, credit cards and mortgages. Max inherited a genetic predisposition to being tight with his money and free with financial advice. He was published in every major newspaper in Florida while working his way through Florida State University. He can be reached at [email protected].
- AAA Foundation for Traffic Safety (2012 November) Motor Vehicle Crashes, Injuries, and Deaths in Relation to Driver Age. Retrieved from https://www.aaafoundation.org/sites/default/files/2012OlderDriverRisk.pdf