Rental Car Costs: Budgeting for Summer Travel & Avoiding Price Surprises

The cost of a rental car may be a shock -- if you can even find one.

If you're planning on taking a vacation this summer once you've got your COVID-19 vaccine, you may need to prepare for sticker shock when you book one particular part of your trip: the rental car.

While rental cars were once affordable -- and easy to find in many tourist areas -- that's no longer the case. Rental prices are currently through the roof in popular travel hotspots. And in some cases, you may not even be able to find one.

Keep reading to learn the reasons why and find out what car-rental options won't burst your travel budget.

There are two reasons why rental car prices are being driven up

Unsurprisingly, demand for rental vehicles fell during the pandemic when most people were not going anywhere. In response, many rental car companies sold off large portions of their fleets, leaving them with fewer vehicles to rent out.

Once people start hitting the road again, these rental car companies are looking at a likely surge in demand. But to make matters worse, there is a semiconductor shortage. This has substantially reduced the number of new vehicles being produced -- particularly by Ford and GM, which tend to be popular choices among rental car agencies.

Since rental car companies now have far fewer vehicles at a time when demand is rising, the price to rent is several times higher than it used to be. In fact, cars in many popular areas are now going for around $500 per day, while SUVs are close to $900.

Most industry experts believe that these shortages are likely to persist for months on end, and they've caused some tourists to resort to desperate measures. Vacationers in places like Hawaii have ended up renting U-Hauls or pickup trucks meant for moving because standard vehicles are too expensive or aren't available.

What should you do if you're taking a trip?

If you're planning a vacation, you may want to consider flying to your destination and choosing a walkable area or a self-contained resort where you can avoid renting a car. Many airlines are offering incentives to get people to fly, so it may actually be less expensive to take a plane than rent a car.

You'll also want to shop around carefully. Airport rental cars may be expensive -- or possibly unavailable. You might be able to find reasonable options, however, if you choose a rental company in town or one in an out-of-the-way area.

If you are considering a rental vehicle from a small company you haven't heard of before, be sure to check their Better Business Bureau rating and reviews to minimize the chances of problems.

Car-sharing services like Turo, which allow you to rent cars directly from individuals rather than from car rental companies, are another option -- although daily rates are being pushed higher on these sites as well.

If possible, you should also avoid prepaying when you book a rental car in case prices drop in the interim. And check the price of rental cars before you plan a trip. The last thing you want is for the vehicle to be so expensive that you bust your travel budget and have to break out the credit cards to afford it.