Toyota Car Tips & Advice

Understanding Rental Car Agreements

Although every car rental agreement is different – and each company has their own rules and restrictions – the language used in most of them is similar, if not the same. To help you more fully understand the fees, options and obligations commonly outlined in rental car agreements, below are just a few of the terms you might encounter:

  • Loss Damage Waiver (LDW) and Collision Damage Waiver (CDW): These are the additional insurance policies that some companies encourage clients to buy. Depending on your personal auto insurance coverage and what credit card you'll use to pay for your rental, these policies may not be necessary.
  • Personal Accident Insurance (PAI) and Personal Effects Coverage (PEC). These options cover bodily harm and/or damage to your personal possessions. As with LDW/CDW insurance, your current auto insurance and/or homeowners policies may already have you covered.
  • Deposit/Refundable Charges. A deposit is used as collateral in the event that the car is damaged or unreturned. Deposits often amount to hundreds of dollars, but are typically covered by using a credit card that has been authorized for that limit. Before signing the car rental agreement, find out whether the authorized amount will impact the spending limit on your credit card.
  • Fuel Charges. Most rental contracts indicate that the renter is responsible for refueling. If you fail to do so, you'll likely be charged for the cost to refuel, plus an administrative fee. Some companies offer a prepaid option that's closer to the current market price for gas, so check with your agency and review your car rental agreement before deciding whether or not to fill up on your own.
  • Daily Rate/Daily Rental. Most rental car agreements base fees on a daily rate – which is a 24-hour period. Other options, like weekly rates, weekend packages, and monthly rentals may also be available.