So you think you've gotten a great deal on your rental car -- but unfortunately, netting that fabulous $19.99-a-day rate doesn't guarantee you a cheap rental. Instead, you may find the price skyrocketing as your bill is rung up at the rental counter. Sales taxes, airport surcharges, insurance, licensing fees -- by the time all the extra charges are added onto your bill, you may find yourself suffering a severe case of sticker shock -- and paying almost double that seductive base rate.

In a 2007 study, Travelocity found that major American airports tacked on an average of 28.04 percent to your total bill (up from 25.8 percent in 2005) in local and state taxes. However, that percentage can be much higher; by state, the worst offender is Alaska, where the average total bill is 54.4 percent higher than the base price.

In Europe, where many countries charge even higher taxes, the sticker shock can be even worse. On a trip to Italy several years ago, I rented a car with a base rate around $110 for three days. The final total? Including insurance, mandatory theft protection, a 20 percent tax, an underage driver fee, a surcharge for not filling the gas tank, and a few other "mystery" charges written on our bill in illegible Italian, I paid about $380 -- more than a 200 percent increase over the base rate. Ouch.

So how can you avoid being nickel and dimed to death? Read on for a roundup of the surcharges you're most likely to face, and tips for how cut costs on your next trip to the car rental counter.

Taxes and Airport Surcharges

Sales tax and airport charges vary considerably from state to state and from country to country. Unfortunately, you probably can't avoid state and local sales taxes -- or the European equivalent, the value-added tax (VAT), which can be as high as 25 percent.

(Note that in some countries you may be entitled to a partial refund of the VAT.) Many local governments also charge fees to fund local development projects, such as convention centers or sports stadiums.

However, you may be able to avoid the airport charges -- such as concession recovery fees, customer facility charges and the like -- by picking up and dropping off your car at an off-airport location. Be sure to weigh the possible inconvenience and the price of any additional transportation against the concession fees charged by the airport location -- which can total 10 percent or more of your total price.

Editor's Note: We recently got an e-mail from a reader wondering whether the airport concession fee could be avoided by not picking up your rental car as soon as you get off the plane. If the reader went to his hotel first and then returned to a rental location near the airport to pick up his car, would he still have to pay the fee?

According to Neil Abrams, founder of Abrams Consulting, a car rental consulting and travel market research organization, the answer is yes. "If the rental location is at the airport, the rental agency is contractually required to pay the concession fee to the airport," Abrams says -- no matter whether the renter is a local or has just flown into town that day. The same generally applies to near-airport rental locations, though he notes that the fees and requirements for these properties may vary from airport to airport.

The bottom line? If you don't want to pay the airport concession fee, check out your rental options downtown.

Insurance

One of the most common extra charges is for insurance, usually referred to by rental companies as collision damage or Loss Damage Waiver (LDW). For an extra $10 - $25 a day, you can avoid liability for any damage to the vehicle, provided you're not found guilty of gross negligence. Insurance is optional in most states, although in a few states it is compulsory and built into the basic car rental cost.

Before you purchase the extra insurance, check to see if your regular car insurance covers you in a rental car. Most policies do. Some credit cards also provide insurance; check with your company to find out. Other optional insurance coverages include Personal Accident Insurance (PAI), Personal Effects Coverage (PEC) and Additional Liability Insurance (ALI), which you can purchase from the rental company. Again, your best bet is to check your existing policy to see whether you're comfortable with the coverage you already have.

Editor's Note: Ed Perkins at SmarterTravel.com recently did an informative series of articles about the limits of your credit card company's rental car coverage. You can read them here:

Gasoline Charges

You will often pay a high premium for returning a car with an empty tank, so in most cases you'll want to fill up before you return your vehicle. However, most car rental companies now offer the option of purchasing a full tank of gas when you first take the car, enabling you to return the car with as much or as little fuel as you wish.

Note that there is no refund for unused fuel, so you'll likely be paying a little extra for the convenience of skipping the trip to the gas station.

Drop-Off Charges

An extra fee is usually charged if a car is returned to a different location than where it was picked up. This fee varies by location; in some instances there is no charge, while you could pay $1,000 or more for cross-country drop-offs. However, some companies do not require a charge when dropping off in-state at many Florida and California locations.

For more information, see One-Way Car Rentals and Driveaways.

The 24-Hour Clock

Be aware of the 24-hour clock rate. If you rent your car on Wednesday and return it on Thursday, most companies charge you one day only if you return it within 24 hours. Some companies will give you a 59-minute grace period before hourly charges start kicking in; after 27 to 28 hours you'll then be charged for the full extra day.

Early Return Fees

You might imagine that returning your car a day or two early would be a good thing for your car rental company, but unfortunately you'll most likely be dinged for that too. Many car rental companies will charge you $10 - $15 per day for early returns, but that's not all -- you may also have to pay a hefty rate difference as well, particularly if your shortened rental period means you no longer qualify for a weekly rate. At that point you'll be charged the default daily rate, which could cost you hundreds.

Mileage

Most major rental car companies allow for unlimited mileage in the same state, but it's a good idea to check their policy before you reserve a car. Many smaller, local companies charge mileage if you exceed a given daily allotment. Another caveat: Some "special" rates may not include unlimited mileage, so be sure to read the fine print.

License Fees

Some states allow car rental companies to charge extra to recover the costs of licensing their cars, usually between 3 and 8 percent of the cost of the rental. You may not be told about this fee in advance, so make sure to ask.

Varying Rates and Peak Season Surcharges

Rental car companies' rates vary a great deal from city to city, and sometimes even within the same city. Make sure to shop around. Be aware that you may pay a specific surcharge for traveling at a "peak" time.

Age Penalties

If you're under 25, you may have to pay an additional fee, usually about $25 per day. Those companies who will rent to drivers under 21 often charge much steeper surcharges. Internationally, you'll not only see penalties for underage drivers but also for older ones -- those over 70 may have to pay extra (if they're able to rent at all).

Additional Drivers

Adding more than one driver to your rental agreement often carries a surcharge, anywhere between $7 and $25 per day. Note that some companies, like Avis and Budget, will allow the renter's spouse or life partner to drive the vehicle for no extra charge -- so if both partners are planning to take the wheel, consider renting from one of these providers.

Frequent Flier Fees

Car rental companies often charge a small fee when you request frequent flier miles for your rental. The fee varies by airline, and can range anywhere from a few cents to $2 a day.

Extras

There may also be additional charges for things you had not considered, like infant and child seat rentals, roof racks and other extras. These could run you anywhere from $5 to $25 or more per day, depending on where you rent.

Overseas

Many of the above charges, including airport fees, underage driver surcharges and local taxes, also apply to international rentals. Most travelers rely on credit cards to cover collision insurance overseas, as costs are significantly higher than they are in the States. But due to the high risks, some credit card companies now refuse to provide this coverage. Be sure to contact your credit card issuer before you leave to be sure you have coverage in the country you're visiting.

There are many country-specific fees and charges to keep an eye out for. For example, theft insurance is mandatory in Italy, and there are highway charges for cars driven in Austria or Switzerland; you'll need to purchase a sticker to avoid paying a fine.

If you don't have an international driving permit, you may also have to pay for a temporary permit, which can cost $10 to $20 or more. For more on international driving permits, see International Car Rental Tips.

Editor's Note: IndependentTraveler.com is published by The Independent Traveler, Inc., a member of the TripAdvisor Media Network, which also owns SmarterTravel.com. Last Updated: 05/20/09

The article is reprinted with permission of IndependentTraveler.com

Warning about some car hire companies Fuel Policy: Like certain car hire companies in Spain, Portugal and Cyprus, you need to check the car hire company's fuel policy as several of these are now working on collect full, pay for a full tank of fuel at their price and return empty.

This can prove quite expensive if you do not hire the car for several days and use up the fuel. There is also the risk that you might also run out of fuel beforing returning it to your car hire destination (often airports) and then miss your flight.

See also: Driving in the USA

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