Car rental guide for Australian and international holidays

How do I choose the right rental car size?

Getting clear on the purpose of your trip can help you narrow down your rental car options. Will you be exploring a city where a compact vehicle is handy for easy parking, or are you heading off-road where a 4WD rather than a AWD will help you tackle unsealed roads? 

Space is also a factor. Are you travelling with your family, a co-worker, with your best friends, or heading away solo? Knowing this can determine how much room you need for both passengers and luggage. The longer the road trip, the more important this is for everyone’s comfort.

There’s also style and cost to consider. Some drivers prefer a compact hatchback for an economical trip; others enjoy spending more on a luxury sedan. And if you’ve had your eye on an electric car, like a Tesla, a road trip is the perfect time to take one for a spin.

More: Driving overseas and International Driving Permit guide

Should you rent a petrol, diesel, hybrid or electric car?

Fuel is important when deciding on the best hire car. Petrol and diesel vehicles are widely available, with diesel cars often more fuel-efficient for long distances. 

The rising popularity of hybrid and electric vehicles (EVs) in Australia means many car rental providers now have these in their fleet, though availability can be limited. Before booking one, it pays to check your route against this handy guide on where to charge an EV in Victoria.

If you've never driven an EV before, familiarise yourself with advanced driver assistance systems, regenerative braking, and battery range. EVs are much quieter, which means pedestrians and cyclists may not hear you approaching. Stay alert, especially in busy areas or car parks.

RACV Members receive a discount at participating Chargefox stations across Australia. 

What is the best fuel policy for my rental car?

Car rental companies have different fuel options, and these can impact your vehicle rental costs. The most common choices are: 

Full-to-full

This is the most cost-effective option, as you only pay for the fuel you use. You’ll start with a full tank and must return it full. A handy tip is to find out the nearest petrol station when you collect your hire car in preparation for refuelling on your return. It eases stress on the day. 

Pre-paid fuel

With pre-paid fuel, you start with a full tank and can return the car at any level. While choosing this option is more convenient, it generally works out costlier since you’re unlikely to use every drop of fuel.  

EV batteries

When you rent an EV, you may be expected to return the car with the battery at the same level.

What insurance do you need when hiring a car?

Travelling with peace of mind – especially by car – is invaluable when taking a road trip, no matter your trip style. 

Below are a few different types of protection to consider. Note that the names of these products can vary between rental car providers so always confirm what the product explicitly includes and excludes if you're unsure. 

Collision damage waiver (CDW)

 When you rent a car, you're liable for any damage to the vehicle, which can be to its value if the car is a write-off. Some rental car companies include CDW (also called collision damage protection), which can reduce your financial liability; others offer it as an add-on. If you’re paying by credit card, it’s worth checking if CDW is a complimentary benefit, though rules and limits often apply. 

Excess reduction cover

Even with CDW, car rentals typically come with a high excess, often in the thousands. The amount in your contract is what you’ll pay for damages or in the event of an accident. Purchase extra coverage if you want to reduce the excess to $0; it’s usually charged on a per-day basis.

Third-party coverage

While basic cover is included for third-party damage to other vehicles and property, it’s worth ensuring your cover is adequate for peace of mind.

Rental car excess insurance

Rental car excess is the amount you may need to pay if your rental car is damaged or stolen. Different travel insurance plans offer different options for rental car excess coverage. 

For example, if you're travelling overseas, RACV Comprehensive Travel Insurance and RACV Essentials Travel Insurance includes Rental Car Excess^#.

If you’re travelling within Australia only, RACV Domestic Travel Insurance includes Rental Car Excess up to $5,000 (per policy), while RACV Domestic Rental Car Excess offers a choice of cover from $1,000-$8,000 (per policy).##

It's important to realise that rental car excess insurance does not replace rental vehicle insurance; it only provides cover for the excess component up to the applicable benefit limit you have selected.

Enquire with your rental car provider how you will need to pay the excess in the event you have an accident or the car is damaged. This can vary depending on factors such as vehicle type and location.

Roadside assistance

Some car hire providers offer free basic roadside assistance, typically covering mechanical faults and flat batteries. If you want to cover renter-caused incidents, like lost keys and running out of fuel, opt for the extended roadside assistance cover. 

What should you check before signing a rental car agreement?

While it may be more fun to browse travel articles in preparation for your trip, it’s recommended to read the rental terms and conditions carefully. Points to look out for include:

Pick-up and drop-off locations 

Is the rental car rate cheaper because of the branch location? It’s worth checking, particularly if it’s at an airport branch, as some locations incur a premium location fee (or similar).

Branch opening hours

If your trip starts early or finishes late, is there an after-hours option for pick-up and drop-off? Some companies have special arrangements, though fees may apply.

Return policy

Check if the company you’re considering has a grace period or penalties for late returns. Knowing this in advance can save you from unexpected fees. 

Age restrictions

Some car hire businesses impose minimum or maximum age limits for drivers, which can vary depending on the vehicle type. If anyone in your party is under 25 or over 75, research before booking.

Mileage

While many providers offer unlimited mileage, it’s not a given. Check the ‘important information’ tab to see any restrictions and the potential cost per extra kilometre. It’s easy to rack up an unexpected bill if you’re driving long distances and are unaware of any mileage restrictions.

Extra drivers and international licences

It can be a blessing to split the driving with one or two others, especially on long road trips, but first, make sure you’re all covered. Additional driver fees may apply, and you’ll need to ensure everyone has registered their licence details before travel, as unregistered drivers breach the rental agreement. 

Depending on your location, all drivers may also need to provide the car rental company with an International Driving Permit (IDP) - see below for more information on IDPs.

Toll roads and fines

Enquire with your vehicle hire company what the process is should you incur fees from toll roads while driving. Even if you don't plan to use toll roads, it's good to know whether these fees are covered by the rental company or whether you'll need to pay them. In unfamilar locations it's easy to end up on toll roads without realising. 

Likewise, ask what happens if you incur a speeding or parking fine. As a general rule, these fines will be issued to the car rental company who will then nominate you as the driver and pass the fine onto you to pay.

What car rental extras and amenities should I consider?

Have you considered extras to upgrade your road trip experience? Some common options include:

GPS

While we’re reliant on our phones for maps these days, if you’re heading to remote or rural areas, like Wilsons Promontory, Grampians National Park or Mount Buffalo, reception may be patchy at best or non-existent at worst. Add a GPS to your rental to navigate unfamiliar and remote locations.

Child seats

It’s mandatory in Australia for children under eight to be in an applicable car seat, from baby carriers to booster seats. Bring your own or add one to your booking.

Tips for renting a hire car

For a seamless rental car experience, follow these tips:

• Book early: If you’re travelling during peak periods or to highly popular destinations, you’ll want to reserve your car far in advance. Booking early will also help you secure the best rates and your vehicle of choice. Remember, RACV Members can save on car hire across the world.
• Inspect carefully: Checking over your vehicle and documenting any existing damage before driving away ensures peace of mind later should there be any disputes. Taking a video of the exterior is a great addition to what you note on the rental documentation. 
• In an emergency: Familiarise yourself with the procedures and contact numbers for breakdowns or accidents to ensure speedy action should it be needed.
• Keep your records: Stay organised by saving copies of your rental agreement, fuel receipts (particularly your final refuel before drop-off), and any correspondence until your trip has ended and the bank hold against your credit or debit card has been removed. 
• Know the local road rules: It is vital you understand the road rules of all the destinations you plan on driving in, as they differ from those in your home location.

How to save money on car hire

• Book early to help secure the best prices
• Understand car rental insurance options, including collision damage waiver, theft protection, and third-party liability. 
• Utilise special offers
• Consider the car type and rental duration
• Check hidden fees and additional charges, include fees for additional drivers, GPS navigation systems, or young driver surcharges
• RACV’s partnership with leading car hire companies, including Hertz, Europcar, Thrifty, and Dollar, offers exclusive discounts and benefits to RACV Members.

Frequently Asked Questions