The next time you are at a rental car counter, pay attention to how much the rental company likes to promote the idea of customer service. Now think: do they really want to help you and make your experience as convenient and as pleasant as possible? Of course they don't. There's a super simple way to greatly simplify the experience (and make them money), yet they refuse to do it because they are too busy running a much more profitable scam.
The scam is the in the "fuel options" they offer. Why do they burden us with this question? They know how much fuel is in the car when it leaves their lot, they know how much is in it when it returns, and the fuel price is not that variable in the area of the rental and in the time span the car is rented. They can mark it up a little bit to cover the maximum range, make a little money, and never have to bother us with this question.
Instead, they offer us options that go like this:
- "Bring it Back Full" - where you are have the hassle of remembering this detail, finding a gas station and hoping you are not running late to your flight;
- "Pre-pay" - where you pay for the tank of gas before you leave and do not have to worry about anything after that; and
- "They re-fuel" - where they quote you a ridiculously high price per gallon and try to justify this because it include a refueling service.
The last one is so blatantly a rip-off, you would feel foolish choosing that option. The first one adds a lot of hassle, but is certainly going to be the cheapest, so you have to think hard about the price you are willing to pay for the convenience.
Now you will notice the rental car companies lay it on thick trying to get you to choose the "pre-pay" option, but it is not because they are trying to minimize your hassles. They say things like "you can just bring it back empty", making it seem like this is just as economical a choice as the first. The fallacy here though is that it is impossible to bring it back empty.
The only way you win is if you bring the car back running on fumes. How many people will feel comfortable running the tank that low in a car whose fuel consumption is unknown and with the extremely vague information a fuel gauge gives you? How many people would be able to plan their travels and fuel consumption so carefully? What if you hit unexpected traffic around the airport? Spending your vacation planning the returning fuel level sounds like a fun addition to your trip doesn't it?
So how many gallons on average will you or the average person return the car with? For me, on my own car, even when I think it is pretty low, there's usually 2 or 3 gallons. Let's say the price of gas is $3.50 a gallon. You are returning the car with $10.50 worth of gas if you pre-paid. That's gas you have paid for that you are giving to them.
If the car has a 13 gallon tank, that means you paid for 13 gallons and only used 10, meaning each gallon really cost you $4.55 a gallon. The rental agency also tries to entice you to pick this option by offering a below market rate for the fuel. They may quote you $3.25 a gallon as a great bargain, but this still means you really paid $4.23 a gallon if you return the car with 3 gallons. Thus, they try to convince you you are saving 25 cents a gallon, when in fact they are gouging you with 73 cents over the market rate.
So the rental car companies are probably making a minimum of $10 per rental with this option, but this is likely much higher as the percentage of people returning the cars with just 3 gallons is probably somewhat low. One of the other factors that makes their pre-paid fuel option so lucrative are business travelers. They are not paying for the car, so they choose the option that gives them the most convenience, not the one that is the best value.
So they make it seem like they are doing you a favor with the pre-paid option, but a real favor is to not ask me to make a decision and allow me to bring back the car with whatever amount of gas and only charge me near market rate for the difference. The rental car company will not lose money (save the extra they are getting by scamming people), and they will make it much more convenient for the customers they pretend to care so much about.