Car Rental (Grade 11 NSC Matric Tourism): Revision Notes
Car Rental
Car rental is an important part of the tourism industry because it gives tourists the freedom and flexibility to travel on their own schedule. When you rent a car, you can drive yourself to different places whenever you want, without depending on public transport or tour schedules. This makes car rental a popular choice for independent travellers visiting South Africa.
Car rental companies
The car rental industry in South Africa is made up of both large and small businesses that provide vehicles to tourists and local travellers.
Large car rental companies operate throughout the country and have offices at all major airports. This makes it convenient for tourists to collect their rental car as soon as they arrive in South Africa. These big companies usually have a wide range of vehicles to choose from and offer different rental packages.
Smaller car rental companies tend to focus on specific areas. They might only operate in one province or region, offering more personalised service to customers in that particular area.
The car rental industry has its own professional organisation called SAVRALA (the Southern African Vehicle Rental and Leasing Association). This association sets standards for the industry and represents car rental businesses across southern Africa.
Conditions for renting a vehicle
Not everyone can simply walk into a car rental office and drive away with a vehicle. There are important requirements that must be met before you can rent a car:
Driver's licence and age requirements
You must have a valid driver's licence to rent a vehicle. The licence needs to have been issued for a certain minimum period - you can't rent a car if you only got your licence last week! Car rental companies also set a minimum age for renters, usually between 21 and 25 years old.
If you're younger than the company's prescribed age limit, you can still rent a car, but you'll face additional charges. This is called a young driver surcharge. Young drivers might also need to purchase extra insurance to cover the higher risk.
Financial requirements
Renting a car involves significant financial responsibility:
- You must have a credit card with enough available funds to cover both the rental cost and any insurance charges
- The credit card is essential because the company will reserve (hold) money on it to cover potential costs like insurance excess and fuel
- You need to be able to pay any amounts that insurance doesn't cover if something goes wrong
Legal documentation
Before you can drive away in a rental car, you must sign a rental agreement (also called a rental contract). This is a legal document that outlines your responsibilities, the terms of the rental, and what you're agreeing to pay.
Car rental rates
The amount you pay to rent a car isn't the same everywhere. Car rental rates vary from one company to another and depend on several important factors.
What affects rental rates?
The two main factors that influence how much you'll pay are:
- Type of car: Larger cars or vehicles with more features cost more to rent
- Distance travelled: The further you plan to drive, the more you'll generally pay
Rental packages and options
Car rental companies structure their pricing to encourage certain types of bookings:
Longer rentals get better rates: If you rent a car for a week or more, the daily rate is usually cheaper than renting for just one or two days. Companies want to keep their cars rented for longer periods, so they reward you with lower rates.
Weekend specials: Many companies offer special discounted rates over weekends to attract leisure tourists who want to explore during their time off.
What determines your total cost?
When a car rental company calculates your final bill, they consider many different elements:
- Duration of the rental period: How many days you need the car
- Type of car: Whether you want a small economy car, a family sedan, or a luxury vehicle
- Distance: How far you plan to travel in the car
- Type of insurance: Which insurance options you choose
- Collection and return locations: Where you'll pick up and drop off the vehicle
- Optional extras: Any additional equipment you need
Vehicle features and pricing
Rental cars come in different sizes with different features:
- Transmission type: Automatic cars typically cost more than manual cars
- Additional features: Cars with air conditioning and radios are more expensive than basic models
- The more features and comfort a car offers, the higher the rental rate
Distance allowances
Most car rental rates include a certain amount of free kilometres per day (for example, 100 km per day). If you drive more than this daily allowance, you'll have to pay an extra fee for each additional kilometre. This is usually charged at a rate per kilometre over the limit.
Insurance options
Insurance is a crucial part of car rental because it protects both you and the rental company if something goes wrong. There are several different types of insurance available.
Collision damage waiver (CDW)
CDW covers damage to the rental car if you have an accident or collision. When you take out CDW, you only have to pay a set amount (called an excess) if the car gets damaged. The insurance covers the rest of the repair costs.
Theft loss waiver (TLW)
TLW protects you if the rental car is stolen. Just like CDW, you only pay a set amount (the excess) if the car is stolen, and the insurance covers the remaining value.
Understanding the excess
When you have both CDW and TLW, there's still an amount that you might have to pay yourself - this is called the excess. The excess is the portion of the cost that the insurance doesn't cover.
Understanding the Excess: A Practical Example
If the excess is R20,000:
- You pay: R$5,000 (the excess)
- Insurance pays: R$15,000 (the remaining cost)
Super insurance options
To avoid paying the excess, you can choose higher-priced insurance options:
- Super collision damage waiver (SCDW): Reduces or eliminates the excess you'd pay for collision damage
- Super theft loss waiver (STLW): Reduces or eliminates the excess you'd pay if the car is stolen
These super options cost more per day, but they give you better protection and peace of mind.
Personal accident insurance (PAI)
PAI is different from the other types of insurance because it protects you, not the car. If you're injured in an accident while driving the rental car, PAI compensates you and covers the cost of medical treatment for your injuries.
Additional costs and charges
Beyond the basic rental rate and insurance, there are many other charges that can be added to your final bill. Understanding these helps you budget accurately for your car rental.
Tourism levy
A tourism levy of 1% is added to all car rental bookings in South Africa. This small tax helps support the tourism industry. It may already be included in the quoted rental price, or it might be added as a separate line item on your bill.
Fuel-related charges
Fuel deposit: When you collect the car, you pay a deposit equal to the cost of filling the car's petrol tank. This ensures the car can be refuelled when you return it.
Fuel charge: If you return the car without a full tank of petrol, the rental company will deduct the cost of refilling from your fuel deposit. It's usually cheaper to fill the tank yourself before returning the car.
Airport surcharge
An airport surcharge is an extra fee charged when you collect or return a car at an airport location. This charge covers the higher costs of operating car rental facilities at airports (such as rent for office space and parking areas). Cars rented from city branches that aren't at airports are therefore cheaper because they don't include this surcharge.
Charges for additional drivers
If someone else besides you will also be driving the rental car, you must tell the rental company and pay an additional driver charge. This fee is charged per extra driver and allows that person to legally drive the rental vehicle.
Administrative fees
Contract fee: Every time a rental contract is created, the company charges a fee to cover the administrative work of drawing up the paperwork.
Delivery and collection fee: If you want the rental company to deliver the car to your hotel or office and collect it from there when you're done, you'll pay extra for this convenience service.
One-way rental fee
A one-way rental fee applies when you collect the car from one office and return it to a different office. For example, if you collect in Cape Town and return in Johannesburg, you'll pay this fee because the company has to arrange to get the car back to where it's needed.
Cross-border fee
If you plan to drive the rental car across South Africa's borders into neighbouring countries like Namibia or Lesotho, you must pay a cross-border fee. This charge covers additional insurance and administrative costs for international travel.
Optional equipment and extras
You can rent various additional items at an extra cost per day:
- Baby seat or child car seat
- GPS device for navigation
- Paraplegic hand controls for wheelchair-bound drivers
These extras are optional, but they can make your journey safer and more comfortable.
Incidental costs
Incidental costs are extra charges that only apply in special circumstances. They're not regular charges that everyone pays - they only appear on your bill if certain situations occur.
Accident administration fee
If the rental car is involved in an accident, the company charges an accident administration fee. This covers the cost of having an insurance assessor inspect and evaluate the damage to the vehicle.
Traffic fine administration fee
Sometimes drivers receive traffic fines (speeding tickets, parking fines, etc.) while driving the rental car. The fine is sent to the rental company because the car is registered in their name. The company then has to find out who was driving the car at that time and forward the fine to them. A traffic fine administration fee is charged to cover this administrative work.
Toll fees
If you drive through a toll gate on a toll road, the driver of the rental car must pay the toll fee. These are charges for using certain highways and roads with toll plazas.
Payment options and calculations
Understanding how payment works and how rental costs are calculated helps you plan your budget and avoid surprises.
Payment methods
Car rental companies have strict rules about payment:
What they don't accept:
- Cash
- Bank transfers
- Cheques
What they do accept:
- Credit cards (for individual renters)
- Bill back vouchers (for big companies and travel agencies)
How credit card payments work
When you rent a car as an individual, you must pay using a credit card:
- The rental company reserves (blocks) a certain amount on your credit card when you collect the car
- This reserved amount covers potential costs including rental charges, insurance, excess, and fuel deposit
- When you return the car, the company calculates the actual final cost based on how long you had the car, how far you drove, and what charges apply
- The reservation is then cancelled
- Only the correct final amount is charged to your credit card
This system protects both you and the rental company - you're not charged more than necessary, and they're assured they can collect payment.
How rental days are calculated
Understanding how rental days work is important because it affects your cost:
The 24-hour rule: A rental day is a 24-hour cycle that starts when you collect the car.
For example:
- If you collect the car at 17:00 on Monday and return it before 17:00 on Tuesday, you pay for one day
- If you return it at 21:00 on Tuesday (after 17:00), those extra four hours count as part of a second day
- You must pay for two full days of rental even though you only had the car for 28 hours
Full day charges apply: Even if you only need the car for part of a day, you still pay for the full day.
Factors that determine your rate
Your total rental cost depends on:
- Type of car you select
- Number of days you need the car
- Distance you plan to travel
- Type of insurance you choose
- Any additional charges that apply to your situation
Calculating a car rental quotation
When working out how much a car rental will cost, you need to gather specific information about the customer's needs:
Questions to ask:
- When and where will they collect and return the car?
- What type of car do they want (manual or automatic, air conditioning, etc.)?
- How many free kilometres do they need per day?
- What insurance do they want (CDW, SCDW, TLW, STLW, PAI)?
- Do they need extras like a baby seat or GPS?
- How far are they planning to travel?
Seven steps to calculate the total
Follow these steps in order to work out the complete rental cost:
Step 1: Calculate how many days the renter needs the car (remember the 24-hour rule)
Step 2: Find a car that suits their needs and identify the daily rate for that vehicle
Step 3: Calculate any extra kilometres they'll need to pay for (beyond the included free distance)
Step 4: Calculate the insurance charges based on what they've selected
Step 5: Add the cost of any optional extras (baby seats, GPS, additional driver, etc.)
Step 6: Add all additional charges (contract fee, airport surcharges, tourism levy of 1%)
Step 7: Add all the amounts together to get the total quotation
Important tip: If a charge isn't clearly specified in the rate table, don't include it in your calculation. Only add charges you have definite information about.
Example calculation breakdown
Worked Example: Calculating a Car Rental Quotation
A customer needs a car from Monday 09:00 to Wednesday 07:00. They want the cheapest automatic car with super insurance. They'll travel about 80 km per day and need SCDW, STLW, PAI, GPS, and baggage insurance.
Step 1 - Days needed: Monday 09:00 to Wednesday 07:00 = 2 days
Step 2 - Daily rate: Cheapest automatic car with super insurance = R496 per day for 2 days = R992
Step 3 - Extra kilometres: Customer gets 100 free km per day but only needs 80 km, so no extra cost
Step 4 - Insurance: SCDW and STLW included in daily rate, PAI at R30 per day = 2 × R30 = R60
Step 5 - Optional extras:
- GPS at R69 per day = 2 × R69 = R138
- Baggage insurance at R29 per day = 2 × R29 = R$58
Step 6 - Additional charges: Contract fee R50.00 (tourism levy, VAT and airport surcharge already included in rates)
Step 7 - Total: R992 + R60 + R138 + R58 + R50 = R1,298.00
Comparative calculations
Sometimes you need to compare rental costs between different companies to find the best deal. This is called a comparative calculation.
Prices can differ between companies because:
- They include different amounts of free kilometres
- Their rates for standard or super insurance vary
- They charge different amounts for extras
Tip for customers: Usually, the cheaper option is the better choice as long as it includes everything the customer wants. Make sure you're comparing like with like - check that both quotes include the same insurance, extras, and services.
Key Points to Remember:
- Car rental gives tourists flexible, independent transport - they can drive where and when they want.
- Important requirements include: a valid driver's licence (held for a minimum period), minimum age (with young driver surcharges for those below it), a credit card with sufficient funds, and signing a rental agreement.
- Key insurance types: CDW (collision damage), TLW (theft loss), SCDW and STLW (super options with lower excess), and PAI (personal accident insurance for medical costs).
- Many additional charges exist: tourism levy (1%), fuel deposit, airport surcharge, contract fee, additional driver charge, cross-border fee, one-way rental fee, and optional equipment costs.
- Rental days work on a 24-hour cycle from collection time - returning even a few hours late means paying for an extra full day.
- To calculate rental costs: follow the 7-step process, considering days needed, car type, kilometres, insurance, extras, and additional charges. Only include charges that are clearly specified.