Avoid Scams & Get the Best Deals
Foreword: Renting a car in Mexico at an affordable price and without scams of any kind is absolutely possible. There are hundreds of honest car rental companies that go the extra mile to ensure you get the best experience possible. The bad reputation the industry has gained is due to some unscrupulous big players using their internationally renowned brands to deceive people and get as much money as possible from their customers. If you rent from the right company, you have nothing to worry about and you can easily get great cars, at an affordable price, and a warm and attentive service. Keep reading to find out all you need to know.
How we got here
Remember when airfares used to include everything? Two checked bags, seat assignment, and free meals and beverages, well we all know those times are long gone. Now, you buy a ticket and it does not come with anything. Do you need to check a bag? Do you want to secure a window seat? No problem, you just have to pay an extra fee, every part of the air travel experience is nowadays unbundled. This change in the air travel industry, along with wider competition, has led to lower prices. Once reserved for the rich and famous, air transportation is now available to everyone. Despite what annoyances we all may have faced when realizing that we now have to pay $30-50 to check a bag, we are happy not having to pay for a ticket that includes check baggage when we are not checking bags.
The market forces and technologies that have contributed to these changes in air travel have also affected other travel industries, such as hotels and car rentals. However, the pricing strategy, with base rates and add-on services, has not been successfully adapted to the latter industries, at least not everywhere in the world. The main reason is that, unlike airlines, the add-ons that hotels and car rental companies try to sell are not always optional, but mandatory. As a customer, you cannot decline them, you might not have to pay them upfront when booking online, but will end up paying them at check-in, so you do not save a cent you just get to differ the payment of those fees.
Until recent years, you could book a hotel room without worrying that there could be extra fees, now you book a room online based on price only to find out at check-in that there is a $50-$100 resort fee, which is not optional. A similar situation has happened in the car rental industry in some countries with insurance, where you book a car thinking you’re getting a great deal, but are forced to pay extra and expensive insurance when you pick it up.
Bear in mind, we’re talking about coercion here, we’ll talk more about that later on, keep reading to learn about this and other scams used by some unscrupulous car rental companies in Mexico and most likely in other countries too.
My trusted US brand Car Rental Company does not work that way
If you think that your trusted and well-regarded Car Rental Company you use in the US would never do something wrong, think again. Outside the US, all those brands you know are run by third parties. The local operators just pay to use a brand name people trust. Sadly, franchisees are not playing by the same rules, this is due to the lack of regulation in Mexico. But also, because of franchisers that turn a blind eye to abusive practices in exchange for lucrative royalties.
We know, you came here to learn how to rent a car in Mexico and get the best deals. But all this preamble was necessary to begin to unveil the complexities of the task you are about to embark on. Our aim is not to scare you. Renting a quality car in Mexico at an affordable price and with reasonable conditions is totally possible. You just need to know how the industry in Mexico works and do some due diligence. Once you learn the details of the industry we are about to tell you, will be able to spot a scam from miles away.
The scams described here are not exclusive to a few Car Rental Companies but widely spread practices by some of the well-known international brands, refereed hereafter as the “traditional Car Rental Companies”, including but not limited to Hertz, Europcar, Budget, Dollar, Thrifty, National and Enterprise, plus some Mexican brands that have also adopted this unethical way of conducting business. So, first thing to remember is to be specially careful, when considering one of these companies, do not believe that you will get from them the same level of service you get from them back home.
Renting a Car in Mexico, Scam #1: Unrealistically low prices
Online Tiny Prices Won’t Include Car Loss and Damage Coverage (LDW)
When renting a car in Mexico most of the traditional car rental companies do not include loss and damage coverage (LDW). Yes, the prices you see published on online travel agencies (OTAs), such as Expedia, Kayak, RentalCars.com or even in the Mexican websites of brands like Hertz, only include the plain and bare rental fee and basic third party liability (since it is required by law). They euphemistically say their prices include “Tiempo y Kilometraje” (time and mileage), but if they were more honest, they would say the truth: that their prices do not include anything.
The LDW you will have to pay for it once you pick up the car, and will make your bill increase three to four times. But why would they do it if this pricing scheme is only going to cause them trouble with their customers? well there are a few reasons. The short answer is that they do much more money this way.
Let’s deep in. The online travel agencies add a 30%-65% mark-up to the car rental operator prices. “Unbundling” the LDW, They can offer a lower price, thus they can better compete with other car rental companies. Although the markup is ultimately paid by the customer, it creates pressure on the operator price, which is forced to reduce its own benefit to offset the mark-up. Otherwise they will end up with a higher price than their competitors and would get very few reservations.
At the beginning, avoiding a mark-up on the total cost, was the main reason to take out the LDW. Having the customer to pay for the loss and damage coverage at the rental branch, represents an income that they won’t have to share with anyone. However, this practice seriously distorted the pricing in the industry. When the traditional car rental companies initially unbundled the LDW from the total price, they allocated 50% to the car rental fee (time and mileage) and the other 50% to the LDW fee. This way if they wanted to rent a car in $100 a day, they will publish a $50/day rate (plus the OTA mark up) and will force to buy a LDW at $50/day at their branch.
But then they realized that they could get more bookings if they lowered further portion paid online and increased the LDW fee they charge directly. This way, not only will their prices look lower than their competitors’ prices online, but also they get to keep a bigger portion of the money paid by the customer, as they do not pay commission on what they charge at their branches.
A few years latter and now OTAs mostly offer rates of just a few dollars a day, which represents only a fraction of the total rental cost. At that point the customer ignores that the LDW fee they will have to pay at check-in, will be around $30-$200/day. This looks distorted, doesn’t it? Yeah, we agree, the just fact of paying two dollars a day should be a warning itself, but these sites never clearly advise that no sort of vehicle coverage is included. If they allude to car coverage is to falsely claim that it is included, which is worst as the customer now has the elements to believe they just got the best deal ever. They will claim something like “includes insurance” to let you think that the car coverage is included (LDW) when only basic third-party liability is, in the best-case scenario.
Your Personal Insurance Won’t Be Accepted
Now you may be thinking, “that won’t be a problem for me because my personal insurance covers me for car rental damages and loss, I won’t have to buy additional protection from them”. Well you are wrong. Remember that we said earlier that the industry price structure is distorted? That distortion is the cause why they won’t take your insurance.
The $3-$5 per day price you can get online, includes the Online Travel Agency mark-up, therefore the Car Rental company is only getting $1.5-$3/per day. They now depend on selling you additional coverage to make the income they are aiming for. Even worst, the vehicle’s coverage price has to be high to make up for the very low income they are making online. That’s the reason why the vehicle coverage they sell, which should be an optional add-on, is “mandatory.”
Coverage acquired thru third parties websites won’t be accepted either
You guessed it, for the same reason, the additional insurance you can get thru those OTAs websites won’t be accepted either. They will tell you that they do not have any kind of agreement with those websites and that you should seek a refund. You will have to buy their coverage if you want to have a car to move around.
Nope, neither your Credit Card Insurance
That is right! neither the protection you get thru your credit card will be accepted. You are getting good at this! But wait a second, we omitted to tell you that there is a one in a million chance that your personal insurance, a coverage acquired thru third parties websites, or insurance provided by your credit card could be accepted. Are we telling you that there is still a chance? Yes, please keep reading to find out how.
Buy their coverage or leave a high deposit
It’s a fact that traditional car rental companies in Mexico don’t accept any outside car rental insurance because they don’t have an agreement with any of these entities. If they accepted it and the car is stolen or damaged, they will have to charge you for the total costs and then you will have to file a claim with your insurance provider to get reimbursed. So, if you are willing to take that risk and willing to spend two or three hours to assert your rights, you could be one of the few lucky ones that get to rent a car for a few dollars a day.
Be advised however, that this would require a hefty deposit, sometimes of up to 50% – 100% of the total cost of the vehicle. Since you would be using an external insurance, the only way they have to secure the payment in case something happens, is by holding in your credit card $4000-$30,000 depending on the car (Yes, we are talking USD). Of course, if you are renting a Suburban or a luxury vehicle, that amount can be even higher. As these companies do not have a public deposit schedule, their deposits can go as high as they deem necessary to persuade you into buy their coverage.
If you do not happen to have the requested amount available on your credit card, the game is over for you. If you do that that amount available on your credit car, you just need to be aware that once they have that amount pre-authorized, they can charge you what ever they want up to that amount for any reason. The items you will be responsible for are total repair costs, traffic tickets, towing fees, late fees, impoundment lot fees, the total cost of the car if stolen, and the rental fees for the entire period the car is out of service. Would you be comfortable with that?
Renting a Car in Mexico, Scam #2: Unwanted Upgrades/Downgrades
This is another one of the classics. Let’s say you book a Full-Size car because you need the space for your family and your bags. When you booked, there were cheaper options, but you did not mind to pay a little more for extra space and comfort. But when you show up to pick-up the car, instead of receiving a Full-Size, you get Sub-Compact, without any sort of explanation. They will just try to pass the Sub-Compact as if it were a Full-Size, very casually. Since they make clear that that is the only car available, most customers end up accepting it. But do not expect a refund for the difference in price, if you have made it this far in the article, you will agree that expecting any kind of ethic behavior would be naive.
Here is their logic, the car you booked is not available, forget about it, it is gone. Now, you have two options, you can leave and try to get a refund from the OTA; Or if you are willing to accept the only car they have available, this merciful and considerate people will be willing to let that car go for the same price you had already paid. Trying to rent a full-size or even a subcompact from another supplier at the last minute can cost more. If you accept the lower category car, you need to be aware that you won’t be able to dispute any refund later, as you would have signed a contract accepting the new vehicle at the original paid price.
The truth is that they were never willing to rent you a full-size for the amount you paid. They just figured out that at that price, it would be easier to get bookings if they offered a Full-Size instead of a smaller car. And do not think that this forced downgrades are just to the immediate lower category, no, no, no. You may as well book a Suburban and get a Compact or a Economy.
On the other hand, the opposite could also happen to you. You can book an economy vehicle because that is enough for your party of two, just to find at the check-in that the only car they have available is Full-Size. But do not think that you can get it for the same price, oh no. In this case, you will have to pay the difference. You are not feeling like paying anything extra, then you won’t get a car to drive, good luck seeking a refund from the OTA.
Before we jump to scam #3, there is another thing you have to know. What you just read, is the happy scenario. Yes, it could be worst. You’ll see, these car rental companies, over-sale their inventory, in other words, they take more bookings than the actual number of cars they have. And they don’t just over-sale their fleet by a little, that would not be their style. On the contrary, they take three to four times more bookings than the cars they own. How do you think they decide who is going to get a car and who is not? we will give you a hint, is not by the order the bookings received. Yep, you got it right, it is by the price paid. So all those with lower rates will end up getting to their hotel by uber, adios!
Renting a Car in Mexico, Scam #3: Even with coverage, you will still pay for damages.
Remember you still have a deductible
Let’s say you ended up buying their LDW coverage, now you should have nothing to worry about don’t you? oh boy! sadly you do. That coverage you just purchased which brought your total rental price from a few dollars a day to $80-$200/day comes with a deductible. Now depending on the country, you are renting in, deductibles are a fixed amount or a percentage of the value of the vehicle. In Mexico it is the latter, for car rentals deductibles can go from 10% to 25%.
There are also some 0% deducible coverages, but they are very pricey and can elevate your cost even more, much more, we will talk about those later. Back to the coverage you just bought, let’s suppose it has a 10% deductible, and let’s say the car you rented has a value of $30,000, your maximum liability would then be $3000. Supposedly, if a damage occurs, you should only pay the lesser between the repair costs and the deductible. What actually happens is that if the car gets damaged, they will always charge you as much as possible.
To repair a damaged rim and a minor scratch on the bumper, would only cost a few hundred dollars in Mexico. But guess what, not at your traditional car rental company. Why would they charge you only $200, when they can keep your entire deposit? And if you think they would not dare to charge you that much, for such minor damages, you are underestimating them, as they can always bring the under vehicle inspection mirror, and allege undercarriage damages.
Do not trust those companies that offer free 0% deductible coverage.
We said in the previous paragraph that 0% deductible coverage is pricey because is is. Depending on the vehicle, adding this coverage can sum up from an additional $80-$150. You should be aware that this coverage come also with exceptions, for example, is does not cover damages to tires or rims, neither glasses nor interior damages if it was not caused by exterior damage. So, if you paid a 0% deductible coverage and the windshield gets damaged, you will pay 100% of its cost.
Having said that this coverage is expensive, you must know that is possible to get a 0% deductible for free at certain companies, well sort of. In short these “Free 0% Deductible Coverages” work as long nothing happens. They are much better at letting you believe that you are getting more value for your money and that you have nothing to worry about if something happens. However, if something does happen you will learn the bad way, why you got this coverage for free. The truth is that the fine print in this coverage makes it almost impossible to benefit from it. There are many reasons that could void your coverage, of course, DUI is one of them, which makes total sense. However, the following clause is what you should really be worried about:
“Coverage will not be valid when it can be determined or presumed that the driver has committed negligence, has not respected the terms and conditions of the contract, or has violated the traffic regulations.”
Noted the “determined or presumed” part of the clause? what about the “negligence” part? But let’s deep into what negligence is, because that sounds like something none of us would ever do. Well, negligence is whatever they want it to be, its gray area.
So if you weren’t paying attention to the road, if you did not see a red light, if lost control of the vehicle, which are among the most common causes of accidents, it will be considered negligence. In that case, do not just forget about the 0% deductible coverage, forget about any kind of coverage at all as you will be liable for 100% of the damages to the car and damages caused to third parties. Now, the same goes for car loss, if the car is stolen and it is determined that it was parked at a “high-risk area” guess what, that is also negligence.
Now you see why this coverage is included for free? Because it is just air, just nice words that look good online and get them bookings.
Renting a Car in Mexico, Scam #4: Made Up Fees
Taxes, Fees, Licence Fee and Premium Facility Fee.
You probably know that unlike the US, in Mexico all posted prices must include all applicable taxes by law. Your traditional car rental company, complies with the law by publishing on their own websites or on OTA websites a rate that includes the VAT. Yes, those $3/per day rates we talked about before include taxes. However once you are at their counter and their offer you the additional coverage, you must know that all the prices they give won’t include taxes and fees.
If they offer you LDW for $50 a day and you think that is not that bad, you have to add first a 16% for VAT+ a 19% Airport Tax and if they feel like it, an additional 10% premium facility fee. What is a exactly a premium facility? we have no idea, they branches do not look premium at all. Anyway, those undisclosed taxes just boosted your coverage bill from $50 to $75.92 per day. Easy money for them and an additional $25.92 per day more than what you had already agreed to, just in undisclosed taxes.
Watch out for other undisclosed charges for concepts such as “license fee” “concession recovery fee”, “Busing Cost Recovery fee”, “Energy Surcharge”, Road Safety Fee, and/or Vehicle recovery fee. Unfortunately, these charges are not only frequent when renting a car in Mexico, even in the US these are an issue the funny part is that not even the car rental representatives can explain what exactly these charges are
Renting a Car in Mexico, Scam #5: You will pay a little more in the form of fuel
This is a less obvious scam, however is one of the strategies you traditional car rental company uses to get an additional $5-$20 from every customer, here is how it works. When you pick-up the car the fuel tank won’t be full, they will tell you that you can return it with the same level. However, if you return it with a lower level you will have to pay a higher cost per gallon, usually three of four times the regular price at the gas station. In order to avoid paying such an inflated fuel price, most customer will leave the tank with more fuel than they got.
Car Rental Companies know that is very complicated to calculate the right amount of fuel to add to leave the tank at a certain level, even more, if you are not familiar with the car. Now you know it, it is not just that they did not have time to fill up the fuel tank, it is a well-thought strategy designed to keep your fuel.
How to avoid this and other Car Rental Scams when renting a Car In Mexico
If you are reading this article, we know two things about you: You are interested in Renting a Car in Mexico and you are a cautious person. To get a good deal when renting a car in Mexico, being cautious is the way to go. Invest some time and do some research about your options to ensure ensure a smooth car rental experience. An quick google search about the car rental companies you are considering, will give you great insights of the service they provide, if they honor their online prices, or if they force you to buy additional coverages.
Do not just check the general online reviews of a brand, use google maps to find and read reviews about the specific branch you intend to rent your car from. Even within Mexico, a single US brand may be operated by two different companies which can provide very different experiences, so is important to be as specific as possible in your research.
This due diligence will be your most powerful weapon to fight scammy car rental companies however there are other recommendations that will help you to get honestly low prices:
- Be willing to pay what it cost to rent a car. If a car rents for $3/day that should make the alarm go off. If you know what a car rental truly costs, you can effectively compare between real prices.
- Do not decide based on the brand. Well regarded US brands and their Mexican branches may not have anything in common but the brand name.
- Consider off airport locations. One of the reasons airport branches have to find unethical ways to get more money from their customers, is due to the very high airport space rent. The other reason is that they are dishonest. Anyway, do not limit your research to companies located in the airport, there are many off-airport car rental companies that offer free airport pick-up.
- When renting a car in Mexico consider local car rental companies, less known does not mean less quality. You will be surprised to find out that some of the companies with better ratings and reviews are local brands.
- Avoid using Online Travel Agencies to book your car. They add a mark-up of up to 70% and create distortions in the price structure of the industry and forcing car rental companies to hide charges for insurance and other concepts. Book instead in the car rental company website, prefer those which clearly publish their terms of service and deposit policy.
- Always take pictures or video of the conditions of the vehicle at check-in.
- Call in advance to let the car rental company that you need the car to have a full tank at pickup, and make sure you return it also full. Keep the gas station receipt as it may be requested by the car rental company staff.
- Take care of the vehicle as if it were your own. Bear in mind that even the smallest damage could trigger hefty charges.
- Allocate at least 30 minutes to the car return process. This way you will have more time to dispute an eventual additional charge. If you leave with unsettled items, they could charge your credit card at a later time.
Renting a Car In Mexico: Do it like a pro
As you have read, renting a car in Mexico can be a pain, but just if you do not know how to do it the right way. But even when you have used all our recommendations to avoid scams, we have a feeling that you want something else. We have a feeling that you want some company names, don’t you? We knew it! Well, we have some name of companies we have tried and you can trust.
There is a brand that comes to our mind when thinking about quality cars, warm service, and low straightforward rates. Although they do not have branches at every city in Mexico, they do have at some of the most important tourist destination in the country, and are rapidly expanding to new cities. This company is Veico Car Rental and if you are looking to Rent a Car in Guadalajara, Cancun, Mazatlan, Colima, Manzanillo, Guanajuato, Puerto Vallarta and Mexico City, you should definitely check out their prices.
Of course, there are other quality and honest companies that you could use when renting car in Mexico: Mobix Car Rental, GDL Car Rental, Renta de Autos en Mazatlan, Auto Rentas Mazanillo are among our top picks.