Five ways to cut the cost of car hire

There's nothing I like more than getting away from it all.

So one of my personalised goals on lovemoney.com is to cut down the cost of holidays - that way I can travel more often.

Hiring a car can be a good way to get around on holiday but I've found the costs can be exorbitant. If that wasn't bad enough, car hire companies can be notorious for adding on extra costs to the headline price so it's important to know what you're paying for.

Here's my five-step guide to cutting the cost of car hire:

1) Shop around

If you're thinking of just wandering into the nearest car hire place when you arrive at their airport, think again. It's much cheaper to shop around and book a car in advance.

In some destinations, pre-booking is essential - there are rumours of a car hire shortage in mainland Spain and the Balearic Islands this summer so if you don't plan ahead you could end up paying through the nose or being unable to hire a car at all.

Brokers and comparison sites such as Holiday Autos, ebookers and Expedia can help you find and book the cheapest deal. If you book via a cashback website, you can cut the cost even more. Find out more about cashback websites.

2) Stick to your guns

In my experience, when you arrive at your destination, some car hire firms will try and persuade you to upgrade the car you booked or palm you off with an inferior car you didn't order. If you don't get what you paid for, then the car hire firm is breaching the contract and you're entitled to claim back the difference in cost between the car you booked and the one you end up with.

When you collect the car, always make thorough checks for any damage to ensure you are not blamed for any you haven't done on your return. Mark any damage - no matter how small - on the car diagram that comes with the contract and get the salesman to agree with your notes. Take photos as well if you can.

3) Check insurance and excesses

You'll probably be sold some kind of insurance when you book a car, but watch out for salespeople trying to flog you more cover when you pick up the car at the airport.

The most basic insurance you get with car hire is normally called a 'collision damage waiver'. However this will carry an excess that you must pay yourself if you make a claim. To reduce the excess payable to around £50 or £100, the car hire company might try to sell you a 'super collision damage waiver' or 'damage excess insurance'.

But  as well as being pricey, if you read the small print you're likely to find that this won't cover damage to certain parts of the car such as tyres or windscreen.

An alternative is to buy a separate policy before you go that will cover excess payments, plus damage to parts of the car not covered by the car hire firm's policy.

Insurance4carhire.com will sell you this cover for £4.50 a day (compared to around £12 charged by car hire companies). It also sells monthly and annual policies if you hire cars regularly, and you can get a 20% discount through cashback website Quidco.

4) Check the fuel situation

Before taking the car away, check the fuel situation. Have you paid for a full tank? How much is actually in the tank? How must you return the car?

If you need to return the car with a full tank, check where the nearest fuel station is to the car hire return depot. And of course, find out if your car runs on petrol or diesel - get it wrong and you'll be charged for any damage caused to the car or its tank.

5) Check for damage upon return

Most car rental agreements are made on a daily or 24 hour hire basis. Therefore returning your car late may incur an extra day's rental to be added to your bill. Check the time you have to return the car and make sure you're back in plenty of time.

On returning the car, wait while staff inspect it, then ask for a copy of the final report. If there's nobody there to inspect it or they don't have time, note this on the rental agreement.

When you hire a car you'll probably be asked to leave your credit card details, so the car hire company can bill you for any extras incurred. Some unscrupulous firms will try and bill you for damage caused later that you're not responsible for so keep an eye on your credit card statement for any sneaky late charges.

Again, it can be a good idea to take a photo of the car when you return it, with the time and date displayed, to clear up any later misunderstandings about the time and condition of the car when you brought it back.

Have a nice holiday!