How Much Deposit for Car Rental Should You Charge? A Simple Method

How much deposit should a car rental business charge? There is no single right number, but here is a starting point. If your everyday car's small trip costs run about $150, a deposit of $250 might be right, and a premium car might be $750. For reference, according to Turo, its US trip deposits run from $200 to $750. Set the deposit to cover the small costs a normal trip can leave behind, up to the amount you would pay yourself on a claim. Then adjust it for the car, the renter and what a card hold can carry. This guide gives you a five-step method and a worked example.

How much deposit for car rental should you charge?

Charge enough to cover the small costs a normal trip can leave, and no more than you would pay out of pocket on a claim. For your fleet, that likely means a lower deposit on everyday cars and a higher one on premium cars or riskier renters. Set the number from your own trip records, not a guess.

A deposit that is too low leaves you chasing renters for fuel and cleaning fees. A deposit that is too high scares off good renters and can fail on a card with a low limit. The goal is the middle: big enough to settle small issues without a fight, small enough that good renters still book.

What should the deposit cover?

Think of the deposit as your fund for small, common costs, such as:

• Fuel or charge the renter did not replace
• Cleaning for sand, pet hair or smoke
• Tolls and tickets that show up after the trip
• Late return time past the booked end
• Minor damage below your insurance deductible

Large damage is different. A crash or a stolen car is a job for your insurance. Our guide to the three layers of car rental insurance covers that side, so we won't repeat it here.

How do you size your deposit? Five steps

1. Add up your likely small costs. Look at your last 20 trips. What did fuel, cleaning and tolls cost you when renters left them? Start from the high end of that list.
2. Check your deductible. Ask your insurer what you pay yourself on a damage claim. Your deposit can go up to that amount, so a minor claim does not come out of your pocket.
3. Adjust for the car. A premium car costs more to clean, fix and keep off the road. Set its deposit higher than an everyday sedan.
4. Adjust for the renter. A first-time renter with no history is a bigger unknown than a repeat renter. You can set one standard amount and raise it for higher-risk bookings.
5. Fit it to the card hold. A hold uses the renter's available credit. It also has a time limit, which matters on long trips (more on that below).

Check your local rules before you set deposit terms.

A worked example

The numbers below are illustrative, not a benchmark. Use your own costs.

The sedan's deposit covers its small costs with room to spare and stays under its deductible. The SUV's deposit is higher because each fix costs more. A new renter on either car might get a higher amount. A repeat renter might get the standard one.

How does Turo set its deposits?

Looking at a known marketplace helps you check your number. According to Turo, its system may add a refundable security deposit to a US trip based on the guest's age, vehicle type, vehicle location and other factors.

• According to Turo, it charges a $200 deposit when its security system picks a trip for one.
• According to Turo, trips with a car located in New York carry a $500 deposit.
• According to Turo, a $750 deposit is required for all guests who book Super Deluxe Class cars.
• According to Turo, it refunds the deposit automatically 80 hours after the trip ends when no damage, unpaid invoices or roadside costs are on the trip.

These are one marketplace's rules for its own guests. They are a reference point for your own math, not a target.

When should you place and release the hold?

Place the hold before pickup, not at the counter. A hold that fails a day early gives you time to fix it. A hold that fails at the handoff leaves you sorting it out with the renter standing there.

Card holds also expire. According to Square's developer docs, the default window to capture an authorized card payment is 7 days for online payments. According to Stripe's docs, if the authorization expires before you capture the funds, the funds are released. On a long rental, plan for the hold to run out before the trip ends.

Release the hold quickly after a clean return. A slow release is a poor last memory for a renter you want back. For what to do when the car comes back with damage, follow our damage claim steps.

How does Rentovation handle deposit holds?

Every Rentovation plan includes security deposit holds on the renter's card. You set the amount on each car or as one account default. Rentovation does not recommend an amount; that is your call, made with your insurer.

The hold is placed on the renter's saved card a set time before pickup, and you choose that timing in your account settings. If someone books inside that window, the hold is placed with the payment. When a trip is marked complete and nothing is owed, the hold is released automatically after a short window for you to record charges. Rentovation also watches for holds that are about to expire and alerts you.

Holds run through your own connected Stripe or Square account, and Rentovation charges $0 per booking. Starter is $197 per month and Pro is $297 per month. Renter ID checks, which use prepaid credits, and e-signed agreements are on every plan too. See how they fit together in our guide to verifying renters and our checklist of what your rental agreement must cover.

Ready to run bookings on your own site? Rentovation starts with a 14-day free trial, and you can cancel anytime. See Starter and Pro pricing for the current trial terms.