Renting a car overseas

Everything you need to know about hiring a vehicle overseas.

Renting a car on an overseas holiday is a great way to get around and see the sights. Rather than relying on public transport or the rigid structure of an organised tour, hiring a car lets you explore and enjoy your surroundings at your own pace.

Unfortunately, overseas car rentals can be a minefield if something goes wrong. From car accidents and theft, to making sure you have the proper licence and that you obey the local road rules, read on to find out how you can stay safe and avoid unexpected costs when renting a car overseas.

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What driver’s licence do I need to rent a car overseas?

If you’re planning on driving a car overseas, it’s recommended that you apply for and obtain an International Driving Permit (IDP) before you leave home. While you won’t necessarily need an IDP to drive in your destination country – though in many countries you will need one to avoid a fine – in most cases you’ll need this document if you want to rent a car.

An IDP is a translation of your Australian driver’s licence and it allows you to get behind the wheel overseas without having to pass any further tests. This United Nations-sanctioned document is translated in nine different languages (English, Spanish, Japanese, Greek, German, Arabic, Russian, Chinese, French) to help you communicate with foreign authorities, and it can also act as an additional form of photo ID during your trip.

IDPs can be purchased from any state-based Australian automobile club for $39 (plus postage). The National Roads and Motorists' Association (NRMA), the Royal Automobile Club of Victoria (RACV), the Royal Automobile Club of Queensland (RACQ) and the equivalent in each state are the only organisations able to issue IDPs in Australia. Any IDP you get elsewhere is likely to be counterfeit and illegal to use.

The Australian Automobile Association maintains a comprehensive list of countries where an IDP is required. Check it out in advance of your holiday to find out the driver’s licence requirements wherever you are going.

You can then apply online at www.internationaldrivingpermit.com.au, or visit a retail branch of your state motoring organisation. You’ll need:

  • Your current Australian driver’s licence
  • A recent passport-sized and -style photo

IDP applications are processed within 10 working days.

International visitors renting a car in Australia – rules and regulations

If you’re an overseas traveller visiting Australia, the rules and regulations surrounding international drivers vary from state to state. However, if you’re a temporary overseas visitor (such as a tourist) and you hold a current licence in your country of residence, there’s no need for you to apply for an Australian state or territory licence.

You can continue to drive on your overseas licence provided:

  • You remain a visitor (your residency status doesn’t change)
  • Your overseas licence remains current
  • You have not been disqualified from driving, had your licence suspended or cancelled, or had your visiting driver privileges withdrawn

If your licence isn’t written in English, you must carry an English translation or an IDP along with your overseas licence when driving at all times.

In addition, if you’re renting a car, many car rental companies will require you to have a photo ID licence. If your licence does not include a photograph, you’ll need to apply for an IDP before you arrive in Australia.

Finally, remember that any restrictions or limitations that apply on your home driver’s licence will also apply in Australia. For example, if your licence specifies that you can only drive four-cylinder vehicles in your home country, you won’t be allowed to rent a six- or eight-cylinder car down under.

Do I need to take out insurance when hiring a rental car overseas?

Yes. Insurance is an essential consideration when you rent a car overseas. There are a couple of types of cover to consider:

  • Physical damage insurance. Also known as a collision damage waiver or a loss damage waiver, this covers damage to the vehicle if you’re involved in an accident. All rental cars will usually come with this type of insurance.
  • Liability insurance. You’ll usually also be offered liability insurance from the rental company, which provides cover if you injure someone or damage someone else’s property while behind the wheel of the rental vehicle.

However, even with the above covers in place you’ll still be liable to pay an excess to the rental company if your vehicle is involved in an accident, stolen or maliciously damaged. This excess, also known as the Damage Liability Fee, Accident Damage Excess or the Damage Recovery Fee, usually starts at around $3,000 but can be several thousands of dollars in some cases.

There are a few options available to help you reduce this excess:

  • Excess reduction cover from the rental company. This type of cover is usually sold to you at the car collection desk and can be a convenient way to reduce or eliminate the excess that applies by paying an additional daily premium. However, this is usually an expensive option and you need to read the fine print closely to make sure you’re aware of any exclusions that may apply.
  • Standalone car rental excess cover. Some specialist insurers provide policies specifically designed to cover the car rental excess. These provide comprehensive cover for damage to your rental vehicle in a wide range of situations, including damage to areas of the car that are excluded by some rental companies, for example windscreens and tyres. They’re also typically more affordable than cover purchased from the rental company.
  • Comprehensive travel insurance. Car rental excess cover is a standard feature on most comprehensive travel insurance policies. It provides car rental excess cover in a range of situations, though this cover is usually not as broad or as comprehensive as that offered by standalone rental excess policies. However, buying travel insurance means you can also enjoy a wealth of other benefits, including cover for overseas medical expenses, cancellation costs, lost or stolen luggage and much more.
  • Credit card travel insurance. Many high-end credit cards include complimentary travel insurance, and some policies offer rental vehicle excess cover. This means that you could potentially reduce or eliminate your excess without having to pay any extra insurance premiums. However, check the fine print to find out when you are and aren’t covered and to see what limits apply.

Check out our guide to car rental excess insurance for more information.

Who’s responsible for damage in a rental car overseas?

Many people assume that because their vehicle is a rental, the rental company will automatically be responsible for covering the cost of any damage to the car. Unfortunately, this is not the case.

While the car is in your custody, you’re responsible for any damage caused – both to your own vehicle and anyone else’s vehicle. This is why you insurance cover is essential when renting a car overseas.

However, it’s worth remembering that you don’t necessarily need to purchase cover from your rental company. While these options are convenient they are also often expensive, so it’s worth shopping around for standalone cover direct from an insurer to see whether you can find a better deal.

What rental car costs do you need to look out for overseas?

Aside from insurance and excess costs, there are several other costs you need to keep an eye out for when renting a car overseas:

  • Basic rate. This is the rate charged per kilometre driven and includes any tolls or admin charges.
  • Driver surcharges. Most rental companies impose a hefty additional daily surcharge on young drivers, while you’ll also need to pay extra for each additional driver you decide to list on the rental agreement.
  • Credit card surcharges. Expect to pay a little extra to cover the cost the rental company incurs processing your credit card payment.
  • GPS rental. Need a GPS to help you navigate your way around? This will come at an extra cost.
  • Baby seat rental. Travelling with a baby or child? If you haven’t brought a car seat with you from home, you’ll need to rent one at an additional daily rate.
  • Roadside assistance. If you want the convenience and peace of mind of breakdown assistance, this can be purchased for an extra fee.

Then come the hidden fees and charges which may be attached to your rental, such as:

  • Refuelling charges. If you don’t return the car with a full tank, you’ll be charged for a petrol refill at several dollars a litre.
  • Traffic infringement administration costs. Parking fines and speeding tickets will be sent to the rental company, and they’ll usually charge an extra fee to cover their admin costs.
  • One-way fees. If pick up and drop off your rental car in different locations, a one-way or relocation fee will usually apply.
  • Premium location surcharge. If you collect your rental vehicle from what the rental company classes a “premium” location, for example an airport, you’ll pay much more for the cost of car hire.
  • Excess kilometres fee. Your rental agreement will often place a limit on the distance you’re permitted to drive the vehicle, and exceeding that limit will result in a fee.
  • Early return fee. When you return your car earlier than planned, the rental company may impose a charge to cover its lost rental income. However, you will usually be able to get back the money you’ve paid for any unused days.
  • Late return fee. Check your rental agreement to find out when late fees will begin to apply if you miss your specified return time.
  • Cancellation fee. Need to cancel your booking the day before you’re due to collect your rental car? Expect to be slugged with a cancellation fee.

How to save on overseas car rentals

Give yourself a little extra spending money on your next overseas trip by using these simple money-saving tips:

  • Don’t pick your car up from an airport. You’ll need to pay a premium location surcharge if you collect the vehicle from an airport, so look for rental company depots in other locations at your destination.
  • Be wary of one-way trips. An extra fee will apply if you pick your car up in one location and drop it off at another – for example, if you pick it up at Heathrow and drop it off at Gatwick. Returning to the pick-up point can save you money.
  • BYO GPS and accessories. Instead of hiring a GPS, why not bring your own or use your smartphone? Instead of hiring a car seat for your child, will your airline allow you to bring your own seat with you as checked baggage?
  • Check the fuel economy. The terms of most rental agreements require you to return the car with a full tank of petrol, while you’ll also need to pay for fuel to get around to see all the sights. With this in mind, remember to select a fuel-efficient vehicle.
  • Inspect for damage. Thoroughly inspect the exterior, underbody and interior of the car for damage, and make sure all damage is included in the damage report before you sign on the dotted line. Taking photos of the vehicle before you drive is also a good way to get proof of its condition. This will prevent any unexpected (or unexplained) damage being charged to your credit card.
  • Look for special deals. Does your credit card company offer special deals on car rental? Can you access discounted car rental as part of your package holiday? Keep an eye out for discounts and special offers to help keep more money in your pocket.
  • Only list one driver. The more drivers you list on the rental agreement, the more you’ll need to pay to hire a car. Stick to one driver to keep costs down.
  • Downsize. Do you really need a hulking SUV if you’re only going to be cruising around busy city streets? Generally speaking, the smaller the vehicle you choose, the less it will cost to rent.
  • Don’t get excess reduction cover from the rental company. Both standalone car rental excess cover and comprehensive travel insurance usually offer much better value for money.
  • Discounted trips. Some rental companies offer discounted trips to drivers who are willing to relocate their vehicles to depots where they’re needed. Sites such as RentalCarRelocation and iMoova can help you find the latest offers.
  • Shop around. Last but certainly not least, compare rental quotes from a number of companies online. It’s quick and easy to do and could save you hundreds of dollars.

What do I do if I have a crash overseas?

Being involved in a car accident overseas can be a stressful and potentially expensive nightmare. Hopefully it never happens to you, but if it does follow these simple steps:

  1. Make sure everyone is safe. Check on the safety of everyone involved in the accident and call the emergency services if necessary. It’s a good idea to have a list of the relevant emergency numbers in the country you are travelling.
  2. Make sure the surroundings are safe. Do everything you can to reduce the risk of any further accidents or damage. For example, do the vehicles need to be moved off a busy thoroughfare?
  3. Gather details. Collect the names, contact information, driver’s licence and insurance details of everyone else involved in the accident, including witnesses.
  4. Get photographic evidence. If it’s safe to do so, take photos of the accident scene and the damage to any vehicles.
  5. Contact the rental company. Contact the car rental provider to let them know what has happened. They will advise you of the next steps to take and what will happen to your vehicle.
  6. Contact your insurer. If you have travel insurance or standalone car rental excess cover, contact the insurance provider to notify them of what has happened.
  7. Provide documentation. Provide whatever documentation and evidence is needed to support your claim, such as police reports, photos, repair quotes and more.
  8. Check before you drive. Thoroughly check your vehicle to make sure it’s safe to drive before doing so.

If you have travel insurance, the good news is that many comprehensive policies will also cover the cost of returning your vehicle to the nearest rental depot if you’re medically unfit to drive. Check your travel insurance product disclosure statements (PDS) to find out whether you have this cover, and take a look at our guide to what to do when you’re involved in a car accident overseas for more information.

Can I rent a car overseas on my provisional licence?

On your P-plates and want to rent a car overseas? The good news is that this may be possible, but you’ll need to check the local laws and regulations in the country you plan on visiting to make sure it’s okay.

If you need an IDP to get behind the wheel wherever you’re travelling, these permits can be issued to provisional and full licence holders. However, they’re not available for L-platers.

You should also be aware that some rental companies may refuse to rent you a car. Each company has its own policies and may refuse to rent a car to:

  • Anyone on a provisional licence
  • Anyone under 21 years of age
  • Anyone who has held a licence for less than a year

As always, research your options online before you go to make sure you’re aware of all terms, conditions and restrictions that may apply.

Tips for renting a car abroad

Renting a car overseas? Check out the tips below to help you stay safe and avoid any potential drawbacks:

  • Get the proper licence. Will you be allowed to drive at your destination with your Australian driver’s licence, or will you need to apply for an International Driving Permit? Get this sorted before you depart so that you can hit the ground running when your holiday starts.
  • Book before you travel. Don’t leave car hire until you arrive at your destination, as you might have to endure a long wait, not be able to get the car you want, or even miss out on a vehicle altogether. Booking online can help you avoid queues and potentially find the best deal available.
  • Compare and save. Compare quotes online from a range of car rental companies to find the best value for money.
  • Choose your pick-up and return locations carefully. You will typically be charged a premium location surcharge if you pick up your rental car from an airport. You’ll also be charged extra if you plan to return your vehicle at a different location to where you picked it up.
  • Make sure you’re insured. Make sure you’re adequately protected against expenses if your rental car is stolen, maliciously damaged or involved in a collision. Whether you rely on credit card travel insurance, standalone rental car excess insurance, comprehensive travel insurance or even excess reduction insurance from the rental company, it’s crucial to consider taking out some level of cover.
  • Automatic over manual. Not completely comfortable driving a manual car? An overseas trip, when you’re battling to understand the local road rules and potentially even driving on the “wrong” side of the road, is not the time to try to improve your skills. Request a car with automatic transmission in advance so that you have one less thing to worry about.
  • Request a GPS. Getting lost overseas can be a stressful and even dangerous experience. Don’t rely on maps or just your sense of direction. Ask for a car with an in-built GPS system or rent a portable GPS to help you find your way around.
  • Check for damage. Make sure to thoroughly check your car for damage before driving away from the rental depot. Check the exterior, interior and underbody, and make sure any existing damage is included in the condition report.
  • Learn the road rules. You might be surprised just how different road rules can be from one country to the next, so research the road rules in the countries you’re visiting before you travel. This will help you stay safe on the roads and hopefully avoid running into any trouble with the law.
  • Don’t be a tourist. In some parts of the world, looking like a tourist can make you (and your rental car) an obvious target for thieves. Put your luggage in the boot, hide any maps/brochures and GPS systems, and remember to lock the doors when you’re not in the vehicle.
  • Read the rental agreement. Check the rental agreement before you drive to make sure you’re aware of any important terms and conditions that apply to the car. For example, are you allowed to drive on unsealed roads? Will you be hit with a hefty fee if you don’t refill the fuel tank before returning the car? Is there a surcharge for young drivers? Is breakdown assistance included as part of the agreement?

By preparing yourself for renting a car and driving overseas before you travel, you’ll be perfectly placed to hit the open road with complete confidence.
Picture: Shutterstock


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Tim Falk

A freelance writer with a passion for the written word, Tim loves helping Australians find the right home loans and savings accounts. When he's not chained to a computer, Tim can usually be found exploring the great outdoors.

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