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Why is car hire so expensive in Tasmania?

Why is car hire in Tasmania so expensive?

Leading up to the pandemic the cost of car hire in Tasmania was becoming expensive. After the pandemic it hit an eye-watering high, with costs of $400 to $500 per day to hire a car on average.

Imagine the posh meals and champagne you could dine on for that money if you stayed at home?

Thankfully car hire in Tasmania has dropped back to more realistic levels. This should give you hope of touring the beautiful island state in the best way possible – on wheels. Having done so myself, I highly recommend the adventure.

As of 2024, a hire car from Hertz or AVIS may still set up back around $250/day, but using the tips below you can hire a car for as little as 70 bucks a day – cheaper than the cost of car hire in Melbourne!

How much is car hire in Tasmania?

At the time of writing (February 2024), the cheapest car available to hire in Tasmania for the first week of March is a Kia Picanto from East Coast Car Rentals. This would set you back $72.25 per day, but is such a small car suitable for touring Tasmania?

In comparison, the cheapest car hire we found in Melbourne for the same week was $112.01/day – Over 50% more expensive.

If you would prefer to hire a car from a larger company such as Hertz, your cheapest option is much more – $254.11 per day. Considering the price difference, this is also for a small economy car, a Suzuki Swift, Hyundai Accent, Kia Rio, or Toyota Yaris.

Thankfully, a more practical intermediate car like a Toyota Corolla or Mitsubishi ASX won’t cost you much more per day at either a major car rental company or a smaller one. Expect to pay $10 to $20 more per day for a more practical car, or even an SUV.

As a curve ball, a Suzuki Jimny or similar would set you back $297.49 per day with Thrifty. That’s not much more than the economy cars available at Hertz or AVIS, and despite being a small car, is also a fun (and economical) way to tour Tasmania.

All quotes are from car rental price compare website VroomVroomVroom.com.au.

Why should you pay the price to hire a car in Tasmania?

When Australians want a cheap holiday, they go to Bali. No car required.

Tasmania is not that kind of holiday. It’s a life experience, not a holiday.

As the 26th-largest island in the world, covering around 68,401 square kilometers (26,410 square miles), Tasmania is still the smallest state in Australia in terms of land and population.

What that means for you, on your driving holiday, is a whole range of mouth-watering benefits:

  • Diverse landscapes – Tasmania offers mountains, forests, beaches, and historical sites. Whatever your outdoor preferences, Tasmania has it all, and with a hire car you can see all of it (if time permits).
  • Scenic drives – I’m sure you love driving, and Tasmania is renowned for its picturesque drives. Take the Great Eastern Drive or the drive to Cradle Mountain, both routes offer breathtaking views and the opportunity to explore charming towns along the way. Travelling Tasmania by car is breathtaking wherever you go.
  • Unique wildlife – You’ve heard of the Tasmanian Devil haven’t you? You’ll only find these adorable beasts on Tasmania. You’ll also find the Eastern Quoll, a ferret-like marsupial adorned with cute white spots about the size of a cat, as well as the Red-Bellied Pademelon, resembling a wallaby or kangaroo but even more cuddly. And that’s not all.
  • Heritage and history – Tasmania has a rich history. You have the option of visiting convict sites (great places to reflect on life!), colonial architecture, and indigenous cultural heritage. Exploring the historical aspects of Tasmania will give you a true insight of the island’s history, and best done by hire car.
  • Island atmosphere – The Australian equivalent of the UK’s Isle of Wight, Tasmania has the distinct island atmosphere and more relaxed pace of life. You won’t find the pleated suits of Sydney or the caffeine-fueled busyness of Melbourne. In Tasmania people like to relax, which is what you want on your tranquil and laid-back driving holiday!
  • Outdoor activities – Okay, I know I said “relaxed”, but your trip to Tasmania doesn’t have to be too relaxed. You can hike, kayak, cycle, or go off on wildlife watching jaunts. Whatever you like to do, in Tasmania it’s best done by car, with your luggage – or even your bed – in the boot.

How can you get cheap car hire in Tasmania?

If you were originally put off by how expensive car hire can be in Tasmania, but re-convinced by the previous section on why Tasmania is an absolute must life experience, then let’s look at how to get the cheapest car hire possible in Tasmania.

Getting the best prices on car hire in Tasmania is mostly a combination of planning, timing, and comparison shopping.

Here are quick-fire tips to make sure you get the best price on car hire in Tasmania, and have the best adventure possible:

  1. Book in advance – This is your best way to lock in a lower rate. Car hire prices tend to increase as the pickup date approaches.
  2. Compare prices – Use an online car rental comparison website such as VroomVroomVroom (or an app) to compare prices from various rental companies. You will find a vast difference in prices based on your dates of travel.
  3. Check local prices – It’s understandable some people prefer global car hire companies such as Hertz and AVIS, but it’s worth checking prices of local and regional car rental companies as well. Sometimes these companies offer the most competitive rates. In the example earlier you saw a difference of $72.25 versus $254.11 per day for a small car.
  4. Flexible dates and times – Given car hire in Tasmania can be expensive, it may be worth booking your holiday around car hire dates and prices rather than planning your dates first and then sucking up the price of car hire. Quite often a little bit of flexibility in your travel dates can save you hundreds of dollars.
  5. Off-airport car hire companies – As convenient as it is to hop off the plane and into a hire car, this is often your most expensive option. Off-airport car hire companies are usually much more competitive on price, and even when you factor in transportation costs between the airport and car hire company, you can still save a great deal of money.
  6. Rent a smaller car – Smaller cars are cheaper on fuel and cost less per day. They may not get you around Tasmania in as much comfort, but they will still get you around Tasmania. A larger car may offer more luxury, but if you’re on a budget this can be a trade off for affordability.
  7. Decline optional extras – Additional insurance coverage racks up costs, and you may even be covered by your own car insurance or credit card. Prepaid fuel options may be convenient, but fuel at the pump will be much cheaper. Always refuel before returning the car.
  8. Does your travel insurance cover car hire excess – If you have comprehensive travel insurance it is worth checking if it covers your car hire excess as well. Usually it’s cheaper to be covered by comprehensive travel insurance than it is to pay an additional premium from a car hire company. We will cover this topic in more detail below.
  9. Use discounts, coupons, or membership discounts – Check car rental company websites or third-party travel websites for discounts an coupons. Sometimes this can be painful, but may also get you a better deal. Check if a car hire company has any memberships or affiliations (such as frequent flyer programs) which offer discounts on car rentals. Some credit cards also offer rental car insurance and discounts, so check those too.

With the above tips you should be able to find more affordable car hire in Tasmania, but there are two final points we must cover:

Review Rental Terms

Carefully review the terms and conditions, including insurance options and fuel policies. Sometimes cheap deals may not be as cheap as you think once you factor in additional fees.

Always Read Reviews

Always make sure you read reviews of a car rental company you are considering. Make sure they have a good reputation for service and vehicle quality.

Additionally, always ask for a confirmation of total cost, including any potential additional fees, before making a reservation.

What causes car hire in Tasmania to be expensive?

If car hire in Tasmania wasn’t expensive before, the COVID pandemic caused two things to happen – (1) an increase in mainland Australians opting to holiday in Tasmania rather than other countries, and (2) car rental companies in Tasmania reducing their fleet during the pandemic.

Although both of the above factors caused car hire prices to reach eye-watering levels after the pandemic, as of 2024 normality has almost returned.

Being an island, combined with the cost of car transport across the Bass Straight, makes car hire a far more convenient option. Transporting a car from Geelong to Tasmania on the Spirit of Tasmania will cost from $179 each way, which may be viable if you live near Melbourne, but from further afield you must also factor in fuel costs.

Most tourists to Tasmania therefore prefer to fly to Tasmania and hire a car for the duration rather than transport their own car. What that means for all tourists, whether from mainland Australia or further afield, is strong demand and high car hire prices.

Did you know in Australia your car rental comes with 3rd party insurance?

In Australia a car must have rego, payable annually by the car hire company. This covers 3rd party insurance and the excess includes 3rd party property.

Does travel insurance cover car hire excess?

We’re often put off by the amount of small print in a car hire contract, only made worse after a long flight and eagerness to embark on our holiday while waiting at the car hire counter.

Being covered by our travel insurance policy can alleviate some of our stress, so it is worth knowing what your travel insurance policy covers or taking out a policy which covers car hire excess.

A car hire company may charge $35/day on top of the rental fee for “premium” insurance, and it is in their best interest to sell it to you.

If you’re uneasy about driving in Tasmania, or damaging a hire car, then you may well be tempted into paying such an excess. However, $35/day over a two week trip is almost $500. For that money you can get a far more comprehensive travel insurance policy which will cover far more aspects of your holiday.

All that said, there are downsides to relying on your travel insurance to cover car hire excess:

  • Upfront costs which you will need to claim back – It is likely you will need to pay the car hire company for any damage (potentially thousands of dollars), and go through the rigmarole of claiming it back from travel insurance. Some car rental companies may try and charge you a significant amount for a stone chip. One car hire company tried to charge me for damage on a car which they had tried to charge my boss when he’d hired the same car the week earlier.
  • Paperwork, paperwork, paperwork – It’s to be expected your travel insurance company won’t make your life easy. Expect to provide a great deal of paperwork to prove your claim, and expect delays in the process.
  • The car rental excess may be hire than your travel insurance cap – The excess varies greatly between car rental companies. Some may have an excess of AUD $6000, whereas your travel insurance policy may have a limit of AUD $2000 unless you pay to upgrade it.

For these reasons, travel insurance covering car hire excess may be the cheaper option, but may leave you out of pocket thousands of dollars while you claim the excess back from your travel insurance company.

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