As travellers look ahead to 2026 with new resolutions on how to make holiday money go further, new analysis from iCarhireinsurance.com, a leading provider of car hire excess reimbursement insurance, shows how simple planning tricks can cut the cost of car hire by hundreds of pounds.
From booking at the right moment to avoiding the hard sell at the rental desk, these tips reveal the biggest savings available for the year ahead.
- Travel off-peak and hire from just £12 a day1
For those with flexibility, low-season travel offers remarkable value. In November 2025, deals as low as £12 a day in Faro were available, £19 a day in Larnaca and £20 a day in Tenerife¹. With winter breaks and shoulder-season escapes growing in popularity, off-peak hiring remains one of the easiest ways to slash costs.
- Dodge costly rental desk extras
With 31% of UK car hirers experiencing a hard sell at pick-up 3, be careful not to let costly extras quickly inflate the bill. Research into European hire costs¹ found the average price of excess protection (£232), an extra driver (£74), a sat nav (£86) and a child seat (£72) can add £464 to the final price for a week’s hire.
Preparation pays off - bring your own sat nav or use your smartphone, travel with your child’s car seat, and consider arranging excess protection in advance from a specialist provider of car hire excess reimbursement insurance like iCarhireinsurance.com.
- The biggest saving - buy excess protection cover before you fly
The same study¹ shows rental company excess waivers average £232 per week (£174 for super damage waiver and £58 for tyre and excess waiver protection). These protect drivers from excess charges of around £1,8001 in the event of theft or damage, even if it is not the driver’s fault.
However, drivers do not have to buy excess protection from the rental company. A weekly European policy from an independent excess reimbursement provider like iCarhireinsurance.com starts from £33.15⁴ and covers damage, theft, and tyres and windscreens. Annual European policies start from £41.99⁴, offering exceptional value for frequent travellers.
Drivers should also ensure they have a credit card available for the excess deposit to be held until the car is safely returned, as many rental firms will not accept debit cards.
- Book early - then rebook if prices fall
Many major car hire companies usually offer free cancellation if notice is given, often 48 hours before travel. This creates a reliable savings tactic: book early to secure the car you want at a price you are happy with, then check prices shortly before departure to see if savings can be made.
In 2025, European car hire prices fell 16% between January and July 2, with price drops of around £100 in Nice and Crete. Barcelona (17% cheaper), Faro (19 % cheaper) and Milan (14% cheaper) also offered strong reductions. If your chosen rental company allows free cancellation, simply rebook at the lower rate.
- Protect yourself from damage charges: record everything
39% of renters have found unrecorded damage on their vehicle3, and one in ten say they were unfairly charged for it3. Yet only just over half take photos when they pick up or return the car, and only 32% take video3.
Documenting all sides of the vehicle at both ends of the hire – ideally with time-stamped photos or video – remains one of the simplest ways to avoid disputes.
- Read the fine print
Almost half of renters (48%)3 admit they signed their rental agreement without reading it properly. Understanding whether the car must be returned with a full tank, what to do in case of a breakdown, and how much excess will be held on your card can prevent unwelcome surprises. Keep all paperwork accessible throughout the trip.
Ben Wooltorton of iCarhireinsurance said: “As travellers look ahead to 2026, one of the easiest New Year resolutions is to stop overpaying for car hire. Costs can spiral quickly, but with a little preparation you can keep hundreds of pounds in your pocket.
“Book early with a company offering free cancellation but check prices again before you travel to see if there is a better deal. Avoid buying costly extras at the rental desk; bring your own child seat or sat nav and think twice before adding an extra driver. The biggest single saving often comes from arranging excess reimbursement insurance in advance with a standalone provider. Rental companies’ waivers can cost more than £200 a week, while independent protection is available from just over £33 and includes tyres, windscreens, and theft.
He continues: “And take your time when checking the vehicle. Even a small scratch can cost hundreds to repair, so photographs or a short video at both pick-up and drop-off are essential. Car hire doesn’t have to be stressful or expensive. With a few practical habits, travellers can start the year with a smarter approach, a better deal, and more of their holiday budget intact.”
Sources
1iCarhireinsurance.com surveyed the cost of renting a medium compact hire car, e.g., a Ford Focus or
VW Golf, in
six popular winter destinations - Larnaca (Cyprus), Barcelona, Faro, Tenerife, Nice and Milan - from 15 - 22
November 2025. Six rental companies were surveyed – Avis, Budget, Enterprise, Europcar, Hertz, and Sixt. The
cheapest destination was Faro, where a week’s car hire with Europcar costs just £87, compared with
an average of
£109. In Larnaca, a week with Enterprise costs £131 (average £163), while in
Tenerife, Europcar charges £143
(average £161). The most expensive destination was Milan, where the average weekly hire costs
£299.
iCarhireinsurance also surveyed the cost of excess waivers, excess fees, extra drivers, sat navs and car seats.
2 The costs comparison study by iCarhireinsurance.com, compares the cost of booking a medium compact car (e.g. VW Golf or Ford Focus) from 26th July to 2nd August 2025 if booked back in January 2025 or if booked on 21st July 2025, a week before departure. Seven popular European destinations (Barcelona, Crete, Dalaman, Dubrovnik, Faro, Milan and Nice) and six major rental providers (Avis, Budget, Enterprise, Europcar, Hertz, and Sixt) were surveyed.
3 Opinium online survey with 1000 adults who have hired a car in the UK or abroad took place between 21 – 28 March 2025.
4 £33.15 based on a 30-year-old UK resident buying an 8-day single trip car hire excess policy from iCarhireinsurance.com for use in Europe. £41.99 annual price is based on a UK resident aged between 30-80 purchasing an excess Europe annual policy excluding in-country (UK) cover.
