I love renting cars, but hate paying up for rental cars. Over time, I’ve found a method which is very effective in reducing the cost of rental cars. It takes some time and patience – but can be very much worth it in a large cash savings. This method focuses on analyzing the data for rental cars, and bidding smartly on Priceline for your car. I have found the Priceline always offers “Opaque” rates far below the rental car companies – even with good online coupon codes.

Step 1 – Set Your Base Price: Use a travel site such as Expedia, Orbitz, or Travelocity to create a matrix of travel prices for the car you want. Write down the best price, for the type of car you want. Being willing to be a little flexible on the car type can be helpful, but is not required.

Step 2 – Hit Hotwire: Go to Hotwire.com, and search the same place, dates and times. Write down the price this gives you – it will likely be lower – but not always.

Step 3 – Look in the City: Are you flying to an airport and then transferring into a city center? Ie flying to San Francisco Airport SFO – then headed for downtown San Francisco? Search the same prices in #1 and #2 above at the City destination – not at the airport.

Tip: Airports charge big, big taxes on rental cars. By renting away from the airport, you can save significantly just on taxes right off the bat.

Step 4 – Costco: Are you a Costco member? Go to Costco.com and click on Travel. Check coupon / discount prices from 3 major rental car companies. I would suggest focusing on Avis, Alamo, and National. They aren’t #1 and they do try harder. If you find anything you’d consider – lock it in – there is no penalty for cancellation unless you choose a prepaid option.

Step 5 – Get Info: Go to biddingfortravel.com to check out prices that folks are getting approved and rejected at priceline.com. Try to match the rough period you are traveling by 1-2 weeks and guess from the car types that are winning. Ie if a midsize is winning at $25/day, a compact is likely to win at $20 per day. The info for your savings contained in this site is very important to bidding smartly.

Step 6 – Priceline: Priceline is your friend, and time is your 2nd best friend. Every day, you can bid for every car type on Priceline, and bid all over again in 24 hours. Don’t be pressured into a poor choice. The economy is weak – and cars need to get paying renters. Use all the data you compiled to bid at least 30%-50% off the Hotwire or best other price you found. Start by bidding the biggest car you’d take, and go down from there. You might get a bigger car for the cheap price you bid. Only bid one car type at a time. If all your bids fail – go up by ~$3 the next day and see how you do. Note that Priceline does charge fees which are above your normal government taxes. Make very sure you are saving at least 30% from your “best” price above before locking into a Priceline deal. Priceline is non-cancellable, so make sure your trip is locked too.

Backup Plan: Always hold a cancellable reservation from the standard companies. Use Priceline to try to improve your price, and don’t even bid if it isn’t a 30%-50% savings – including the Priceline fees. Here is a real life scenario we found with real results yesterday:

San Francisco Car Rental – July 2009 – Compact Car
Orbitz – Alamo is lowest at $724/week (SFO Airport)
Costco coupon brings Alamo down to $564 at Alamo’s site. (SFO Airport)
Hotwire at $452 (SFO Airport)
Enterprise – City downtown pickup at $277
Priceline accepted bid – $190

Our savings by going city downtown pickup and Priceline bidding was 74% versus our first search on Orbitz, and even 30% under the most comparable bid from Enterprise downtown (which is the savings % Priceline estimates).

Do your homework, and save serious money renting a car.