Reasons Why Rental Car Companies Require a Deposit

Rental cars are a great choice of transport if you’re on a foreign tour. They let you drive your private vehicle without needing to wait for metro, buses, and taxis. However, almost all rental cars require an advance deposit or security, and that security amount is usually about 85%-150%.

So, why do these companies require that large amount as a security deposit? Here’re the reasons and explanations why rental car companies need to charge double or triple the amount of rental as security.

They help incentivize renters to return cars on time

The main incentive is that they help incentivize renters to return cars on time. If you’re worried about being late or damaging the vehicle in any way, then a deposit is going to make sure you’re extra motivated not to have those things happen. Why would companies want customers who are so motivated not to return their cars late or damage them? 

Well, if customers can’t be trusted with vehicles that belong only temporarily in their possession, then the model of sharing-economy transportation becomes unstable. And here, the deposit is the thing that makes this model stable and reliable, and safe for the companies that offer you their whole vehicle in your possession.

The deposit will let them cover the damage

You’ve got the freedom to go anywhere and do anything with the company’s car. The company will not restrict you for anything during your rental tenure. 

In that case, an unintended accident or damage is possible and it does happen with 10 out of 3 people. Suppose, you’re driving on a plain road, and out of the blue, your brain gets unbalanced and you crash the car into a tree.

In those cases, the rental companies will deduct that accident repair cost from your deposit. They need advance assurance that if you damage their vehicle they can charge you.

The deposit protects the scam

A customer rented a car and drove it to their personal space and decided not to bring the car back or simply, stole the car. In that case, what would the company do? The company does issue the police FIR for stolen cars and might find a car back, but that doesn’t provide 100% security against stealth.

They can’t just operate their business on people’s beliefs and honesty, they need a guarantee. The security lets them have a guarantee against the stealth of their car. If you try to steal the car, they’ll simply sue you in court and will keep charging you a penalty fee unless they get their car back from your possession.


We hope that you now have a better understanding of why rental car companies require a deposit. The main reason is to protect their business and ensure that they get their money back if there are any damages or issues with the car when it is returned. This doesn’t mean you shouldn’t rent from them; just make sure your expectations are realistic and take care of the vehicle!

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