My Car Rental Debt Collector Debacle And Negotiating a Lower Payment

A few months ago I had gone to visit relatives in Washington D.C for a few days ahead of a work trip to New York. When I got to Dulles airport, just outside D.C., I rented a car from the Budget car rental at the airport. The total for the weekly rental was around $380. Because I already had auto insurance coverage in my home state in addition to my credit card coverage I declined the additional auto insurance and collision coverage that car rental companies try and up-sell you.

All was going fine until two days before the rental was due to be returned when I had a fender bender. One of the members of the family I was visiting and staying with backed into my rental car that was parked in the drive away behind their car, leaving a big dent on the right hand side of the car and damaging the side rear view mirror. Needless to say that family member was terribly apologetic and since they had Auto insurance they offered to pay for any damages. They called their insurance company (Esurance) to report the incident and got a claim number. I then called the budget accident reporting number I had on my auto rental agreement. After going through several automated prompts I got through to a customer service representative who once confirmed the car was drive-able told me to just come in when my rental was done and fill in an accident/damage claim form with the at fault person’s (my family member) insurance details and claim number.

Prior to returning the car I took lots of pictures, notes and had the insurance details of my family member’s auto insurance claim where he accepted all fault for the accident. Apart from the hassle of filling in the forms at the rental return location the whole thing was not a big deal. They didn’t even really check the car when I returned it and just said someone from their claims department would contact me if there were any issues.

I owe how much for the claim!

I never heard back from Budget so called them a few weeks later to check the status of the rental – because I have learned no news does not mean all is fine – and was told the claim was being reviewed. I would get a call if there were any further questions, but no current issues were recorded in their system. So I assumed this episode was behind me and Budget and my family members auto insurance company would take care of the details as would be the case if I had an accident back in my home state with my own car.

But three months later I started getting calls for a payment I owed from someone named William. Given the vague voicemails around the payment I supposedly owed, I thought these were just robocalls. So I ignored them as it didn’t even occur to me that I had any outstanding payments due to anyone. But I then got the following letter from a debt collections company which definitely got my attention as it said I had a debt for collection and 30 days to respond!

My auto rental debt collection notice

The letter stated I owed $243.60 to Budget Rent A Car. I was naturally taken aback after receiving this letter because I had no idea why I owed the money and why it had gone to a debt collection company without Budget getting back to me to discuss it first. Initially I thought it was a phishing scam or fake letter. But I quickly figured out it was probably related to my Budget rental accident from a few months earlier, despite having several more rentals with Budget after that incident. I quickly found my notes/pictures from the incident and called my family member’s insurance company. They confirmed that they had paid the claim. I then called Budget to check why this was sent to me, why it came from a debt collector and most importantly why the charge if the auto insurance claim had been paid.

After a thirty minute call with four Budget representatives they finally confirmed the authenticity of the letter and said that this was an “administrative charge” for handling the claim and for rental time lost while the car was being fixed. This was above and beyond the already paid insurance claim costs. They said this was stated in my rental agreement contract. I pulled the copy of the agreement I had kept with my notes and checked it; and the clause was indeed buried in there. Not very obvious if you weren’t looking for it. This made me mad and I asked them to waive it given I had been a loyal customer as I had rented cars several times in the past year. The representative I talked to said he couldn’t waive the fee and his supervisor wasn’t much help either. They gave me another claims number to call.

Negotiating a Lower Payment

I called that number and got a representative (so far 4 hours and counting, spent on this issue!) who eventually told me that they tried to contact me but couldn’t get through. I had moved houses in the last year so it appeared they still had my old address on file. I did ask why they didn’t call my cell prior to the debt company calling, but did not get a satisfactory answer. But long story short, I was told that after 60 days of no response Budget passes unpaid claims to a debt collection company. I decided to stop arguing about this further because I was beyond frustrated and generally once the letter is out for debt collection, it is hard to pull back without the claim being settled.

I then decided to call the debt collection company who confirmed the process above and it seems were able to get my current address and contact number pretty easily. That’s a separate topic and worrying at one level, but it appears unlike Budget they had their act together. They were actually pretty courteous throughout the process and provided much more information than Budget did. They confirmed the $243.60 charged was administrative and not related to the insurance settlement.

Given this confirmation and because I didn’t want this debt to eventually hit my credit score I decided that OK I can pay it but I did ask for options. I knew that this was a non-interest accruing debt (see letter) so technically I could let this drag out for months and deal with constant follow ups. Based on what I had researched online I also knew the main goal of debt collectors is to settle the account ASAP so they get paid and have a certain minimum they can go down in order to settle the debt (normally between 50% to 75% of the debt). After some back and forth with the agent, they agreed to drop the amount owed by 15%. I said thank you and asked them to send me a letter to confirm this. But this was just the first round of negotiations.

After getting another follow letter and several calls over the next two weeks I called them back and said that due to the worsening economic situation (due to the Coronavirus induced slowdown) I needed a break. I argued that I could not make the current payment and would take several weeks to pay it. Surprisingly quickly the agent said he understood and had directions to settle ASAP so could cut the payment due in half! No questions asked, if I agreed to settle now. I said I appreciated that and to send me a revised letter confirming that. I wants to get this revised offer in writing. I got the following letter a few days later.

My negotiated lower auto insurance debt payment

The letter confirmed my conversation and reflected the lower payment I had negotiated. So I made the payment and while annoyed at being hit with this bogus administrative charge I was glad to settle this for half the original amount.

Lessons Learned

Other than what I stated in this article, here are main lessons learned from this ordeal. Some of which I hope help others who may face a similar situation in the future and stumble across this article.

– Read the auto insurance contract and be aware of these hidden costs. Ask at the counter when they ask you about getting insurance. While I am sure most auto rental companies have hidden fees, I was pretty disappointed with the customer service and lack of flexibility from them as I had been a loyal customer. Budget rent a car is definitely not on my preferred list and likely going to lose a lot more from my patronage than the administration charge it hit me up for.

– Debt collection companies main purpose is to settle the debt. So don’t just assume you have to pay the full amount at the outset. Always negotiate and hold firm. You will likely be able to negotiate a lower payment. And get everything in writing!

Have you experienced anything like the above? Please leave a comment if so and share your experience and tips.

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One thought on “My Car Rental Debt Collector Debacle And Negotiating a Lower Payment

  1. I always joke watching People’s Court and Judge Judy saved me from being ripped off!! I’ve received full deposits my last two moves!! After 11yrs in one apt I got 1/3 of the deposit. What I found insulting was the made up damages(carpet, yes carpet!!!) to keep the interest as well! I read complaints this complex takes advantage of low income which I wasn’t!! That’s actually why I moved. I stated in my response, assuming I was low income and vulnerable would come back to bite them!! I submitted all my pictures to BBB opened case! One day I called apt customer service to check on case and she said “Wait you never missed a payment in 11yrs! I’m looking at these pictures how clean you left apt and took pictures of ceiling caving in etc. I’ll take care of this!” I got the check for what they kept in the mail!! BBB was useless!! I warned my next landlord lets not play games here are the pictures after 6yrs! I got full deposit plus interest!! People pay the rent on time and document all damages and repairs!! Now I OWN!!!

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