Why is a Security Deposit Held?

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If you’re going on a foreign trip, renting a car is a great way to get around. A rental car enables you to drive your own car instead of waiting for the metro, buses, or taxis. However, it is mandatory to let the rental car companies hold an advance deposit or security, and that amount is usually between 85% and 150%.

The deposit amount is blocked on your credit card and will be released within 30 days after you return the rented vehicle. The collateral (deposit) is blocked, not debited. Continue reading to find out the reasons and explanations why companies need to charge double or triple the amount of rental as security.

They Help Incentivize Renters to Return Cars on Time

The deposit encourages renters to return vehicles on time, which is a major benefit for us. A deposit ensures that customers remember to return the rented vehicle. In many cases, the late return fee is deducted from the deposit.

The sharing-economy transportation model becomes unstable if customers cannot be trusted with only temporarily available vehicles. And it is the deposit that makes this model stable and reliable, as well as safe for the companies that offer you their vehicle in your possession.

The Deposit Can Cover the Damage

Accidents are quite common on the road for which rental company offers insurance for the renters. However, not everything is covered by basic insurance. If the renter, by any chance, gets into an accident and damages the vehicle, they need a way to pay for the repair cost.

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

Protection Against Any Potential Scam

A rental vehicle is the company’s property, and they must ensure its safety and security. The security deposit allows them to have a guarantee against the stealth of their car.


The main purpose of car rental businesses is to protect their property 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; make sure you take care of the rental vehicle.

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