Car hire services offer solutions to clients who could need a car but their current situation does not allow them to have their own. Reasons for car hire include traveling, car damages resulting from accidents, or a private need that requires you to have more than one car for a short time. A car rental agreement template is signed between the owner of the car and the person renting as a mutual agreement that the car was taken in good condition and will be returned in good condition.

Car Rental Agreement
Car Rental Agreement Download for Word

Car Rental Agreements

How do I write a car hire agreement?

Car hire agreement brings together two parties who could be strangers or people who have met before and it must be binding strongly because it is the guarantee between the two parties that the car was received in good condition and will be returned in good condition.

Your car hire agreement form must include every detail of the car condition at the time of hire and the details of the person hiring so that in case of defaulting, you can be able to claim compensation from the person who hired your car under the law. When writing the car hire agreement, including the following details:

  • Details of the car
    The vehicle rental agreement should capture the details of your car in the first paragraph of the agreement and should include:
    The make of the car
    Year of manufacture
    Engine capacity
    Vehicle identification number
  • Terms of rent
    Generally, the rental duration starts from the day and hour you sign the agreement with the person renting your car and runs through the agreed number of days until the car is returned to you in good order and condition. The terms of vehicle hire services shall include the following:
    The date and hour when the car was rented (the date should be written in complete form – November 2nd, 2020, 2:30 pm).
    The date when the car shall be returned
    An allowance for extending or shortening the rental period.
  • How will the car be used
    You must agree with the person renting your car the reason he/she is renting or what they intend to use it for. In your car rental agreement template, include your terms on what the car should be used for under the law because a client might hire your car to use for criminal purposes or to carry narcotics.
    Some clients could hire your car for sub-leasing and therefore, your car rental agreement form should indicate the car is not for sub-leasing unless there is a mutual agreement towards that purpose.
    Remember to set the geographical region within which your car must not exceed according to the places your client intends to visit. The form should include the following details:
    The person renting
    The driver (if the renter has a driver)
    Any additional driver
    Driver’s license number of the vehicle operator
  • Mileage
    Include the vehicle’s mileage at the time of signing the car rental contract and indicate if there will be any limitation of mileage. In the case of mileage limitation, indicate the cost per mile on any extra mileage the vehicle shall cover and the reading at the time when the vehicle is returned. Include the following in the mileage section:
    Mileage reading during departure
    Reading during arrival
    Total mileage covered
  • Fees
    Your car rental agreement template should include the fees payable, which can be calculated on a 24-hour basis or per mile basis. Before the renter departs, there is a down payment they should make as a commitment fee or security for the car.
    The details of the fuel must be indicated, capturing if the gas tank was full, half, quarter, or whatever amount at the time of rental and if the fuel shall be charged or the renter should return the vehicle with the same amount of gas. This will cushion you from incurring gas-related losses.
    There are other situations when the renter receives a car with an empty tank and may return it in the same condition, but if they return it with a considerable volume of gas, the two parties must agree based on reimbursement.
    There should be a line indicating any excess mileage and the total amount payable as follows:
    Rate per day/ per mile
    Deposited amount
    Fuel available
    Excess mileage charges
    Net fee payable
  • Security
    There are situations when the renter may use the car against the agreed terms and you notice the car needs repairing or replacement of some accessories like a spare wheel, spanner, or jack.
    To cushion you against such losses, ask for security, which is an amount deposited to take care of any repairs or replacements resulting from the way the renter operated or used the car.
    The security is used to take care of the repairs or replacements and if the cost exceeds the deposit, the renter tops up the balance but if the amount is lesser, the owner reimburses the balance and the same case would apply if there were no repairs or replacements done.
  • Insurance
    The company insuring the vehicle takes care of any losses that could be incurred due to accident or theft while the renter owns the car but at times, the insurance asks for deductibles.
    The car rental contract should indicate who will be responsible for any insurance excesses/deductibles in case of an accident and in this case, it is the renter’s insurance which should take care of the deductibles and the renter should provide proof that they have the cover.
  • Indemnity
    Include an indemnity statement where the renter indemnifies himself not to hold the owner responsible against any legal suits, losses, or damages that could incur as a result of the renter disobeying road user rules, mishandling of the vehicle, careless driving, parking fees, or any other arising issues that could be judged as a failure by the renter to observe rules.
  • Warrant
    The warrant should state that the vehicle was in good condition at the time of rental and the renter agrees to operate the vehicle within reasonable road conditions and rules and that the renter has the necessary legal documents for operating the vehicle and the vehicle will be returned in good condition and order.
    It should also capture the state where legal suites shall be pursued in case such a need may arise and who will be responsible for paying any legal fees.
  • Signatures
    Finally, your car rental agreement template should conclude with spaces for signatures for both parties, date signed, and any witness.

Vehicle Rental Agreements

What disqualifies you from renting a car?

Some car renting services go further to check your previous driving records to see if you are a law-abiding citizen or not. The car rental companies with much experience are more likely to apply this rule because of their encounters with different clients during the agreement period.

Some of the shortcomings of renters could be traced back to a sequence of law-breaking incidences like careless driving, drug trafficking, drunkenness, and criminal activities.

If the car rental service provider notices such incidences, they might disqualify you from renting a car to safeguard their interests. Other factors would disqualify you from renting a car which includes:

  • Invalid license
    If your license is not renewed or has been revoked or suspended, the car rental company or individual will deny you their services. It is important to ensure your driver’s license is valid before renting a car. If it has been revoked or suspended, sort out the issue with the authorities first.
  • Reckless driving
    If you have a record of recklessly driving on the roads, you will likely be disqualified from renting a car. To avoid frustration, always drive your car well and be mindful of other road users.
  • Accidents
    Your car rental service provider could deny you their services if they find in your records several accident reports because it could mean you are likely to be involved in an accident.
  • Drunkenness and drug abuse
    If you are drunk or intoxicated with drugs at the time of car rental, the vehicle owner will have the right to deny you renting. You can avoid this by keeping away from excessive alcohol intake and misuse of narcotics. The law demands you be sober when driving.

Car Rental Templates

Your checklist before hiring a car

When hiring a car, their items you must check before signing the car hire agreement form, failure to which you could incur charges when returning the car. Check and tick the following items before signing the agreement.

  • Spare wheel
    Every vehicle is mandated by law to have a spare wheel which would be helpful in the case of tire punctures or bursts. The owner could claim a replacement.
  • Wheel spanner and jack
    Without a wheel spanner and jack, you will have a rough time when the need comes to change a wheel, and again the owner could charge you once you return the vehicle.
  • Engine oil and brake fluid
    Always check using the deep stick if the oil is at the right levels and if it warrants change and checks the brake fluid level. Gearbox replacement is expensive.
  • Cooling system
    The car cooling system must be well supplied with water and coolant fluid.
  • Wheels treads
    The treads must be the right size to provide a good grip while driving.
  • Steering
    The steering should be powered enough for comfortable driving.

Rental Car Contracts

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TemplateLab April 1st, 2023