When planning a trip, it’s natural to think that making reservations for a rental car ahead of time is the best way to go. After all, the earlier you book the cheaper it is, right? Not necessarily. According to a recent study conducted by NerdWallet, renting a car at the last minute could be your best bet.

Save money on a rental car by booking it later

NerdWallet conducted its study in March of 2022 by analyzing 360 different rental car prices from eight of the top agencies. While there are plenty of different rental rates to choose from, the outlet chose to compare the small sedan categories, which is typically the cheapest rate. As for comparing the rental dates, they checked on what pricing would be if a customer were to book a car three months in advance versus seven days before their trip. The test yielded some interesting results.

NerdWallet found that rental customers can expect to pay an average of $75 more to book a rental car for a week if they reserved three months ahead of time as opposed to waiting until the last minute. As Nasdaq points out, that means there’s a 15% penalty just for booking a car early.

The savings on a last-minute booking varies by car rental agency

One of the most interesting parts of the study is how much rental car customers can save depending on the rental agency they book through. For example, booking a car with Enterprise at the last minute yielded a 40% savings over booking one three months in advance. Dollar had the smallest difference between last-minute and advanced bookings.

But the results were the same across the board: It’s cheaper to wait until the last minute (or one week before) to book a rental car. Here are findings from NerdWallet’s study:

Why is it cheaper to wait until the last minute?

The supply chain shortage has affected car rental agencies as a lack of inventory has driven up demand and pricing. Michael Taylor, a travel intelligence lead for J.D. Power, told NerdWallet that the cheaper last-minute rental rates aren’t too surprising.

“Rental car pricing algorithms have gone through a period of unexpected change,” Taylor said. “The surging demand, coupled with the lack of rental cars available system-wide, has seemingly caused pricing models to fluctuate more than in the past.”

There’s also the case of rental agencies repositioning their fleets. More specifically, when travelers rent a car for one-way travel and return it to another rental car office location, rental agencies take note of this data and may offer deals for those traveling in the reverse direction. In essence, the cheap last-minute deal could lure renters into returning a car to an office in need of more rental cars.

Additionally, some rental car companies may set high prices normally and then bring them down when there’s a larger amount of inventory at any given time.

Booking in advance could still be a good idea

While it may look as if booking a rental car at the last minute could be the answer, that’s not always the case. By waiting until the last minute to book a car, you run the risk of it being sold out. However, if you book ahead of time, you can lock in a reservation rate and ensure that you have a car to rent.

One strategy that Nasdaq recommends is reserving a car ahead of time and then periodically checking the rate as your trip nears. When you see that the rate dipped below what you initially locked it in for, cancel it, then re-book the rental car at the lower rate. Of course, that may be a hassle for some renters.

If anything, book your rental cars when it’s convenient for you. But it’s nice to know that even if it’s a last-minute deal, that may not be a bad thing.