Arranging car hire is one of the most stressful, time-consuming, and expensive parts of any summer holiday.
This challenge became even bigger once pandemic-related travel restrictions were lifted.
Huge demand and a lack of rental vehicles caused prices to skyrocket at their peak in 2022.
So, many Britons are wondering if they will have to pay through the nose to rent a car for summer 2025.
The good news is that car hire costs are likely to be less than what was paid last year.
An annual study by iCarhireinsurance.com reveals the average cost of a week’s rental in summer 2025 is £369.
This is around £11 less than in 2024 and a massive £283 cheaper than in 2022.
The report looks at prices for a seven-day hire in 12 popular holiday destinations.
iCarhireinsurance.com has tracked car hire prices in these same locations since before Covid-19.
This makes it a key indicator of whether costs are rising or falling.
While 2022 saw eye-watering average rentals of £652 per week, prices have steadily declined since then.
However, the 2025 average of £369 is still higher than the pre-pandemic price of £310 for the same class of compact car.
The data covers the peak holiday week from 26 July to 2 August.
Prices are averaged from six major rental companies: Avis, Budget, Enterprise, Europcar, Hertz, and Sixt.
Best and Worst Destinations for Car Hire Costs
The best value destination is Faro, Portugal, serving the Algarve region.
A compact car rental there for the busiest week costs just £254 in 2025.
This is a third less than the £375 average in 2024.
Munich, Germany, is the next cheapest city break option.
A Golf-sized rental costs £307, down slightly from £311 a year ago.
Barcelona, Spain, remains popular with car hire at £316 for seven days.
This is a slight increase of £10 compared to 2024.
Turkey’s Dalaman, known for beaches and historic sites, offers week-long rentals at £325.
This is down from £360 in 2024.
The most expensive destination is Geneva, Switzerland.
A compact car rental there costs £576, up £116 from last year.
Still, this is almost half the £933 charged during the 2022 peak.
Car hire prices in Crete, Greece rose slightly to £429 for summer 2025.
Nice, France, and Milan, Italy also have higher costs at £399 and £382 respectively.
Both are much lower than their 2024 prices.
Travelers heading to Sydney, Australia will pay £365 this year.
This is £68 more than last summer.
In London, car hire costs rose from £366 to £400 for the peak holiday period.
Avoiding Extra Costs at the Rental Desk
While prices are falling, holidaymakers should avoid steep extra charges.
These include fees for extended cover, sat-nav rental, and child car seats.
Ben Wooltorton from iCarhireinsurance.com says it’s encouraging to see rental prices stabilizing closer to pre-pandemic levels.
He warns travelers to check prices regularly and avoid unnecessary extras.
Bringing your own sat-nav or child seat and purchasing excess reimbursement before traveling can save hundreds of pounds.
The analysis found extras can add up quickly: £189 for excess protection, £72 for sat-nav, £68 for an additional driver, and £70 for a child seat.
Tyre and windscreen cover adds another £53.
In total, extras could increase costs by £451, pushing an average rental to £821.
Savvy travelers should buy insurance excess cover in advance.
This costs just £3.49 per day or £41.99 for annual European cover.
It’s a big saving compared to paying £189 at the rental desk.
Why Did Car Hire Prices Soar After the Pandemic?
Car hire prices soared post-pandemic when travel restrictions eased.
Rental firms had sold many vehicles during 2020 to stay afloat as demand vanished.
When travel resumed, hire companies struggled to replenish fleets.
This was due to a big drop in new vehicle production.
Now that car manufacturers have returned to full production, rental firms can replace vehicles normally.
This has helped bring prices back down towards pre-Covid levels.
Holidaymakers planning their 2025 trips can now breathe a little easier.
Car hire is becoming more affordable again, making it easier to explore their holiday destinations.