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Driving You Crazy: Why do so many Colorado rental cars have out-of-state license plates?

Do they pay any Colorado taxes and fees?
Avis Denver
Hertz Chicago
Posted at 5:48 AM, Aug 02, 2022
and last updated 2022-08-02 08:55:54-04

Karen from Denver writes, “What's driving you crazy? Why do so many Colorado rental cars have Florida plates? Do they pay any Colorado taxes and fees? You can tell they are rentals by the tag on a window near the driver, and the cars are too clean to have driven to Colorado from Florida.”

More often than not, Karen, when I am traveling out of Colorado, the rental car I drive will have an out-of-state plate. In fact, during a recent trip to Chicago, my rental car had a plate from Louisiana. I was surprised to see several cars with Colorado plates in the same rental lot.

The main reason rental car companies have a bunch of out-of-state cars in or out of Colorado is due to people renting a vehicle in one city and dropping it off somewhere else.

“The easiest explanation for out-of-state license plates is one-way rentals,” said Danielle Stuart, the director of corporate communications for Enterprise Holdings — better known by their brands Enterprise, National and Alamo.

Stuart said business and personal rental customers will rent a vehicle for a one-way trip and then fly home. She said one-way rentals have been a very popular option the past few years during the height of the pandemic, as families would use the rental vehicle for a road trip and then choose to fly home.

“Once a vehicle is taken out of state, it is cost prohibitive to have it shipped back and, therefore, we will continue to rent the vehicles as its current location,” Stuart said.

Stuart said about 40% of available rentals with Enterprise Holdings in Colorado are equipped with out-of-state plates. Around 40% of vehicles with Colorado plates on them are being rented in some other state.

In a recent trip to rental car locations in downtown Denver, about half of the cars in lots for Hertz, Avis and Budget had Colorado plates.

Avis-Budget did not respond to emails asking for comments on the story. Fox Rent-A-Car said it was “not in a position to answer your questions at the present time.” In another request for comment, Hertz said “we won’t have anything to contribute.”

MORE: Read more traffic issues driving people crazy

Another relocation technique rental companies use is having employees or contractors shuttle or transport one or more cars at a time from a cold weather spot to a warm weather state where the rental companies are short on cars. Sometimes after delivery, these drivers will be shuttled to another city to drive another car to a different cold spot or just fly home. This is often the case during certain season of the year, like during the winter months when there are more people wanting to vacation and rent a car in Arizona or Florida than Minnesota or North Dakota.

“Our team will work to try to reallocate our fleet to meet seasonal demand as much as possible and will accomplish this by hauling vehicles to the markets with higher demand,” Stuart said. “Also, when a natural disaster strikes, Enterprise shifts resources to meet demand for local ground transportation in affected areas.”

Sometimes car rental companies will offer customers incentives and discounts on one-way rentals right after Labor Day and into the fall going from a northern state to southern states for just this reason.

Regarding the question whether rental companies pay any Colorado vehicle registration taxes and fees, though it makes reasonable sense that a company registering vehicles in specific states will cost them much less in registration fees, Enterprise Holdings said they will always register the vehicle in the state of first use or delivery.

“We do not consider the registration cost,” Stuart said.

However, speculation online suggests some rental companies register many of their cars in low-fee states, like Texas, and avoid registration in higher tax and fee states, like Colorado.

For example, according to the Texas Department of Motor Vehicles, the cost to register a passenger vehicle under 6,000 pounds is a flat fee of $50.75. In Colorado, the method to calculate the cost of vehicle registration centers on the taxable value of the vehicle. A base model 2021 Toyota Corolla that has a taxable value of $17,850 would have an estimated registration cost of $367.75. That’s a big difference from Texas, especially if a company is registering several hundred vehicles.

In regards to safety, Stuart said if customers feel safer having a rental car with an in-state plate, their local customer service team will work to accommodate that request.

By the way, after driving from Colorado to Florida and back in an RV for Superbowl 33, Karen, I can vouch that it's possible to have a clean vehicle when getting to Colorado after such a long trip.

Denver7 traffic anchor Jayson Luber says he has been covering Denver-metro traffic since Ben-Hur was driving a chariot. (We believe the actual number is over 25 years.) He's obsessed with letting viewers know what's happening on their drive and the best way to avoid the problems that spring up. Follow him on Facebook, Twitter or Instagram or listen to his Driving You Crazy podcast on iTunes , Stitcher , Google Play or Podbean.