If you've been in an accident and weren't at fault, you might have heard the term "credit hire" — and wondered what it actually means. The short answer: it's how not-at-fault drivers get a replacement car immediately, at zero upfront cost. Here's the full explanation.
What is credit hire?
Credit hire is an arrangement where a specialist hire company provides a replacement vehicle to a not-at-fault accident victim on credit — meaning you receive the car now, and the hire company later recovers the cost from the at-fault driver's insurer.
The key word is "credit." The hire company extends credit by providing the vehicle without upfront payment. The debt for the hire is owed by the at-fault driver (or their insurer), not by you. You are not borrowing money — you are simply the recipient of a vehicle that you are legally entitled to.
This model has been established in Australian law for decades. It is the same model used by national providers like Right2Drive, Carbiz, and others — and by local Melbourne operators like 888 Car Hire.
How the cost recovery works — step by step
1. You contact a credit hire company and provide details of the at-fault driver's insurer and claim reference.
2. The hire company assesses your eligibility — they confirm you meet the three conditions (two vehicles involved, not your fault, at-fault driver insured).
3. A replacement vehicle is delivered to you — usually the same day, often within hours.
4. The hire company notifies the at-fault insurer of the credit hire claim and the daily rate being charged.
5. The hire continues for the duration of your repair — from delivery until your own car is returned.
6. When the hire ends, the hire company bills the at-fault insurer for the total hire cost. This is a standard process — insurers expect and routinely pay credit hire invoices.
7. If the insurer pays, the matter is closed. This is the most common outcome.
What happens if the at-fault insurer disputes the claim?
Insurers occasionally dispute credit hire claims — usually on grounds of rate or duration, rarely on liability. When this happens:
- The credit hire company handles all correspondence and negotiation with the insurer. This is their core function.
- You continue to have use of the vehicle throughout the dispute.
- If the dispute cannot be resolved directly, it may proceed through the Australian Financial Complaints Authority (AFCA) or the courts.
- You are not required to take part in this process — you are not the plaintiff or defendant. The dispute is between the hire company and the insurer.
This is why choosing a reputable credit hire operator matters. A company with experience in insurer negotiations will resolve disputes faster and more effectively than a new or underprepared operator.
What you are responsible for
During a credit hire, you pay for: - Fuel — fill the tank as you would any rental vehicle - Tolls — CityLink, EastLink, and other Melbourne tolls accrued during your hire - Parking fines — any infringements during the hire are your responsibility
You do not pay for the daily hire rate, insurance, or any fees associated with the credit hire claim.
How long does the hire last?
For the duration of your repair. If your car takes two weeks to fix, you have the replacement vehicle for two weeks. If repairs are delayed — due to parts supply, insurer approvals, or repairer backlogs — the hire can usually be extended to match.
The hire company will typically confirm the expected repair duration with your repairer directly and keep the claim open accordingly.
Why credit hire is better than going through your own insurer
If you make a claim through your own insurer: - You may be required to pay an excess - Your insurer controls the vehicle provided (which may be a downgrade) - Your no-claims bonus may be affected - The process is slower — your insurer must negotiate with the at-fault insurer on your behalf
With credit hire: - You pay nothing — no excess, no deposit - You receive a like-for-like vehicle - Your own insurance is untouched - The hire company works directly with the at-fault insurer, cutting out the middleman
For most not-at-fault drivers, credit hire is the faster, cheaper, and simpler option.