The short and simple answer is, the sooner the better! Contrary to what some travel search sites such as Priceline would have you believe, the last thing you want to do is wait until the last minute to reserve a car rental. Not only do prices for rental cars tend to climb as the rental date approaches, the availability of cars and the choice of vehicle types decreases as well. Simple supply and demand economics should tell you that as supply goes down, prices go up.
True, there are occasionally times in the rental car industry when an unusually dead period happens at an unanticipated time of the year. When this happens, you will see companies lower their prices in order to get more of their cars on rent. More often than not; however, customers waiting for that “last second deal” find themselves reserving cars at far higher prices than they would have paid if they had reserved much earlier or worse, they discover that there are absolutely no cars available. Remember, this is the busiest rental car market in the world!
As soon as you know what time and date you will need a car, you should definitely reserve one. You can always check from time to time to see if a lower rate has become available for your rental date and rebook the car at that lower rate, if the rate difference warrants the time it takes to cancel and rebook.