I have crossed the Canadian border in a rental car many times. I have crossed in Vermont, Maine, New York and the Peace Arch in Washington. Most of the times, no questions are asked. Sometimes, I am asked whether it is my car and a few times I have had to show the rental agreement. I have rented from Budget, Hertz and Avis and it has not been an issue. I would always inquire at rental time because as mentioned by the previous poster, some of the minor companies do not allow it. Also, these days I would not try to cross the border in either direction without a passport. Although it is not yet required, a passport makes for a much smoother process. Also, keep in mind that gas cost is significantly higher on the Canadian side. Be sure to fill up the tank right before crossing the border.