There are several options for using cars in today’s world that weren’t available several years ago. Are car subscription services better than leasing?
If you want to have access to a car but don’t want to buy one, there’s an option that removes the costs of buying or leasing. This option is called a car subscription, and it’s supposed to be a more affordable option. There are certainly some drivers who find subscriptions more affordable than buying or leasing, but that might not always be the case.
What are some benefits of car subscription services?
Subscriptions are supposed to be an affordable alternative to long-term rentals and more flexible than leases. The subscription period can be short, as little as one month, or extremely long, up to several years. In most cases, these services fall between the two and should give consumers the ability to switch cars, stop the subscription, and change what they want as their needs change. One of the greatest benefits of these services is the cost of auto insurance, which is bundled into the subscription price.
The tradeoff
Most car subscription services cost more than leasing a vehicle. Of course, you’ll need to consider the lease cost and insurance premiums to determine if a subscription service is more expensive than leasing. Still, these services should be more affordable than a long-term rental, which leaves you in the same position as a driver who doesn’t actually own the vehicle.
Should you pay for a subscription service or look to more traditional methods of buying or leasing a vehicle? The answer is an individual one and something you need to figure out, based on how much flexibility you want in your automotive needs or how long you’ll want to use the vehicle.
What companies offer car subscription services?
Most of these services are offered by startup companies. Major automakers have tried to use these service models in the United States with limited success. Some of the providers you might find are SIXT and FINN, both of which originated in Germany, where this business model has gained traction. Other companies, such as Autonomy and Ferry are American based companies offering subscriptions for electric vehicles. Another company, called GO is building a long-term subscription model.
Most of these businesses are still small and in limited markets. This means you’ll have limited access to vehicle changes and upgrades should you need them. They also only operate in select markets, which could be another factor in your decision to subscribe or utilize traditional financing methods.
How much do these services cost?
Typically, a car subscription costs 30% more than the monthly cost of leasing the same car. Of course, there are additional fees that are part of the subscription, built into the price, that you would pay when leasing and that you won’t have to worry about when you sign up for a subscription service.
A comparison
A comparison of car subscription services versus leasing the same vehicle was performed. Using FINN’s monthly subscription price for a Tesla Model 3 costs $999 per month for a two-year subscription. This allows you to drive the vehicle up to 850 miles per month. The same vehicle costs about $500 per month to lease, and you can drive up to 10,000 miles per year, which is 833 miles per month. Of course, the lease price doesn’t include insurance, taxes, and maintenance, which are all built into the subscription price from FINN.
Using this comparison, you have to ask yourself if you think you’ll spend $500 per month in insurance, taxes, and maintenance for the same vehicle. Also, at the end of a lease term, you have the option of buying the vehicle, which isn’t offered through FINN’s subscription model.
Are your credit score and driving record factored in?
Car subscription services aren’t the same as renting a vehicle. Rental companies don’t look at your driving record or credit score before determining the price you’ll pay, but car subscription companies do. This means the same factors that go into being approved for auto financing and insurance costs will determine how much you’ll pay for your car subscription.
If you want the convenience of all fees and costs bundled into one package, the flexibility to change vehicles, and to avoid committing long-term to a vehicle, car subscription services might make sense for you. Otherwise, traditional methods of leasing and buying vehicles still make the most sense.
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