Car Subscriptions? Crazy or Not Here's Why you Might Consider it as an Option
We’ve all heard of buying, leasing and renting, but now there’s another way to get into a vehicle - car subscriptions. Here’s the details.
In the past, getting into a new ride involved either buying or leasing a vehicle. Today, a third option is rearing its head – car subscriptions. Think of it as a long-term rental where you can choose your car, access an all-inclusive benefits package, and choose your subscription term.
What’s the catch? Let’s discuss.
What is a Car Subscription?
A car subscription is similar to a hybrid option between leasing and renting. Subscribers can reap the benefit of flexibility that you don’t typically see in traditional leases while maintaining more affordability than a long-term rental will offer.
With vehicle leases, you are trapped under a long-term contract with strict requirements on mileage, upkeep, and no option to swap vehicles if the need arises. On the other hand, long-term rentals are pricey by nature.
How Does a Car Subscription Work?
A car subscription model is a service offered by select automakers and specialty dealers. The way it works is you select your vehicle and pay a monthly subscription rate for the use which can include an all-inclusive style benefits package (don’t get too excited, gas is not included).
What’s Included in a Car Subscription?
Typically a car subscription service charges a flat rate monthly payment and can include:
- The vehicle and options to swap
- Routine maintenance
- 24-Hour roadside assistance
- Insurance coverage
Where Can you get a Car Subscription?
Currently, car subscriptions are not available nationwide and are mostly offered by startups. Here are a few popular services to investigate:
This idea of car subscriptions is not new, automakers have tried and failed in the past, but the new shift in consumer spending may be changing the outlook. In today’s market, consumers are spooked by anything that costs them too much or ties them into a long-term agreement which is why we assume the concept of vehicle subscription is making a comeback. A vehicle subscription satisfies two key areas to near perfection:
- No long-term commitment: If you are swept up in a mass layoff, you can easily cut your car bill from your budget and hop back on when cash is freely flowing again. Regular leases and financing lock you down (tight) to a strict time frame and costly consequences if you break your contract.
- Cost is predictable: Subscription plans offer a flat fee to cover all your needed basics apart from gas. Leases and financing don’t offer anything apart from maybe a free car wash (if you’re lucky). Renting offers pay transparency but lacks the long-term aspect.
The Pros and Cons of Car Subscriptions
Like all vehicle agreements, the waters easily get murky and budgets are broken like fragile glassware. But it’s not “all” bad news. Here are the pros and cons to consider.
Pros:
The convenience of all-in-one
Car subscriptions eliminate the hassle of going out and putting your own “package” together. With a subscription, you can get routine maintenance, roadside assistance, and insurance already handled for you.
The flexibility to change your mind
Need a bigger vehicle? No problem trade your sedan for an SUV. Need something more fuel efficient? Great, swap out that gas guzzler for something more eco-friendly. The point is you have flexible terms that allow for access to a variety of vehicles.
The transparency in cost
Many subscriptions offer a turnkey option with no hidden subscription fees, no down payments, and a flat-rate monthly charge.
Cons
Higher Cost than leasing
Although subscriptions are transparent about their cost, this doesn’t mean they are inexpensive. Depending on vehicle type and subscription term you could be facing a higher cost per month for the flexibility and convenience.
No nationwide availability
You can’t throw a stone without hitting a car dealership in the U.S. but subscription dealers aren’t yet as prominent. You may find that the offer just doesn’t serve your area.
Restrictions are still at play
Check to see if unlimited mileage is a part of your subscription (although not likely). Things like mileage restrictions are still a downside to being in a car you don’t own. While you may have more flexibility with your mileage, subscription issuers are still likely to cap you at a set amount of miles per month.
Key Takeaways from Salt & Pepper
Mass layoffs, inflation, and economic uncertainty can make subscription vehicle services look more appealing than in recent years, however, there are still downsides.
Before signing anything weigh out your options between buying, leasing, or subscribing. And be aware that your subscription price can fluctuate based on a variety of personal factors like your credit score and credit history.
Comments ()