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Car Subscription Services vs Leasing

January 24, 2022

Car Subscription Services vs Leasing

As the automobile industry evolves, consumers are presented with new options – car subscription services and car leasing. Both offer a way to save money on car payments, yet these options are quite different.

According to a recent study, American households on average spend nearly $10k per year on transportation, which is an expense that can be financially burdensome, especially if owning a car that isn't used daily.

So which option is the best for saving some bucks? Let's compare.

Car Subscription Services

Car subscription services are relatively new in the car industry.

Basically, instead of buying or leasing a car, you make a monthly pledge that will give you access to a wide selection of cars that you can switch out whenever you like. The packages can begin at a few hundred dollars per month.

One of the advantages of subscription models is the ease of operation. The dealership handles everything from routine maintenance to detailing, making it an enticing choice for busy executives or millennials who don't want to deal with the hassle of owning and managing a car.

Here are some important aspects of the car subscription services:

  • You'll never have to worry about insurance, which some car companies include in their subscription’s fee.
  • Subscription fees can vary between $400 and $1,000 per month, and some companies like Flexdrive allow subscribers to pay per day.
  • Subscription services are typically flexible with no long-term commitments, which allows you to return the car when you require it.
  • Door-to-door delivery and pick up can be provided in select markets

Leasing

Leasing is a payment option for new cars that lets you rent a car for a set number of months, usually between 36 and 48. Unlike with subscription services, when you lease a car, there are no options like switching out vehicles, so you'll need to stick with the same car for the duration of the lease.

Leasing agreements involve much of the same factors as buying a car, such as determining the market value, negotiating the depreciation, fees, and any add-ons that you might need.

The main advantage of leasing is that monthly payments are normally lower than loan payments due to the fact that you’re not buying the car, but just using it. It's also commonly regarded as a way of entering luxury auto markets and getting upper-level cars at an affordable price.

Here are some important aspects of leasing:

  • Once you're registered, the actual lease cost should be negotiable, just like when buying a car.
  • Fees and add-ons can add a significant sum to the lease.
  • You'll still have to purchase car insurance, which can be pricey in some locations.
  • You’ll have to pay a damage fee if you return the vehicle damaged or if you surpass the mileage restrictions.

Which Option Is Best for You?

As for which option is the best for you, it depends on your driving habits and lifestyle. If you're the kind of person who enjoys driving different cars and dislikes the commitment that comes with leasing, then a car subscription service may be your best choice.

Nonetheless, if you plan to hold on to a car for a few years so you won’t need another car anytime soon, leasing could be better suited to you. Plus, it’s a great chance to save money and be able to drive a luxury car at the same time.

To choose the appropriate option for you, you also have to assess the costs of each. Subscription rates can be more costly than leasing and vice versa. Determine your monthly budget and stick to it to avoid over-spending.

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