Car Subscription Vs. Buying: Which Is Best for You?

Buying or leasing a car has long been the sole option for anyone who wants to access a car. However, this isn't the case anymore; today, you can access a vehicle through a car subscription. Forget the hassle of purchasing, taking out a loan, and finding a buyer when you want to change your vehicle. A car subscription allows you to drive the car you want for a monthly fee that usually covers the cost of the vehicle, insurance, maintenance, and other related expenses.

Although this model is relatively new, it's gaining much traction. Most people looking to own a car are torn between subscriptions, leasing, or buying a vehicle. This guide will discuss the differences between car subscriptions and buying a vehicle to help you make the right choice.

How car subscriptions work

Buying a vehicle is a daunting and expensive process. And with prices of cars and interest rates increasing all the time, car subscriptions couldn't have come at a better time. A car subscription is an all-inclusive service where you pay a flat monthly fee to drive a vehicle. This fee generally includes the car, insurance, maintenance, and sometimes roadside assistance. Unlike traditional car leasing, car subscriptions often allow you to switch between different vehicles or cancel the service with shorter notice periods.

Despite being a relatively new concept in the automotive industry, many independent rental companies, dealers, and automakers offer the service. Examples of car subscription services include;

• FINN – This is an independent company that allows subscribers to change cars every six to 12 months. It offers subscriptions to various automakers, such as Jeep, Chevrolet, Ram, and Audi.
• Hertz My Car – This is a rental company that allows subscribers to swap cars twice a month.
• Care by Volvo
• Porsche Drive
• Access by BMW
• Book by Cadillac

To join a subscription service, you must first meet their credit, insurance, and driving history requirements. If accepted, you'll then pay a one-time membership fee and a monthly subscription fee. For instance, to join Porsche Drive, you'll pay a $595 membership fee and $250 for Hertz My Car.

Benefits of car subscription

• Flexibility: The most significant advantage of car subscriptions over buying is you can easily switch between different models or even different types of vehicles. This flexibility is perfect for those who enjoy driving new cars frequently or have changing needs, such as a different vehicle for winter versus summer. You can also choose the length of your subscription, from a month to several years.
• Convenience: A car subscription eliminates the hassle of buying and owning a car. You just need to choose a car and enjoy driving. It is also a short-term commitment, unlike leasing or car financing.
• You don't incur the costs of owning a car: Owning a car comes with many expenses, such as the down payment, loan repayment, insurance, and maintenance costs. With a car subscription, you only pay the monthly fee.
• Access to different car models: Depending on the company you subscribe to, you can access various models. Keep in mind that some models may require a higher subscription.

Drawbacks of car subscription

• Limited mileage: All car subscriptions have a mileage cap. You will be charged a monthly fee for miles above the allotted miles.
• Lack of ownership: No matter how long you keep the subscription, you will eventually be without a car. Just like leasing, the amount you pay doesn't give you equity in the car.
• Expensive in the long run: Subscription fees can add up, especially if you subscribe longer. In fact, the amount you pay in a car subscription could be equal to or higher than monthly repayments for a car loan.

Car buying

When buying a car, you have two options: buying outright or through auto financing. Purchasing a vehicle outright is paying the whole amount at once. It is the least expensive method because you don't pay monthly installments. When you finance your car purchase, monthly payments spread the cost over several years.

Benefits of buying a car

• Long-term value: When you buy a car, you own an asset you can sell or trade in the future. Even though a vehicle depreciates over time, it still retains some value.
• Freedom to modify: The car is yours, so you can customize it to your liking.
• Long-term cost savings: The amount you pay over the years for buying a car compared to a subscription is low.
• No mileage cap: You can drive as much as you want without worrying about mileage limits because the car is yours.

Drawbacks of buying a car

• Depreciation: A car starts losing value the moment you drive it off the dealership lot. However, if you are on a car subscription, you don't have to worry about this.
• Maintenance costs: Your car will need regular maintenance and repair, which can be expensive.
• Down payment and loan: Paying outright, making a down payment, and financing a car loan are significant financial burdens.
• Limited to only one car: You don't have the flexibility to change your car.

Car subscription vs. buying: which one is best?

You need to consider some factors to determine if a car subscription is better than buying. These include;

Cost

Getting a car through a subscription is less expensive than buying one. You only pay a one-time membership fee and a monthly subscription. Buying is more expensive, whether outright or through financing. There are also ongoing costs like maintenance, repairs, and insurance.

However, you need to understand that although the subscription fee covers a lot, it never leads to car ownership. Moreover, the long-term cost of a subscription will exceed the cost of buying a car.

Generally, buying a car is more cost-effective if you plan to keep it longer. Once it is paid off, you can even sell it or trade it in for a newer model.

Lifestyle

A car subscription is an excellent option if you prefer to drive a new car every few months or need a vehicle for a short period. The flexibility to switch vehicles or cancel the service with minimal notice appeals to those who don't want to be tied down.

However, buying makes more sense if you drive long distances or require a vehicle with specific features. There are no mileage restrictions, and you can choose a car that perfectly suits your needs. In addition, you can modify your car according to your preference. Whether for performance upgrades, aesthetic changes, or simply adding a personal touch, owning a car allows you to make it truly yours.

Flexibility and convenience

Car subscriptions appeal to people who don't want long-term commitments to buying or leasing. The short-term contracts in car subscriptions can be adjusted or canceled with little notice, which is convenient for people who move frequently.

You also don't have to worry about unexpected expenses because all car-related expenses are bundled into the subscription fee. On the other hand, buying gives complete control over the car, and you can sell it over time to get back part of your investment.

Conclusion

There is no one-size-fits-all answer to the car subscription vs. purchasing debate. The best choice depends on your personal preference. It will often depend on your individual needs, financial situation, and lifestyle preferences. A car subscription is good for you if you prefer to change cars regularly. However, you should consider buying if you prefer more control and ultimately own the car.