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Car Subscription vs. Lease vs. Purchase

Mr_ShiftrightMr_Shiftright Sonoma, CaliforniaPosts: 62,927
edited January 10 in General
Car subscriptions seem to be the "next new thing" in marketing for the automobile industry.

Here's a brief rundown of what they are and how they work:

What are Car Subscriptions?

Does this tempt you with any apparent advantages of how you buy/lease right now?

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Comments

  • biancarbiancar Mid-AtlanticPosts: 965
    Zero interest in the car subscription idea.  I like my insurance company and don't want to switch to Liberty Mutual (company Volvo uses).  I'm not interested in being that locked into the dealer's idea of when I might need to switch cars.  For me, ownership only.  No subscription for sure, probably not ever a lease either.
  • Mr_ShiftrightMr_Shiftright Sonoma, CaliforniaPosts: 62,927
    I hadn't thought about being forced into another insurance company, so that's a consideration.

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  • rkelly17rkelly17 Pittsburgh, PAPosts: 68
    Also here in PA tax is on the monthly payment. So I assume in a subscription scenario you will pay tax on everything not just the car part of the payment.
  • PF_FlyerPF_Flyer Pennsylvania Furnace, PAPosts: 8,444
    edited April 2018
    I don't see what the consumer gains in this arrangement given how much these cost. Even factoring in what I pay for upkeep and insurance, how is this of benefit to me? As George Carlin said, "You can take and nail two sticks together like they've never been nailed together before and some fool will buy it"

    The example in the article of a 2015 Nissan Sentra for $800/month. I have a 2014 Versa Note that cost me $288/month(highest car payment I've ever had). That leaves me roughly $500/month to spend on maintenance/insurance to break even. I think owning works in my special situation :)

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  • stickguystickguy Posts: 30,711
    price aside, it is the convenience they are selling. and short term commitment. So basically, it is a long term rental, taking their insurance. Only way I can see it makes sense. Unless the desire to switch models often is worth the price premium.

    I know at times our company had people come from overseas for extended periods that needed a car for maybe a year. This would work for that situation.

    I know that I would never be interested in this.

    2019 Acura TLX A-spec 4 cyl. (mine), and 2013 Acura RDX AWD (wife's)

  • Mr_ShiftrightMr_Shiftright Sonoma, CaliforniaPosts: 62,927
    stickguy said:

    price aside, it is the convenience they are selling. and short term commitment. So basically, it is a long term rental, taking their insurance. Only way I can see it makes sense. Unless the desire to switch models often is worth the price premium.

    I know at times our company had people come from overseas for extended periods that needed a car for maybe a year. This would work for that situation.

    I know that I would never be interested in this.

    Egg-xactly! It's all about convenience. To make a comparison, why would ANYONE trade in a car to a dealer when they could get thousands more selling it privately?

    But they do, all the time.

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  • PF_FlyerPF_Flyer Pennsylvania Furnace, PAPosts: 8,444
    I just cannot imagine, even if I hit the powerball, that I would ever be interested in this. We didn't even talk about restrictions on use mentioned in the article, and what kind of penalties would be involved if you messed up this month's vehicle.

    I can't get the idea of Dippin' Dots out of my head. They found a way to put more air into ice cream AND change you more at the same time. :)

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  • isellhondasisellhondas Issaquah WashingtonPosts: 20,197
    My prediction for what it's worth is this will quickly die on the vine.
  • qbrozenqbrozen Posts: 25,063
    I think it can work... for the right price.

    To lease a $36k Volvo (that's the MSRP of the XC40 T5 Momentum in the $600 offer) for 2 yrs/24k, let's use the 1% rule plus tax plus DMV and inception fees due at signing, then add a fairly healthy $75/mo insurance (I pay a bit less than that here in NJ, so I'm assuming this should be enough for just about anywhere). Add in 3 oil changes and tire rotations. Oh, and lease disposal fee at the end. I come up with a back-of-the-napkin estimate of $535/mo.

    $65 more per month for "convenience" seems a bit dear to me. At $550, I may think about it.

    '18 BMW 330xi; '67 Coronet R/T; '14 Town&Country Limited; '18 BMW X2. 47-car history and counting!

  • Mr_ShiftrightMr_Shiftright Sonoma, CaliforniaPosts: 62,927
    It's like trading in to the dealer vs. selling on your own, isn't it? You're paying for the "convenience" of it.

    It's a clever marketing angle I will say that, because some potential leasees dread being locked in for 36.

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  • kyfdxkyfdx Posts: 104,108
    If the price is right, it could work, but you can guarantee it will be more than doing it on your own.

    But, I think it's imperative that it's your only vehicle. Might work best for someone that doesn't already own a car or house (that already gets multi-line insurance discounts).

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  • Mr_ShiftrightMr_Shiftright Sonoma, CaliforniaPosts: 62,927
    Plus you are locked into the automaker's insurance carrier.

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  • kyfdxkyfdx Posts: 104,108

    Plus you are locked into the automaker's insurance carrier.

    Yes.. I think Volvo uses Liberty Mutual. That's a decent company, so if you didn't have insurance, it might be okay. I wouldn't want to switch, though.

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  • stickguystickguy Posts: 30,711
    I could see it for someone in a situation where they will only need a car for 6-12 months. temporary job, something like that. Where buying does not make sense, leasing is too long, and renting too expensive.

    2019 Acura TLX A-spec 4 cyl. (mine), and 2013 Acura RDX AWD (wife's)

  • Mr_ShiftrightMr_Shiftright Sonoma, CaliforniaPosts: 62,927
    Well stick, that's what we call a "niche" all right!

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  • MichaellMichaell ColoradoPosts: 93,880
    kyfdx said:

    If the price is right, it could work, but you can guarantee it will be more than doing it on your own.

    But, I think it's imperative that it's your only vehicle. Might work best for someone that doesn't already own a car or house (that already gets multi-line insurance discounts).

    Which raises an interesting point - if you are on the subscription program, and get into multiple accidents that are deemed to be your fault, can the insurance company raise the premium and/or cancel your policy, therefore nulling out the subscription?

    Or, is the insurance company on the hook for a fixed insurance premium?

    Could be an advantage if you have great credit and income, but are a lousy driver.

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  • kyfdxkyfdx Posts: 104,108
    edited May 2018
    Until you turn it in, and find you are ineligible for insurance.

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  • Mr_ShiftrightMr_Shiftright Sonoma, CaliforniaPosts: 62,927
    Insurance companies will always find a way to stick the knife in.

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  • kyfdxkyfdx Posts: 104,108
    Car insurance is like health insurance. Companies want new customers to be able to show that they've been continuously covered. Gaps are a no-no.

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  • turbo_v6turbo_v6 Posts: 6
    Thanks for the post and the info, car subscription can be so pricey at lease to me.
  • storm10storm10 Posts: 207
    To me, someone has changed word "subscription" from the word "rent". It's a classic rent a car. When you purchase or lease - you are the first and only owner of the car. So you don't have to worry about bacteria from the previous, possibly sick people, holding the steering wheel, or who knows what else happened in this car. I wouldn't want my baby sitting in the car-seat after someone just smoked in it. Plus the performance of the car will be on a par with any typical rental car, when 20 previous people drove it differently and the axles are about to collapse. Plus you have to be insane to pay $4k per month for Mercedes... when you can easily lease it for $400. Am I missing something??
  • qbrozenqbrozen Posts: 25,063
    I doubt used ones are included.

    And what example are you referring to when comparing $4k to $400? Pretty sure that doesn't exist.

    '18 BMW 330xi; '67 Coronet R/T; '14 Town&Country Limited; '18 BMW X2. 47-car history and counting!

  • Mr_ShiftrightMr_Shiftright Sonoma, CaliforniaPosts: 62,927
    I think Mercedes subscription service is just getting under way--I haven't seen any numbers yet.

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  • leroy111leroy111 Posts: 7
    I rather just stay with a lease it isn't worth the bother to have to switch cars when they decide
  • qbrozenqbrozen Posts: 25,063
    ? Not sure what you mean "when they decide." You sign for a specific term, just like with a lease.

    '18 BMW 330xi; '67 Coronet R/T; '14 Town&Country Limited; '18 BMW X2. 47-car history and counting!

  • Subscription could work great depending on the market they are advertising to... Maybe companies might find the best use out of these subscriptions?
  • idrachmanidrachman Posts: 6
    What is an range of discounts (%) that you've heard of for a Macan base model? One dealer was offering only just about 5%. Thx.
  • qbrozenqbrozen Posts: 25,063
    Just for kicks, I downloaded the Care by Volvo app. When I click on the Xc40 T5 Momentum, it comes back with $650/mo. Did they already raise the price before even getting this off the ground?

    '18 BMW 330xi; '67 Coronet R/T; '14 Town&Country Limited; '18 BMW X2. 47-car history and counting!

  • MichaellMichaell ColoradoPosts: 93,880
    qbrozen said:

    Just for kicks, I downloaded the Care by Volvo app. When I click on the Xc40 T5 Momentum, it comes back with $650/mo. Did they already raise the price before even getting this off the ground?

    Apparently. Somebody mentioned it in the XC40 lease thread.

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  • Mr_ShiftrightMr_Shiftright Sonoma, CaliforniaPosts: 62,927
    Almost $8K per year. I suppose there are lease payments that commonly equal that.

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