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Car Subscription Services – What They Are & How They Work

Owning a car can be a pain sometimes. When you’ve paid your fourth repair bill in a single month, or when you’re waiting for an hour at the DMV to renew your auto registration, you might start to fantasize about selling your car and leasing a new one instead. But you’d still be making a long-term commitment, and you’d still be responsible for repairs. And if you already know you can’t live without a car, what other alternative do you have?

Car subscription services are the new answer to that question. With these services, you pay a monthly fee and get the use of a car on a short-term basis. In most cases, your monthly fee also covers expenses such as insurance and maintenance, making your car truly hassle-free.

How Car Subscription Services Work

A car subscription service is not the same as a car-sharing service, which charges you a small monthly fee plus an hourly rate for the use of a car when you need it. With a subscription service, the monthly fee is much higher, but you get to use the car full-time.

If this sounds a lot like leasing, it is — but it’s more flexible. Instead of committing to one car for three years, you can switch to a different car after a year or even less. Some services go so far as to let you switch cars mid-month with a few days’ notice. For instance, you could drive a small, fuel-efficient car to work all week, then switch to an SUV for a weekend camping trip.

Another difference between subscription and leasing is the convenience factor. When you lease a car, you’re responsible for all repairs that aren’t covered by the warranty. With a subscription service, by contrast, one monthly fee typically covers all the expenses of car ownership, such as insurance, maintenance, and roadside assistance. All you have to pay for is gas.

Signing Up

Most car subscription services let you set up an account online and manage it through a smartphone app. However, you must go through a series of checks before you can sign up. The requirements for membership can include:

  • Age. Many subscription services are only open to people at least 25 years old. Younger drivers are typically more expensive to insure, so this age requirement helps keep the subscription fees lower.
  • Driving History. To sign up, you need a valid driver’s license and at least a few years of driving history. When you register, the company checks your records for the past few years to see how safe a driver you are. If it finds more than one or two violations, you probably won’t be able to sign up.
  • Credit History. Most companies require a credit card in your name for payment, although some allow you to sign up with a debit card. The company checks your credit history to make sure you’re likely to meet your payments every month.

Assuming you meet all these requirements, you must then agree to the terms of service. As discussed below, most subscription services put limits on how you can use the car that, technically, belongs to them. Among other things, they typically require periodic checks of your driving record during your subscription term.

Once you’ve agreed to everything, the company hands over the car of your choice. Most services deliver the car directly to your door. Some companies require you to come pick it up, but it’s a quick process that takes no longer than picking up a rental car.

Maintenance and Repairs

In most cases, the monthly fee for a car subscription service includes maintenance costs. In many cases, the subscription app itself notifies you when your vehicle is due for routine service. However, you can’t simply take it to your favorite mechanic; you have to use one of the service’s approved providers. The bill for the repairs goes to the subscription service, not to you.

If your car breaks down or is in an accident, your first call — after the police — should be to your subscription service. Most of them can provide you with roadside assistance to fix a small problem on the spot or tow you to the nearest authorized mechanic. If your service also includes insurance, you can report your accident claim on the spot.


Who Offers Car Subscription Services

Car subscription services are a growing market. There are dozens of them already, with new ones appearing all the time. Many car manufacturers — including Audi, BMW, Cadillac, Lexus, Mercedes-Benz, Porsche, and Volvo — offer subscription services, although some of them include only selected models.

However, most subscription services from auto manufacturers are only available in particular cities or parts of the U.S. As of January 2020, Care by Volvo is the only one that’s available nationwide.

Dealerships and independent companies are also getting into the car-subscription game. Competitors include:

  • Fair. Based in Los Angeles, Fair operates through a network of dealerships in select cities across 17 states and the District of Columbia. This network includes all the dealerships that were once part of Ford’s Canvas subscription service, which merged with it in 2019. Unlike many services, Fair gives you the option of buying your own insurance separately to keep your monthly fees lower. Fair offers a separate tier of service, called Fair Go, for people who want to drive for Uber.
  • Flexdrive. The Flexdrive service works with dealerships in various cities across 10 states, including Austin, Atlanta, and Philadelphia. It offers a variety of car makes, from the tiny Smart ForTwo to the burly Jeep Grand Cherokee Limited. Flexdrive is one of the few services that lets you switch vehicles at any time during your subscription.
  • Clutch. Clutch Technologies isn’t exactly a car subscription service; it’s a shared platform used by several subscription services offered by car dealerships. Services that use Clutch include DriveFlow in Raleigh, North Carolina, and Drive Germain in Columbus, Ohio.
  • Mobiliti. Based out of Detroit, Mobiliti also operates in Austin, Texas; Harrisburg, Pennsylvania; and Lawrenceville, New Jersey. A subscription to Mobiliti includes insurance, routine maintenance, a limited warranty for bigger repairs, roadside assistance, vehicle title and registration, and the ability to swap out cars as often as once per month.
  • Revolve. South Florida-based Revolve specializes in luxury cars. Its fleet includes sports cars like the Maserati GranTurismo, luxury sedans like the Audi S8+, high-end SUVs like the Range Rover Sport Supercharged Dynamic, and electric vehicles like the Tesla Model X P100D. To go with these pricey vehicles, Revolve provides $1 million in liability insurance to all subscribers.
  • Borrow. Another service that focuses on a niche market is Borrow in Los Angeles. It offers only electric cars, available for terms of three, six, or nine months. The cars come with home chargers and some charging credits. It’s a good way for potential electric car owners to test the waters before making a purchase.
  • Hertz My Car. Hertz, one of the biggest car rental services in the U.S., has also joined the car-subscription fray. Its Hertz My Car service is available in the Atlanta and Austin areas. It offers two subscription tiers, one for medium-sized vehicles and one for large ones. Both tiers allow you to switch cars twice per month.

Advantages of Car Subscription Services

For many people, joining a car subscription service is a lot easier than buying or leasing a car. Its advantages include:

1. Startup Costs Are Low

When you buy a car, you have to plunk down a big wad of cash upfront for the down payment. For many people, it’s not easy to raise this large sum all at once.

With a subscription service, the upfront costs are minimal. Some companies charge an activation fee when you first sign up, but it’s in the hundreds of dollars, not thousands.

2. There’s No Haggling

The price you get on a new car depends on how good a job you do bargaining with the salespeople at the dealership. That’s great if you pride yourself on your negotiation skills, but no fun at all if you find negotiating stressful. With subscription services, the fees are all set in advance, so there’s no need to haggle.

3. It’s Easier to Get Approval

If you have poor credit, it can be hard to get approved for a car loan or a lease agreement. Even if you qualify, you’ll probably pay more for financing or have to make a larger security deposit on a lease. Car subscription services also check your credit, but they’re not as picky.

Plus, they typically do a soft credit check, which doesn’t affect your credit score. If you’re paying for your subscription with a debit card, you might not need to go through a credit check at all.

4. It’s More Convenient

With most subscription services, one bill covers everything — the car itself, registration, insurance, maintenance, warranty, and roadside assistance. You can generally set up your account online and manage it through a smartphone app. Most services even deliver the car right to your door.

5. It Gives You Flexibility

Buying a car is a commitment. Although you can trade in your old car for a new one, it’s costly and a lot of hassle. Leasing also commits you to a term of several years, with big fees if you cancel early.

With a subscription service, you can switch cars more frequently. Depending on the service, you could try a new car once per year or as often as once per week.

6. It’s Cheaper Than Renting

Car subscription services fill in the awkward gap between renting a car and leasing one. The cost of renting a car varies widely — anywhere from $13 to $97 per day according to Angie’s List. That can really add up if you need a car for several months.

By signing up for a longer term with a subscription service, you pay less for each day of use.


Disadvantages of Car Subscription Services

Car subscription services aren’t for everyone. Although they have many perks, they also have significant drawbacks, including cost and limitations on how you can use the car.

1. It’s Often More Expensive

That handy all-inclusive fee car subscription services charge isn’t cheap. Just how much it costs depends on the car, the service, and the terms of your subscription. However, in most cases, it’s significantly more than you’d spend buying or leasing a car.

Buying vs. Subscribing

A 2019 article in Edmunds compares the costs of buying versus subscribing for a 2015 Ford Escape. According to the editors’ calculations, buying this car with a 60-month, zero-down loan would cost $425 per month. Adding $240 for insurance would bring the monthly cost to $665.

Getting the same car through Ford’s Canvas service — now part of Fair — could be either cheaper or more expensive, depending on the term. You’d pay $555 per month for a one-year commitment, $592 per month for a six-month term, and $880 for a single month. Adding unlimited mileage to your subscription would cost an extra $40 per month. So, for the first five years, subscribing could be cheaper than owning.

However, once your five-year loan was paid off, you would own the car outright. At that point, you would be paying $240 per month for insurance, plus any maintenance costs. But if you were subscribing, your monthly cost would stay exactly the same.

Thus, the longer you own the car, the less it ends up costing you per month. Using this example, owning the Escape for 10 years would cost you $54,300, or $452.50 per month. That’s more than $100 cheaper than subscribing at the cheapest one-year rate.

Leasing vs. Subscribing

Edmunds also compares the costs of subscribing to a car service and leasing a car. It looks at the average three-year lease costs for five different models — the Cadillac Escalade, BMW X6 M, Mercedes-Benz SLC 300, Volvo XC40, and Porsche 718 Boxster. Then it compares these costs to the price of getting the same models through the manufacturers’ subscription programs.

In most cases, Edmunds finds leasing is cheaper. The “subscription premium” — that is, the extra amount you’d pay over three years with a subscription — ranges from $4,884 for the Mercedes to $28,765 for the BMW. However, for the Volvo, subscribing is actually cheaper. Choosing a subscription rather than a lease would save you $1,589 over three years.

2. Most Cars Aren’t Brand-New

Signing up for a car subscription service won’t give you that intoxicating new-car smell. With most services, the cars are newish but not brand-new. Even if you happen to get a car from the current model year, there’s no guarantee you’ll be the first person to drive it.

On the plus side, cars from subscription services are generally less than three years old. With some of the more upscale subscription services, you’re guaranteed to get a car that’s in excellent condition — so it looks and handles like new, even if it doesn’t smell new.

3. There Are Restrictions on Use

When you buy a car, it’s yours, and you can do what you like with it. You can take it anywhere at anytime, and you can mess up the interior as much as you want.

With a car subscription service, you don’t get that same freedom. Most car services impose a whole bunch of rules on how you can use the car. These typically include:

  • Mileage Limits. Most subscription services limit the number of miles you can drive the car. Some services set mileage limits by the month, others by the year. If you go over the limit, you pay an extra fee, just as if you were leasing. Some services let you choose your own mileage limit and adjust your monthly fee up or down accordingly. With others, you can pay extra for unlimited mileage.
  • Location Limits. Many services grant you the use of the car only within the continental U.S. If you feel like taking a road trip to Canada or Mexico, you need to rent a separate car for the purpose.
  • Tracking. Most services put trackers in their cars that allow them to keep tabs on your location and driving behavior. This helps them recover the car if it’s stolen, but it also allows them to make sure you’re following all their rules about where and how to drive it. And, if you don’t keep up with your subscription payments, they can track you down and take back the car.
  • No Smoking. Many services don’t allow you to smoke in the car. If the interior smells of smoke when you turn it in, they charge you a fee for “excess wear and tear.”
  • Pets Stay in Carriers. Another rule with many services is that all pets must be in carriers when inside the car. If you transport your pet without one, you must pay a repair and cleaning fee. Service animals are the only exception to this rule. If your dog loves to ride with its head out the window, this could be a deal breaker.
  • No Other Drivers. Many car subscription services don’t allow anyone but you to drive the car. Some make it possible to get authorization for someone else to drive, but only if you request it in advance. If the car gets into an accident or any other mishap while someone else is behind the wheel, you are responsible for all damages.
  • Maintenance. As noted above, if your car needs maintenance, you have to take it to a designated repair shop. This could mean giving up a trusted mechanic in your neighborhood and switching to an auto-repair chain several miles away.

4. You Have Less Control Over Insurance

When you own a car, you are responsible for insuring it. This creates more work for you, but it can also save you money. It gives you the freedom to compare prices and coverage levels across different insurers and find the lowest rate on your auto insurance.

With most subscription services, by contrast, insurance is bundled with your monthly fee. The service gets to choose your insurance provider and determine your level of coverage. You can’t raise your deductible to save on the monthly premium or lower it if it’s more than you can afford to pay. You also can’t save by bundling your policies with your homeowners insurance provider.

One exception to this general rule is Fair. This service allows you to choose between using its insurance (if you qualify) and providing your own. If you use your own insurance, you must show proof of coverage before picking up your Fair car.


Is a Car Subscription Service Right For You?

For some people, a car subscription service can make more sense than buying, leasing, or renting. For others, though, it’s definitely not as good a choice. It all depends on your priorities.

To decide whether a subscription service makes sense for you, consider these questions:

  • Where Do You Live? Car subscription services aren’t available everywhere. If there isn’t a service in your area, it makes the whole question moot.
  • What Kind of Car Do You Want? Some car subscription services specialize in specific types of vehicles. For instance, if you live in Los Angeles and want to try an electric car, Borrow is a good way to do it. Likewise, Revolve can help you find a luxury car in South Florida. But if you’re looking for specific kinds of cars, you’ll need to make sure the subscription services near you have the selection you want.
  • Do You Value Ownership? When you subscribe to a service, you don’t own the car. You have to put up with someone else’s restrictions on where and how to drive it. Also, no matter how long you keep the car, you’ll never be free from monthly payments.
  • Do You Change Cars Often? If you’re the kind of person who likes novelty, a service could be a good choice for you. It makes it much easier and potentially less expensive to switch to a new car every year than buying or leasing the latest models.
  • Do Rules Bother You? When you sign up for a car subscription service, you agree to play by someone else’s rules. You have to put up with tracking, limits on mileage, and various other restrictions on how you use your car. People who value their freedom and privacy are likely to chafe at these restrictions.
  • Do You Like Negotiating? Fees for subscription services are fixed. You can change the price by choosing a different car, subscription term, or mileage limits, but you can’t bargain it down. That’s a plus for those who hate haggling, but a minus for those who like to negotiate on everything.
  • How Tech-Savvy Are You? With most subscription services, you have to use an app for everything. Any time you want to schedule maintenance, report an insurance claim, or simply ask a question, the app is the way to do it. For less tech-savvy consumers, this can pose a challenge. However, some services also offer support by phone, so check with the company.
  • What Will It Cost? Subscription services are usually more expensive than buying or leasing. This is particularly true for people who pay cash for cars or keep their old cars well past the loan payoff date. However, it’s not always the case, so crunch the numbers to see which is more expensive for you. A true cost to own calculator like the one at Kelley Blue Book can help you do the math.

Final Word

In many ways, deciding whether to join a car subscription service is like deciding whether to rent or buy a house. Renting gives you more freedom and flexibility. You’re not responsible for maintenance, and it’s easier to move on whenever you need to or want to. But, on the downside, you have less control over your home, and you can’t build equity over time.

In general, younger people are more likely to choose renting a home over owning. This can be because they aren’t ready to settle down or because they can’t afford to buy a home yet. Because both of these factors also apply to the car-buying decision, car subscription services could be an appealing choice for many millennials.

Ultimately, though, it comes down to the individual. Only you can decide whether the convenience of a car subscription service outweighs the costs. Weigh all the pros and cons, and make the decision that’s right for you.

Amy Livingston
Amy Livingston is a freelance writer who can actually answer yes to the question, "And from that you make a living?" She has written about personal finance and shopping strategies for a variety of publications, including ConsumerSearch.com, ShopSmart.com, and the Dollar Stretcher newsletter. She also maintains a personal blog, Ecofrugal Living, on ways to save money and live green at the same time.

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