Sometimes Car Subscriptions look too good to be true? One monthly payment that covers all of the essentials? But did you know there may be other charges that you need to take into account. This article isn’t to scare you, but to look at each vehicle subscription provider and take a deeper look into their offering.
Hidden Charges
Headline rates may be well and good, but sometimes when you look deeper into the contract you may find additional charges. Some companies are so transparent that if you look at their website they clear display everything you can think of, from how much you need to put down, the in-contract charges even down to what to expect when your vehicle goes back.
In this article we’re going to take a look at some of the charges you need to look out for when taking a car subscription with one of the many providers on this website.
Costs and Fees
Here are some of the charges you need to look out for:
Documentation Fees
Quite a few of the car subscription companies use the term Documentation Fee’s, but what is this charge and why should you pay it. We reached out to a few of the providers and this is what we learnt:
Documentation Fees are there to cover charges such as credit checking, delivery, preparation of a car and any other out-of-pocket expenses that the provider may incur. From what we understand, this isn’t always a profit area, but a balanced approach that allows the company to be competitive by offering things like free delivery to enabling the car to be a lower price.
For example, one particular company charges anywhere between £95 inc VAT to £15,000 inc. VAT, we asked why, there answer was quite simply that the higer rate would be for high-end performance cars where they are required to pay a larger amount upfron to their own finance company to get the best rates, this in turn allows you to pay a lower amount.
Processing Fees
Similar to the Documentation Fee, the processing fee covers the similar items from the delivery (where applicable), to the checking of the customer and the administration time.
An insider from a Sheffield based car subscription provider said that they use the processing fee to reduce the headline monthly rate, so we feel it is important that you look at the contract as a whole across the time frame you need the vehicle for.
It is also understood that these processing fees (and documentation fees) are chargeable for each vehicle you subscribe to, so if you decide to change your car, it will be payable again.
Joining Fees
Some of the vehicle subscription providers ask for a ‘joining fee’ as though you were becoming a member of a club, one particular OEM car subscription provider charges £500 as a one-off, once you subscribe to your first car, this isn’t payable on subsequent vehicles unless they change their terms and conditions in the future.
One of our subscription providers said to us that the joining fee was charged to enable access to some of the best vehicle subscription rates in the market and to encourage the regular change of vehicles due to the way they procure their cars.
Signup Fees
Similar to the joining fee, some of the subscription providers charge this as a one-off fee to signup to their service. Costs range from £199 to £499 depending on the provider.
When you start digging into the terms and conditions of some of the subscription contracts, it states ‘the fee the Driver payns upon signing up to the Subscription’
Enrollment Fees
Finally, in this section is Enrollment Fee, again this looks like it could be a ‘one-off’ fee, yet it is understood that it could be payable each time you take a vehicle out, a recent review makes it look this way also.
Additional Driver Fees
Depending on whether you opt for a car with insurance or not, will depend on how many additional drivers you can have. WIth some providers only one driver as standard is permitted, some offer up to 3 for no additional costs, some can charge £25 per month.
If you need more people on your subscription contract, it may be worth looking at those providers who allow you to insure the vehicle yourself, you will sign a disclaimer stating that you are responsible for all drivers to have to correct licence and that they are fully comprehensive on their policy.
Delivery Charges
Some companies allow you to collect the vehicle, but their centres may not be close by. Therefore, whilst most can deliver the charges can be quite high and will be based on a pence per mile or a radius of an error.
Always read the small print on their websites, this charge may also be applicable at the end of the contract also.
Mileage Allowances
Each car subscription will come with a standard set of miles per month, this can range from 500 miles up to 3,000 in some cases. Make sure you opt for the mileage based on your personal requirements, otherwise you may get a nasty excess mileage bill at the end of the contract.
Some firms additional mileage costs can be quite high, this is down to the way the vehcles are funded, so make sure you look at all options before you commit.
Deposit
A deposit can be held by the provider depending on the subscription company and the vehicle taken. This is common practice with most providers and should be refunded back to you when the car is returned or the contract finishes.
The only time it won’t be refunded is if you have any damages or excess mileage charges, you owe rental or you have a high number of tickets coming through with applicable administration charges.
In-Contract Fees
In-Contract fees are for things like administration charges for Penalty Charge Notices (PCNs), taking your car abroad or other items that may apply.
Administration Charges for Parking, Violations or Speeding Tickets
If you have ever had a lease car before and you’ve been caught speeding, or you may have accidentally got a parking ticket, then then it is usual practice for the leasing company or in this case, the vehicle subscription provider to levy a charge.
This can vary from provider-to-provider but it is there for them to carry out the paperwork to either pay the ticket or represent the ticket into your name for you to deal with.
Some tickets may have been issued accidentally either due to human or computer error, but remember that the subscription firm is just telling the company who was in the car at the time of the offence and has no juristiction on the ticket issued or the rules of the road or car parking place.
At the end of the day they have still carried out the work and it is no their fault, so remember to be kind.
Taking your subscription car abroad
The majority of the car subscription companies will charge you for raising the paperwork to take your vehicle abroad, it is VERY important that you get this paperwork in order before you go as your car may be impounded (which could prove very expensive) and getting your car back can prove challenging.
Before you head abroad, you will need to ask the vehicle subscription provider to issue a VE103B, this is called an ‘on-hire’ certificate and shows that the registered keeper has allowed you to take the car abroad and who the actual registered keeper of the vehicle is.
There will be a charge for this service and you need to carry the physical documents, which the subscription company will send you in the post.
Some providers will not allow you to take your car out of the UK, so if you do want to go on holiday in the car that you subscribe to, check the terms and conditions. Also, due to Brexit laws you cannot take the car out of the UK for any longer than 28 days and it cannot be out of the UK for any longer than 90 days over a 12 month period.
Late Payments and Bounced Direct Debits
It is always very important to keep your car subscription payments up-to-date, if you bounce a Direct Debit or you do not pay for your car on the correct date, it could incur additional charges.
Take a look through your contract and it should state the administration charged levied for bounced Direct Debits or late payments.
Some companies offer a discount for paying by certain methods, this includes a discount for paying by Direct Debit or an incentive for using your credit card.
Insurance Excess
If your car subscription comes with insurance and you have had an accident, you may be required to pay an excess, this can range from £500 to £5,000 depending on the provider, so always read the small print.
Also, check with the provider on how the insurance is set-up. Some of the insurances are based on the driver, some are based on a blanket policy, it can have a massive effect on your insurance if you need to obtain your own policy.
Cherished Plate Transfer
Some subscription companies allow you to put a personalised plate on yor subscription vehicle. As well as the DVLA fees, the subscription provider may charge for the administration time for putting this plate on the car and taking it off when you are ready to swap.
Transfer of Contract
If you have taken a Business Car Subscription or you have taken a car out in your name and need to transfer it into another name, those providers who allow this may levy a charge for the administration time it takes for this change to be processed and any checks that may be required.
End of Contract Charges
These are the charges that you may have to settle when the vehicle goes back to the subscription provider:
Excess Mileage
If you have taken a contract out for 1,000 miles per month over 3 months, but you’ve driven 4,000 miles, expect to receive an excess mileage charge. As we’ve mentioned above, it is always important to take a vehicle out based on your own mileage requirements. If you do 1,500 miles per month, don’t opt for a subscription that offers 500 miles per month as it meets your budget requirements as you will get a nasty shock.
If you have taken a lower monthly mileage subscription and your circumstances has changed, call the provider to see if you can increase the mileage, it should work out cheaper.
Damage
With all of the car subscription contracts, the vehicles will need to be returned back to the provider in a state set out by their terms and conditions, these can be called return standards or return conditions, depending on the provider.
Damage costs can be estimated by the provider and believe it or not, they do not need to provide evidence that the work has been carried out or give you the option to repair it. They do however, need to show that the damage has been caused whilst on subscription with yourself.
It is always important to clean your car before returning it back to the provider, that way they can see any damage and it also shows that you are not hiding anything.
Always take photos and videos of the car yourself, at some point in the future, we will create a vehicle condition report similar to those used by the providers so that you can carry out your own checks before booking the car subscription in for return.
One provider gave us some really good advice, and that was not to ‘skimp’ on your repairs by using a back street garage or a friend of a friend, as you may get charged for a poor previous repair.
Help and Guidance
If you feel we have missed anything from the above article, please drop the team an email using the form below. We try and cover all bases where we can and reach out to the providers on our website to gain an understanding of their processes, contracts and charges, so that we can relay this back to you.
I would like to thank Pivotal, Cocoon Vehicles and Voltric for their help with this article, with a special mention to Sixt+.
