Car Subscriptions offer a more flexible route to running a car than traditional financing such as contract hire or Personal Contract Purchases, whether your a personal customer who just doesn’t want to commit to a long-term deal or maybe your a business who needs the flexibility due to staff turnover or short-term assignments.
Car Subscriptions are simple to understand, but we understand that quite a few of you have questions that may not have been answered before. Also, with a few companies closing their subscription programs, where do you stand if your current provider closes?
However, there are always positives and car subscriptions offer a wealth of benefits. From lower upfront payments when compared to car leases, flexible terms and the latest vehicles. They are great if you have plans that could change or your family grows.
How do they work?
With a vehicle subscription, usually your 1 monthly payment covers your rental, maintenance/servicing, breakdown assistance and road tax, some also include car insurance although it isn’t always beneficial to use this option. (See article – Do Ineed a car subscription with fully inclusive insurance?)
Usually you take a rolling monthly contract (some have minimum terms) and they can be rolled on until you decide to terminate the agreement, this can be 12 months or 3 years, just depends on the providers.
With a traditional car lease or financing agreement, a large deposit is usually required, on top of this you also have your maintenance costs and in the case of PCP or HP, you may also have to deal with the loss in value over the contract. You don’t have these worries with car subscriptions, you have lower upfront costs, servicing included and the provider has the issues of the vehicle losing it’s value and disposing of the car.
When you start doing the maths, you’ll realise that there isn’t much difference between the 2 options.
Don’t forget that a car subscription is a type of lease, therefore you will have to undergo credit checks and agree to the terms and conditions of an agreement. You may have to provide your own car insurance but the rest of the costs are covered, so all you should need to do is insure and fuel the vehicle.
We’ve already covered many of the main points in a recent article (click the header) and many of those sneaky providers who offer short-term car leases, have dressed fixed contracts as subscriptions which is morally wrong.
In a nutshell, a car subscription is a rolling month-to-month car lease with no real fixed end date and an easy get out clause, should you need to send the car back early. Whereas a short-term car lease is a fixed contract usually over a 6, 9 or 12 month period, these cannot usually be extended or reduced in length without paying charges.
Pro's and Con's of a Car Subscription
Pro's:
- Flexibility - From 1-month to 3 years with no early termination charges
- Lower upfront payment, usually equivilent to 1-month plus a joining fee
- Maintenance & Servicing is included so no worries on this side
- Road Tax is also included for the duration of the car subscription, bonus!
- Quick Delivery with most vehiclss available in physical stock
- Delivery to your door with most subscription providers.
- Easier credit checks with most providers, most don't show on credit reports
- Cheaper than paying termination charges when compared with PCP or a 2/3 year car lease
Con's:
- Due to their shorter period and flexibility, costs can be higher than traditional finance or lease
- Limited stock with no customisable options
- Colours maybe retricted or not even guaranteed
- Some advertise 28 day rates not monthly rates
- Some short-term car leases are dressed up as car subscriptions
- Used cars may not be to the required standard upon delivery
What should I look out for?
As with all deals, you need to read the small print when it comes to car subscriptions. There is alsorts to consider…
If you’re the type of person who racks up multiple parking tickets, expect administration charges for processing these, that is industry standard…
Also look out for car subscription companies who promote a “28 day rate” – This means that you will be paying 13 payments per year, as a headline rate it looks cheaper so always compare like for like.
Look out for companies who dress their fixed short-term car leases up as car subscriptions, they aren’t flexible and you will have to pay to get out of the contract. On top of this maintenance isn’t always included…
Look out for scams on Instagram offering ‘No credit check car leases’ and ‘No deposits’ – Check the company behind the deal and make sure they are reputable companies on companies house and FCA, being a member of the BVRLA also is beneficial.
Are Car Subscriptions for you?
Car Subscriptions is still a relatively new concept in the UK, previously it was promoted as a flexible car lease or a flexilease, but they did exist in some form or another. There aren’t as many providers as there are traditional car leasing brokers so that does limit you to who you can subscribe with.
As we put in the opening paragraph, some car subscriptions companies have pulled out of the market. Onto and Elmo ceased trading, Volvo have stepped back and Cazoo gave up.
However, there are still plenty of reputable companies in the marketplace from long-standing companies such as Cocoon and Autohorn, to some of the newbies such Drivefuze and Voltric. Just be wary if the price looks too good to be true or if the company is heavily funded.
As with all agreements, make sure you read the terms and conditions and make sure you know what you’re signing up for.
Whether you need it for personal or business, an Expat or a new start-up company, car subscriptions should be deemed as a viable option when you are looking at taking out a new car (or van).
