The rise of Uber and Lyft was just the start of the ride-sharing scheme.
With the ever-increasing popularity of smartphone apps and subscription services, both tech innovators and automakers have developed a number of successful car subscription services (usually regional but nationwide) that challenge the traditional ways of owning a car.
If you want a new set of wheels you usually have a few options:
- You can finance a new, certified used or used vehicle.
- When buying a new, certified used or used vehicle, you can pay cash without any problems.
- You can lease (think long term rental) from a dealer for a set number of years with mileage and other restrictions.
If you live in a mostly walkable city or travel somewhere by air, you might only drive if you rent a car through a traditional rental company like Enterprise or Hertz.
Car subscriptions fall somewhere between leasing and short-term car rental.
When you sign up for a car subscription, you pay a monthly subscription fee to access vehicles, whether it’s on demand or for a specific period of time with a specific vehicle. This can be especially useful if you drive a fuel efficient sedan for your daily commute, but need a truck for weekend renovations to your house, or want to indulge in a sports car for a week.
Although subscription services vary, the fee is usually all-inclusive. That means the service covers auto insurance, roadside assistance, and routine maintenance like oil changes and tire rotations.
Automakers like Mercedes, Volvo, BMW, and Ford have jumped into the car subscription game, but you can also subscribe to non-branded companies like Drive Flow, YoYo, and Fair.
Car subscriptions are usually only available in major cities. Before joining any program, make sure your location is eligible.
Car subscription prices can vary widely. * Luxury automakers who got into the subscription game can charge four-digit monthly fees for access to their cars – and their target buyers are happy to pay them.
However, this doesn’t mean that all car subscriptions are expensive. Some automakers like Ford have instead focused on cheaper subscription services for used vehicles. ** And other startups not affiliated with automakers have developed their own models that work in different cities.
These car subscriptions differ in their payment method. Some charge you by vehicle type, others by mile; and some charge an activation fee, others a reservation fee.
Here are some of the prices in the market:
- Nissan Switch: $ 699 to $ 899 per month plus $ 495 activation fee
- Fair: Very variable depending on the car, but you can only spend $ 100 or $ 4,000
- Loan: $ 199 to $ 1,099 per month with a $ 1 reservation fee
- Sixt +: USD 459 per month for a Kia Rio or similar (sedan) to USD 1,059 per month for a Range Rover Velar or similar (premium SUV) plus USD 199 registration fee
- Hertz My Car: $ 999 to $ 1,399 per month
- Subscribe to Enterprise: $ 1,499 plus a $ 250 registration fee
- Drive Flow: $ 50 to $ 1,599 per month
- YoYo: $ 99 join fee plus $ 0.50 to $ 1.00 per mile
- FreshCar: $ 499 to $ 599 a month
- LMP Subscriptions: Very variable based on the car, but at the time of writing the cheapest was $ 195 per month (Toyota Corolla 2018) and the most expensive was $ 4,563 per month (Rolls-Royce Dawn 2019).
While car subscription prices may seem expensive at first glance, don’t forget that you won’t insurance, Registration or maintenance fees.
* All prices included in this article were correct as of September 29, 2020. Prices change frequently in the market. Please confirm all prices on each company’s website.
** Ford previously operated Canvas, which focused on used models, but since last year has acquired Fair Canvas from Ford.
Car subscriptions can seem expensive at first – and in most cases they still are – but they can save you money (and hassle) in other ways too.
Benefits of car subscriptions
Here’s why a car subscription can make sense for your lifestyle:
- Bundled price: You want all vehicle charges to be bundled into one price instead of worrying about vehicle registration, monthly insurance premiums, and routine maintenance.
- Maintenance-free: You don’t have to worry about planning and / or performing maintenance work such as oil changes, tire rotation and more complex repairs. In addition, many services offer free roadside assistance so you don’t have to subscribe to an AAA or any similar program.
- Flexibility: Many car subscriptions allow you to routinely switch vehicles. Switching what you drive is a lot easier than buying or leasing a car. Subscription services also have flexible terms, with many based on a monthly pay-as-you-go model.
- Bad Credit: When you have a poor man Credit score If you’re worried about running into more debt, a car subscription service could make it easier to get behind the wheel. One caveat: if you are grappling with debt and cannot get vehicle credit, don’t use a credit card to fund your car subscription fees.
- Convenience: Most of the services are app-based, which means you can do everything from your smartphone. A concierge will usually even bring the car to you.
- Savings: When you’re having trouble getting a deposit on a new vehicle, and face high insurance costs Based on your population or your location, a car subscription can be a savings option when you choose a lower-tier vehicle.
Cons of car subscriptions
However, subscribing to such a service also has disadvantages:
- Monthly payments: When you buy a car, the end is in sight – that financial freedom is on the horizon when you’ve paid for the car in full. When you choose to subscribe, you will pay for a vehicle forever.
- Limitations: Companies can limit your mileage, ban smoking in vehicles, and even force you to leave your four-legged companions at home.
- Missing negotiation: When buying a new or used vehicle, you can haggle with the dealer or private seller. With the subscription, however, the vehicle prices are set in stone.
Can you actually save money with a car subscription? In most cases, probably not. But if you choose the more fuel-efficient options and see driving as a necessity rather than a luxury, you can make it happen.
As a demonstration, let’s imagine a scenario with Sixt +, a popular option that is now an official Lyft partner.
As mentioned above, you can get a Kia Rio for $ 459 per month at 500 miles per month. Upgrading to 1,000 miles per month with additional taxes and vehicle license fees will be charged $ 564.84 per month. There is also an application fee which with taxes is $ 212.93.
Driving this Kia Rio for three years on a car subscription service like Sixt + would ultimately cost you $ 20,547.17.
What if you bought a Kia Rio from a dealer? Let’s take a down payment equal to the initial Sixt + fees, and let’s say you’re buying the base model of the current Kia Rio, which costs $ 15,850. Using Cars.com Loan Calculator, an estimated 5.75% sales tax based on my own state and an interest rate of 5.61% based on data from Experian for the first quarter of 2020monthly payment over 36 months is $ 501.
So if you are funding a Kia Rio over three years it will cost $ 26,194.43. That’s $ 5,647.26 more than you would pay if you were using Sixt + on the same car for the same amount of time.
Of course, after the car has been paid for, you have the option to sell it privately or to a dealership. Depending on how well taken care of the vehicle, you can get upwards of $ 5,650 for it.
However, by using Sixt + you have the annual hassle of registering the vehicle, the process of getting quotes for car insurance and determining the coverage you need, as well as the uncomfortable process of haggling with a dealer to buy and then trade it in again avoided. In addition, all maintenance is covered. So if major malfunctions occur in the vehicle, you are not hooked like in a self-purchased vehicle.
In general, independent (i.e., not affiliated with automakers) startups tend to offer better prices for their subscription services. However, automaker independent services have come and gone frequently in recent years. The graveyard of car subscriptions, either pooled or purchased from another company, includes Mobiliti, Flexdrive, Carpe, Canvas, Inride, Carma, and Less.
Automakers, on the other hand, have much more financial power behind them than India. Though Cadillac and Ford have both pulled out of the car subscription game, the other auto giants have stabilized.
Starting a subscription with a third-party service can save you some upfront savings. Be prepared, however, that this company may collapse or be acquired, which could affect your subscription.
So I’ve ranked the subscription services for cars separately: a ranking of third-party services and a ranking of automaker’s services.
The best third party car subscription services
I like Fair because it really captures the financial value and the convenience of a car subscription. The experience is paperless and you can go month after month or get even bigger savings with a three year lease. If you’re not interested in fancy cars with luxury features, Fair is significantly cheaper than owning a vehicle.
YoYo offers an unconventional car subscription model in an already unconventional industry, but one that is suitable for many city dwellers who only need a car occasionally. It only takes a few minutes to sign up, the sign up fee is affordable ($ 99), and you only pay per mile. Cars are dropped off everywhere, you can swap vehicles as often as you want, and you don’t even have to worry about fuel bills.
Climate change is one of the biggest causes I’m campaigning for, which is why I love it Lend. Not only is a car subscription service a better option for the environment (fewer cars are made overall), it is all credit in electric vehicles. You can choose a term of three, six or nine months.
Borrowing is a great test run for those who are thinking about electric vehicles but are afraid of the range. Spend three months on an electric vehicle to see if you ever have to worry about running out of juice on your daily trips.
4. Drive flow
I like Drive flow because of its levels. You can opt for the Explorer package for just $ 50 a month and then have access to a vehicle whenever you need it. You get 80 miles a day with a daily usage fee – but you don’t to have to use it every day. This could be great for a college student who lives 50 miles from mom and dad and loves going home to do laundry and get a free meal on the weekends.
Drive Flow also offers extended subscriptions. However, at $ 899 per month for the next level, it’s harder to justify.
5. Sixt +
Sixt + begins to get into the area where it may not make financial sense to invest, but as that Example above If you’re thrifty and deliberate, the Sixt + car subscription service can potentially save you money over time.
Recognitions: LMP subscriptions, FreshCar, Hertz My Car and subscription with Enterprise
The best car subscription services for automakers
One caveat: most of these options don’t make financial sense for real penny hoarders. However, if you’re looking for a way to self-medicate and money isn’t an issue, here are some of the best car subscription models direct from automakers:
1. Nissan Switch
One of the largest non-luxury automakers getting into the car subscription game is Nissan with the Nissan Switch Program. You pay an activation fee of $ 495 and then choose between $ 699 per month (Altima, Rogue, Pathfinder, and Frontier) or $ 899 per month (Altima, Rogue, Pathfinder, Frontier, LEAF, Maxima, Murano, Armada, TITAN, and 370Z) . Pricing models. The plans include roadside assistance, car washes and details, maintenance, insurance, a concierge – the works.
2. Maintenance by Volvo
Volvo’s all-inclusive subscription service is called Care of Volvois currently available with a free 30-day trial. This subscription service is model-based so you don’t have to switch models on the go. Currently, a 24-month contract for an XC40 T5 AWD R-Design compact SUV costs $ 700 per month with no signature required.
Also important: Care by Volvo is the only service currently offered nationwide.
3. Porsche Drive
Porsche Drive (formerly known as the Porsche Passport) is certainly not a penny hoarder driving style, but if you’ve dreamed of trying a number of high-performance models from the brand, you can manage the activation fee of $ 595 and monthly fees between $ 1,500 and $ 2,600, which hit you from.
Timothy Moore is an editorial and graphic design researcher and freelance writer. It covers topics such as personal finance, travel, careers, education, animal care, and automotive. He has been working in this field since 2012 with publications such as The Penny Hoarder, Debt.com, Ladders, WDW Magazine, Glassdoor and The News Wheel. He lives in Ohio with his fiancé.
This article originally appeared on www.thepennyhoarder.com