Car Subscriptions: Smart or Silly?

  • Based in Los Angeles, Warren Clarke loves providing readers with the information they need to make smart automotive choices. He's provided content for outlets such as Carfax, Edmunds.com, Credit Karma and the New York Daily News.

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Change is everywhere, and there are structures in place to support us if we choose to leave old traditions behind in favor of exploring new avenues. This is certainly true when it comes to the relationship people have with their cars. Many have begun to question whether car ownership is the best choice for them, and there are alternatives available for those seeking to leave this tradition behind.

Signing up for a car subscription is one of these alternatives. This option is similar to leasing, but with certain key differences. With a car subscription, a person pays a flat fee each month for access to a vehicle. Insurance and registration are usually provided and maintenance costs are covered, so the subscriber doesn’t have to pay those expenses out of pocket. Also, the subscriber isn’t limited to just one vehicle. With most car subscription plans, it’s possible to rotate through different vehicles in the fleet over the course of the arrangement.

Some car subscription services offer only vehicles from a single automaker, while others provide choices from a wide range of marques. And some offer only new vehicles, while others provide a selection of used cars.

So, is a car subscription smart or silly? It depends on your preferences and priorities. Let’s take a look at this question from a few different perspectives.

Term Length: Smart or Silly?

Woman holding a smartphone
With car subscriptions, subscribers have tremendous flexibility when it comes to term length, and they’re able to easily cancel the plan by tapping a few keys on their smartphone. (Unsplash)

Term length is one aspect in which a car subscription differs from leasing. Most leases require at least a 24-month commitment, but a car subscription is a lot more flexible. Though 1-year subscription plans are available, it’s possible to subscribe on a month-to-month basis.

This flexibility might be a smart solution for some people.

For example, if someone’s income is unpredictable, a lease that requires regular monthly payments over a few years could be burdensome if a changing financial situation leads to a lean month or two. This kind of income variability is not uncommon with those who are self-employed, and according to the Pew Research Center, 10% of the U.S. workforce falls within this category.

And for those who travel regularly for work or pleasure and are gone for weeks at a time, a car subscription may represent an ideal alternative to making lease and insurance payments on a vehicle that’s just sitting in the garage.

Eligibility Requirements: Smart or Silly?

Worried Man
Worried that a spotty credit score will make you ineligible for a car subscription? Some companies will accept even those with subprime credit. (Unsplash)

Many car subscription services take a hard look at a person’s credit history when deciding who qualifies for the program. To become a subscriber, good credit is usually a prerequisite.

A good driving record is also required, primarily for insurance reasons. At Flexdrive, a subscription service that offers used cars, this means “no more than one minor violation in the past year or two minor violations in the past three years.” Those with more than one major violation in the past three years would be ineligible for a Flexdrive subscription.

There are also age restrictions, due to insurance concerns. At most companies, subscribers must be at least 21, but the minimum age at some companies is 25.

Those with subprime credit may have a harder time finding a car subscription company that will accept them into the program. However, there’s at least one company that will.

Fair, a car subscription provider offering used vehicles from more than 30 different automakers, accepts those with subprime credit. And these customers don’t get saddled with high interest rates and extra fees, as would be the case if they were seeking a car loan or lease.

For those with poor credit, a car subscription from Fair might be a smart choice, since it could wind up being more cost-effective than buying or leasing. Note that with Fair, insurance isn’t included in the advertised price of the subscription, but it can be bundled in for an additional fee in most states.

Usage: Smart or Silly?

Odometer of a Car
As with leases, car subscription plans typically place restrictions on monthly mileage. (Pexels)

Much like leases, car subscriptions come with certain usage limitations. There’s usually a monthly mileage limit that can’t be exceeded without penalty, but most companies offer packages that give subscribers a higher limit for an additional cost.

Canvas, a car subscription company that offers used Ford vehicles, includes 500 free miles with every vehicle. For those who intend to do more driving, the company provides a variety of packages, including one that provides unlimited mileage for an extra $100 per month.

As with leases, many car subscription plans allow subscribers to add a secondary driver. At Canvas, subscribers are required to add secondary drivers to the company’s insurance policy.

Many car subscription plans prohibit smoking in the vehicle. Pets are allowed, but they’re typically required to be placed in carriers. Subscribers may get charged an extra cleaning fee if there’s pet hair in the car.

Car subscriptions offer a key usage-related benefit: the ability to sample different cars throughout the fleet. Having access to a variety of vehicle choices can keep things fresh and exciting.

And this perk can be of huge assistance during those times when usage requirements temporarily change. For example, someone who is moving may appreciate being able to switch to a truck or large SUV during the week of the move.

Pricing: Smart or Silly?

Person counting money in one-dollar bills
A car subscription with a luxury brand can be extravagantly expensive, but affordable plans are available for those who want a used, budget-friendly car. (Unsplash)

With a car subscription, pricing can vary dramatically. It all depends on whether someone is in the market for a luxury model or something more affordable.

Some plans for luxury models will set you back a pretty penny. Porsche Passport’s basic Launch subscription plan starts at $2,000 per month, plus a $500 activation fee. This plan offers access to the Cayman, Boxster, Macan, and Cayenne.

At the time this article was published, 2-year Cayman leases were available for $649 per month, with $5,989 due at signing. Porsche leases include two years of maintenance. With the cost of the signing fee spread out over two years, that works out to a monthly expense of roughly $900.

The average cost of insurance on a Cayman is $112 per month, according to data gathered by The Zebra. That means that with insurance factored in, leasing a Cayman would incur a total cost of $1,012 per month.

This monthly cost of $1,012 is a lot less than the $2,000 per month that would be owed for a Porsche Cayman subscription. But for a subscriber who doesn’t intend to keep the plan active every month, or wants to swap between sports cars and sport-utility vehicles, a subscription might be worthwhile financially.

Now let’s evaluate a car subscription from Fair, a company that offers affordable used cars. Fair offers subscription plans for a 2016 Nissan Sentra for as little as $130 per month. This fee includes maintenance, but not insurance.

When looking purely at vehicle cost, it can be affordable to buy a used car, but this ownership may come with unpleasant surprises when it comes to repair costs. Since maintenance is included, this is never an issue with a car subscription. With a flat fee paid every month, a subscriber’s expenses are always predictable. This may be preferable for those who like having certainty when it comes to their budget.

Also, a subscription from a company like Fair could be tailored so a subscriber is never in a used car that’s more than two or three years old. This ensures access to vehicles that offer reasonably current automotive technology. A car owner driving a vehicle that’s five years old or older doesn’t have this benefit.

A car subscription may be a smart choice for those who need inexpensive access to a used car that’s current enough to offer up-to-date technology and reliable service.

Get Smart

 It’s still relatively new, but car subscription services already offer several flavors and permutations. One of them may be a match for your needs.


About the Author

  • Based in Los Angeles, Warren Clarke loves providing readers with the information they need to make smart automotive choices. He's provided content for outlets such as Carfax, Edmunds.com, Credit Karma and the New York Daily News.

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