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Subscription Services: Aren’t They Just More Expensive Leases?

Subscription Services: Aren’t They Just More Expensive Leases?

April 24, 2018

Vehicle subscription services have seen huge growth recently. You can check out our article about them here. They are are rapidly being rolled out by several luxury-brand car manufacturers, as well as some dealers.

But there is a lot of confusion out there about these new subscription plans. One question we have been hearing is:

Aren’t subscription services really just more expensive leases?

Well, not really. Let’s go through the basics on how these plans work, so that you can better understand how they compare to a traditional lease program.

Subscription Services Give You More Vehicle Choices

When you sign up for a subscription service, you will have access to a wide variety of vehicles. If you sign up for a vehicle manufacturer’s service, you can typically select from sedans, SUVs, trucks, coupes, convertibles, and sports cars, based on what that manufacturer produces. Subscription plans from a dealer will often let you choose vehicles from several different brands. This can provide you with more variety. It can also help you to compare competitive vehicles with each other.

These subscription services are usually priced in different tiers. The lower-priced tier will let you choose from lower-priced vehicles, while the more expensive tier gives you more expensive and higher-performance vehicles.

Subscription Services Are More Expensive Than Leases

If you take a look at some of the monthly fees for subscription plans, they cost much more than your average lease payment. These fees start at around $1,000 per month and can go way up from there. Porsche’s top tier, for example, costs $3,000 per month. There are a few good reasons for this:

  • The fee includes insurance and maintenance
  • The fee includes concierge and cleaning services when you swap vehicles
  • The fee includes the depreciation on a fleet of expensive cars

In addition, many subscription services require you to pay an initiation fee when you sign up. That’s more money out of your pocket.

Subscription Services Are More Flexible Than Leases

Unlike a traditional lease, you are not locked into a specific fixed term or a single vehicle with a subscription service. You can use a vehicle for as little as a month, return it, and walk away. The next time you need a vehicle, order one up through the app – it’s that easy! This is an ideal situation if you travel periodically, and don’t want a vehicle sitting around and gathering dust while you are away.

Most subscriptions also let you swap the vehicle you are driving for another, within the limitations of the program. If you need a big SUV for a vacation trip, or you’d like a convertible for a summer drive along the coast, you can have one. It’s included in the price – you’ve got choices!

Some people may also use a subscription plan when they are planning to buy or lease a new vehicle, but want an extended test drive. This gives them the opportunity to live with a variety of vehicles, for a long enough period to let them know which one they prefer. Others may just want to drive something different every so often, and this lets them do it.

Subscription Services Can Help When You Travel

Another benefit is yours when you travel to another location where your subscription plan is offered. You will usually be able to get a vehicle of your choice, delivered to you when you arrive, through the plan.

Traditional Leases Continue To Offer Many Benefits

While these new subscription services are designed to appeal to people who value convenience and choice above all else, traditional leasing is still the best way to drive the car you want for the lowest possible price. Leasing continues to give you all these benefits:

  • Leasing gives you a low monthly payment
  • Leasing gives you a vehicle that’s always under warranty
  • Leasing lets you drive a nicer car than you could purchase
  • Leasing keeps you from getting “underwater” on a long-term car loan
  • Leasing lets you put little or nothing down
  • Leasing lets you have all the latest safety and infotainment technology
  • Leasing gives you tax advantages if you use your vehicle for business

Subscription Services Will Grow, But Leasing Will Continue To Make More Sense For Most People

Subscription services are one more way to drive the vehicle of your choice. These plans are ideal for consumers who don’t always need a vehicle, who don’t want to always drive the same vehicle, or who aren’t sure what vehicle to buy.

For the rest of us, who need a vehicle on a daily basis, who can live with the same vehicle for a few years, and who know what we want to drive, traditional leasing will continue to serve our needs very well.