Car subscription, leasing or renting: What's best for you?

Thinking of getting a car but unsure what's right for you?

Car subscription, leasing or renting: What's best for you?
9 min read
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Here's what you need to know

✔️  Car subscription services could account for 10 per cent of all new cars on the UK’s roads by 2025.

✔️  Subscription plans are designed to be as simple and transparent as possible.

✔️  Leasing is more likely to come with additional costs attached.

The way we own and use products is changing. Many of us have found ourselves clearing out shelves full of CDs and DVDs that have been sat there collecting dust since the arrival of streaming services such as Netflix and Spotify.

Now we’re seeing a similar trend in car ownership. It’s estimated that subscription services could account for 10 per cent of all new cars on the UK’s roads by 2025. And that’s on top of existing lease schemes that already account for more than five million vehicles on the road.

What is a subscription service?

Subscription services are broadly similar to car rental, with all-inclusive payments that cover both your use of the vehicle and associated costs such as servicing and maintenance.

All subscription services work a little differently, but in many cases, the only thing you’ll have to add is fuel or electricity. Some subscription services even include discounted fuel prices or free charging on selected networks for electric vehicles.

Subscription vs car rental

The main difference between a car subscription and traditional rental is the duration. There’s generally a maximum length for a rental term, ranging from a couple of weeks to several months, whereas subscription services are designed to carry on for as long as you need them.

You also get far more control over the type of vehicle that you drive on a subscription. While a rental agreement might say something like “Ford Focus or similar”, a subscription will generally detail the exact make, model and colour, complete with a breakdown of the specification and any options fitted.

Subscription vs leasing

Leasing is effectively another variation on the rental concept. Here, however, you have a long-term fixed contract, which can tie you in for anything up to five years. It’s sometimes possible to end the lease early, but the fees for doing so can be prohibitive.

Another key difference is that leasing is more likely to come with additional costs attached. Some lease deals are more comprehensive than others, but you will generally have to organise your own insurance, and potentially your own VED (road tax) and servicing too. Subscription services frequently include all of these in the main cost – although it’s worth checking as some do charge separately for insurance.

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Why use a subscription service?

There are several reasons for choosing a subscription service over traditional car usage schemes, but the main one is flexibility.

Subscription services work on a rolling contract that can be as little as 1 month, with the option to cancel or change your vehicle at the end of that time. That’s handy if your circumstances are likely to change – for instance, if you’re thinking of starting a family or working abroad for a while.

It also gives you access to the latest models. That’s particularly relevant if you’re looking at electric cars, where the technology is progressing at such a fast pace that a 5-year lease could feel like a lifetime.

Finally, there’s the simplicity of running a car on subscription. Most companies will deliver the vehicle to your door and collect it if it requires servicing or maintenance. Everything is generally covered by a single monthly fee, which means you don’t have to spend time shopping around for deals on insurance or arranging appointments for servicing. In a nutshell, it’s the simplest way of running a car. You can see our rundown of the cheapest cars on subscription.

What are the downsides to a subscription?

Subscription plans are designed to be as simple and transparent as possible, but you still need to read the small print. There will be a monthly mileage limit that most services allow you to choose, but as with renting or leasing, you will be charged more if you exceed that. Similarly, most providers charge different amounts depending on the length of contract that you take out.

Much like leasing or renting, there’s no option to buy the car at the end of your subscription. And while there’s generally a good choice of different models available in stock you won’t have the full range of customisation options that are available to those purchasing a car outright. Check our our car subscription vs car buying guide!

Another thing to bear in mind is that you will still need to pay for things like parking services and congestion charging schemes. Swapping your details can add a fair amount of extra hassle if you change cars on a regular basis. You may also find that any penalty charges, such as parking fines are hit with an additional processing fee.

If you’ve got a nose for a bargain then you may also miss the opportunity to shop around for your own deals when it comes to things like insurance. The all-inclusive deals offered by subscription services are generally quite competitive, but that doesn’t mean you couldn’t undercut them elsewhere.

So, what’s included with each?

It varies. However, it’s fair to say that subscription services are generally a lot more comprehensive than lease deals. The table below gives you an idea.

Subscription Rental Leasing
Maximum duration Roling contract Fixed term - generally up to 3 months Fixed term - typically 1 to 5 years
Initial payment Generally a refundable deposit Generally a refundable deposit Generally 1 to 12 months' rental (non-refundable)
Insurance Generally included Included Not generally included
Servicing Included Included Not generally included
Breakdown cover Included Included Sometimes included
Road tax Included Included Sometimes included (may be first 12 months)
Fuel or electricity Sometimes included Not included Not included

How much does it cost?

It pays to shop around. Subscription costs can vary considerably, as can the features that are included in the service.

The upfront cost of a subscription is almost always more than you’d pay for a lease, but that’s not necessarily the case once you add up all the additional extras. Lease deals start with a substantial lump sum payment that can be well into the thousands, whereas some subscription services simply charge a small refundable deposit.

Next comes insurance, which can be another major factor – particularly if you’re a younger driver living in an urban area. There’s no definitive rule, but subscription services are more likely to include free insurance than lease deals. Similarly, servicing, maintenance and breakdown cover are included on subscription services, but they may come at additional cost if you go down the leasing route.

We picked three cars at random, each from a different subscription service, and compared them to a typical lease deal. Once we’d factored in servicing, insurance and initial payments, two of the three cars were cheaper on subscription – one by a significant margin – while the other worked out considerably more expensive. The moral of the story is to compare different services and make sure that you take note of what’s included.

Subscription Leasing
Skoda Octavia 1.0 TSI SE Technology £547.00 £566.31
Renault Zoe ZE50 R135 GT Line Rapid Charge £399.00 £598.79
Tesla Model 3 Standard Range Plus £1,239.00 £825.53

It’s worth bearing in mind that not all the benefits of a subscription service are financial. The additional flexibility that they bring can be extremely useful in itself, as can the simplicity of having everything bundled into one regular payment.

Also, you will probably get a credit search when getting a car on subscription. Similarly to leasing and buying on credit, subscription providers can carry out a credit check. Read our guide on credit searches and bad credit to learn more about the process. If you own a company you can learn more about business car subscription here.

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