Car subscription vs buying a car: What's best for you?

Car subscription vs buying a car: What's best for you?

Does it make sense to go for a car subscription rather than buying?
5 min read
✓ fact checked
Here's what you need to know

✔️  Car subscription is a low-commitment way to drive the car you want.

✔️  Purchasing a car isn't always the best financial decision because new cars depreciate in value very quickly.

✔️  In many cases, you would have to subscribe to a car for 2-3 years before you’ve spent the same amount as buying a car outright.

The majority of households in the UK own at least one car. For settled families, this makes sense. But as work and life becomes increasingly flexible, people want a driving option that fits their lifestyle. That’s why more people are looking at car subscriptions vs car buying for their next vehicle.

So what are the key differences between car buying vs subscription — and which is the right option for you?

What is a car subscription service?

Car subscription is a low-commitment way to drive the car you want, whenever you need to. It works in a similar way to other subscription services like Netflix or Spotify — you pay a single monthly fee and get access to the car of your choice, along with breakdown cover, servicing, and lots of other added extras.

Why are car subscriptions becoming more popular?

While having a car is often seen as a necessity, buying a car isn’t easy. There are large upfront costs, and it’s an established fact that most cars lose value as soon as they’re driven out of the dealership.

Car leasing is another popular alternative to buying a car. However, leasing tends to involve lengthy fixed-term contracts with prohibitive fees for early cancellation. Many leasing firms also exclude servicing and road tax, so these are additional costs to consider.

Car subscription offers a flexible alternative to car ownership. With short-term contracts, simple payment terms, and all-inclusive packages, it’s easy to see why car subscription is growing in popularity. It also offers you the opportunity to trial different types of cars, such as electric vehicles, without committing to a purchase. If you own a company you can learn more about business car subscription here.

Car subscription vs buying a car

Choosing between car subscription vs buying a car usually depends on your circumstances. While there are benefits to car ownership (for example, after your initial purchase, your monthly costs are usually relatively low) a car subscription suits many people better than buying a car.

Here are the key differences between car subscription vs ownership to help you decide if it makes sense to get a car on subscription.

Cost of car subscription vs purchase

When you buy a car, you’ll need a lot of cash upfront (or a reasonable credit score to finance your vehicle). You’ll also need some in reserve for emergency maintenance, servicing, and MOT tests. As a result, buying a car requires a significant financial commitment right from the start.

With car subscription, you’ll pay more per month — but there are no upfront fees, and most packages include servicing, MOTs, breakdown cover, and even insurance. In many cases, you would have to subscribe to a car for 2-3 years before you’ve spent the same amount as buying a car outright.

There are also other financial elements to consider when choosing between car subscription and car buying, such as:

  • Depreciation — buying a car isn’t an investment for the future. Cars lose their value quickly, especially as road taxes rise and electric vehicles become the norm.
  • Credit score — unlike car subscription, leasing or buying a car on finance can affect your credit score, which impacts other purchases you might want to make.
  • Equity — if you’re already a car owner, switching to a car subscription can release the equity on your existing vehicle, giving you an injection of cash to spend elsewhere.

Choosing a car subscription isn’t just about your current circumstances. It can also help you be more financially secure in future.

Flexibility

Most people buy a car with the intention of keeping it for a long time. This often makes sense if you’re settled with where you live and work, and you can easily finance your purchase.

Car subscription gives you the flexibility to drive only when you need to. You can travel, move house, and change up your commute without worrying about selling your car. You can simply hand it back to the provider when you’re finished with it. This is just one of the many reasons you could replace your current car.

Commitment

Buying a car is a long-term commitment — and yet most people buy after just a single test drive. If you don’t enjoy driving the car you’ve bought, you’re stuck with it.

Most car subscriptions are short-term, with many companies allowing you to subscribe on a rolling monthly basis. That means you can trial a car for as long as you want to, switch cars regularly, test drive brand new models, and cancel your car subscription without incurring huge fees.

What’s included with car subscription vs car buying?

Another major difference between car buying vs subscription is what’s included. With most car subscriptions, as a minimum you’ll get:

  • Car hire
  • Included mileage
  • Servicing and MOT
  • Breakdown cover
  • Road tax

Many providers also include insurance and a courtesy car, should you need one while yours is being serviced. That means fuel is about the only additional cost to consider outside your subscription.

Brand new cars sometimes include servicing and other extras under a warranty agreement. However, these usually only last for a limited period, and then you’ll need to take care of all of the above yourself. Second-hand cars rarely come with any extras, unless it’s still under its original warranty.

Is car subscription cheaper than buying?

Like buying a car, the cost of a car subscription depends on many different factors. This includes which car you choose, your planned monthly mileage, and the cost of your car insurance.

Short term subscriptions usually work out a lot cheaper than buying a car. So if you know you’ll only need a car for up to a year or so, subscription can be your cheapest option.

However, if you’re planning to keep your car for a while, buying is often more cost-effective. Bear in mind that the upfront cost is only part of the price — you’ll also pay for maintenance, insurance, tax, and other costs that are usually included in a car subscription.

Should you use a car subscription service?

Car subscription usually suits people who:

  • Want the flexibility of being able to cancel their subscription without fees or lengthy notice periods
  • Want to know what their outgoings will be every month
  • Want a reliable car supported by all-inclusive maintenance and insurance
  • Can’t afford the upfront payment for buying a car
  • Want to drive new cars they may not be able to afford to buy

When not to use a car subscription service

Because you don’t own a subscription car, there are some limitations on how you can use it. For example:

  • You can’t usually customise your car (although there are some exceptions, such as Care by Volvo)
  • You can’t usually smoke in a subscription car

Some drivers also find that they don’t want or need to trade car ownership for flexibility and simple pricing.

Car buying vs car subscription: a comparison

Compare how much it costs to drive three of the most popular cars on a subscription model vs buying a car.

Car model

Subscription

Buying*

Months until subscription equals buy value

Tesla Model 3 (Long Range 75kWh)

£1199 per month

£42,475

35

Volkswagen Golf (1.6L SE Nav TDI)

£349 per month

£8,995

25

Audi e-tron

£1,299 per month

£47,194

36

*Least expensive price for most similar car in terms of specification and age as of March 2022.

Browse cars currently available on subscription

Considering getting a car on subscription? Car Sloth compares all the major car subscription providers in the UK, so you can find the right car for you. Take a look at the cars currently available on subscription.

Browse all cars available on subscription

There are hundreds of cars available via UK subscription companies.

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