Are Car Subscription Services Worth It? Here’s How to Decide
The rise of Uber and Lyft was just the start of the rideshare revolution.
With the ever-growing popularity of smartphone apps and subscription services, tech innovators and automakers alike have developed a range of successful car subscription services (typically regional but one is nationwide) that challenge the conventional ways of owning a car.
- What car subscription services entail
- How much car subscriptions cost
- The pros and cons of car subscription services
- Whether a car subscription service can save you money
- The major services in the market going into 2021, ranked
Typically, when you want a new set of wheels, you have a few options:
- You can finance a new, certified pre-owned or used vehicle.
- You can pay cash without the trouble of a loan when purchasing a new, certified pre-owned or used vehicle.
- You can lease (think long-term rental) from a dealership for a set number of years with mileage and other restrictions.
Alternatively, if you live in a mostly walkable city or are traveling somewhere by plane, you might only drive when renting a car through a traditional rental company like Enterprise or Hertz.
Car subscription services fit somewhere in between leasing and short-term car rentals.
When you sign up for a car subscription service, you are paying a monthly subscription fee for access to vehicles, whether that’s on an as-needed basis or with a particular vehicle for a certain amount of time. This can be particularly useful if you drive a fuel-efficient sedan for your daily commute but need a truck for weekend renovations on your house or want to treat yourself for a week in a sports car.
Though subscription services vary, the fee is typically all-inclusive. That means the service will cover car insurance, roadside assistance and routine maintenance, like oil changes and tire rotations.
Automakers like Mercedes, Volvo, BMW and Ford have gotten into the car subscription game, but you can also subscribe to brand-agnostic companies like Drive Flow, YoYo and Fair.
Car subscription services are typically only available in major cities. Before deciding to participate in a program, make sure your location is eligible.
Prices for car subscription services can vary greatly.* Luxury automakers that have gotten into the subscription game can charge four-figure monthly fees for access to their cars — and their target buyers are happy to pay them.
But that doesn’t mean all car subscription services are expensive. Some automakers, like Ford, have instead focused on cheaper subscription services for used vehicles.** And other non-automaker-affiliated startups have created their own models that work in various cities.
These car subscription services have some variations in how you pay. Some charge you by the vehicle type, others by the mile; and some charge an activation fee, others a reservation fee.
Here are some of the prices across the market:
- Nissan Switch: $699 to $899 per month, plus $495 activation fee
- Fair: Highly variable based on car, but you can spend as little as $100 or as much as $4,000
- Borrow: $199 to $1,099 per month with a $1 reservation fee
- Sixt+: $459 a month for a Kia Rio or similar (sedan) to $1,059 a month for a Range Rover Velar or similar (premium SUV), plus a $199 sign-up fee
- Hertz My Car: $999 to $1,399 per month
- Subscribe with Enterprise: $1,499, plus a $250 enrollment fee
- Drive Flow: $50 to $1,599 per month
- YoYo: $99 joining fee plus $0.50 to $1.00 per mile
- FreshCar: $499 to $599 month
- LMP Subscriptions: Highly variable based on car, but at time of writing, the most affordable was $195 per month (2018 Toyota Corolla) and the most expensive was $4,563 per month (2019 Rolls-Royce Dawn)
While car subscription prices might look expensive at first, don’t forget you won’t have insurance, registration or maintenance fees to contend with.
*All prices included in this article were accurate as of Sept. 29, 2020. Pricing frequently changes in the market, so please confirm all pricing on each company’s website.
**Ford previously ran Canvas, which focused on used models, but as of last year, Fair has acquired Canvas from Ford.
Car subscription services can seem expensive at first glance — and in most cases, they still are — but they can also save you money (and hassle) in other ways.
Pros of Car Subscription Services
Here’s why a car subscription model might make sense for your lifestyle:
- Bundled price: You’d like to have all your vehicle fees wrapped into one price rather than worry about vehicle registration, monthly insurance premiums and routine maintenance.
- Maintenance freedom: You enjoy not worrying about scheduling and/or performing maintenance like oil changes, tire rotations and more complex repair work. In addition, many services offer free roadside assistance, so no need to subscribe to AAA or a comparable program.
- Flexibility: Many car subscription services allow you to change up your vehicles on a routine basis. If you want to switch what you’re driving, it’s much easier to do so than it is when you’ve purchased or even leased a car. Subscription services also have flexible terms, with many built on a month-to-month, pay-as-you-go model.
- Bad credit: If you have a poor credit score or are worried about amassing more debt, a car subscription service could make it easier to get behind the wheel. A caveat: If you’re struggling with debt and cannot get a vehicle loan, do not use a credit card to fund your car subscription fees.
- Convenience: Most services are app-based, meaning you can do everything from your smartphone. A concierge will typically even drop the car off to you.
- Savings: If you’re struggling to come up with a down payment for a new vehicle and face high insurance costs because of your demographic or location, a car subscription might be a way to save if you opt for a lower-tier vehicle.
Cons of Car Subscription Services
But there are also drawbacks to subscribing to such a service:
- Monthly payments: When you buy a car, there’s an end in sight — that financial freedom on the horizon when you’ve paid the car off in full. If you choose to subscribe, you will forever be paying for a vehicle.
- Limitations: Companies may cap your mileage, ban smoking in vehicles and even force you to leave your four-legged companions at home.
- Lack of negotiation: When buying a new or used vehicle, you can haggle all you want with the dealer or private seller. But when it comes to subscription service, vehicle prices are set in stone.
So can going with a car subscription service actually save you money? In most cases, probably not. But if you choose the more frugal options and think of driving as a necessity, not a luxury, you can make it happen.
To demonstrate, let’s imagine a scenario with Sixt+, a popular option that is now the official partner of Lyft.
As stated above, you can get a Kia Rio for $459 a month at 500 miles a month. Assuming an upgrade to 1,000 miles a month and adding in tax and vehicle license fees, it comes to $564.84 a month. There’s also a sign-up fee that, with taxes, amounts to $212.93.
Driving that Kia Rio over three years with a car subscription service like Sixt+ would ultimately cost you $20,547.17.
So what if you were to buy a Kia Rio from the dealership? Let’s assume a down payment the same size as the initial fees for Sixt+, and let’s assume you purchase the base model of the current Kia Rio, which costs $15,850. Using the Cars.com loan calculator, an estimated sales tax of 5.75% based on my own state and an interest rate of 5.61% based on Q1 2020 data from Experian, the monthly payment over 36 months is $501.
So if you finance a Kia Rio over three years, it would cost you $26,194.43. That’s $5,647.26 more than you would pay if you used Sixt+ for the same car over the same amount of time.
Of course, after the car is paid off, you have the option to sell it privately or to a dealership. Depending on how well you’ve taken care of the vehicle, you could get more than $5,650 for it.
But by using Sixt+, you will have avoided the annual hassle of vehicle registration, the process of getting car insurance quotes and determining what coverage you need, and the uncomfortable process of haggling with a dealership at purchase and then again when trading it back in. Plus, all the maintenance is covered, so if something major malfunctions in the vehicle, you are not on the hook as you would be in a vehicle you purchased yourself.
In general, independent (i.e., not automaker-affiliated) startups tend to offer better pricing for their subscription services. However, automaker-agnostic services have come and gone frequently over the last several years. The graveyard of car subscription services that have either folded or been acquired by another company includes Mobiliti, Flexdrive, Carpe, Canvas, Inride, Carma and Less.
On the other hand, automakers have a lot more financial power behind them than the indies do. Though Cadillac and Ford have both stepped out of the car subscription game, the other auto giants have held steady.
Starting a subscription with a third-party service may net you some savings up front, but be prepared for that company to potentially fold or be acquired, which may affect your subscription.
As such, I’ve ranked car subscription services separately: one ranking of third-party services and one ranking of automaker services.
The Best Third-Party Car Subscription Services
I like Fair because it truly captures the financial value and the convenience of a car subscription service. The experience is paperless, and you can go month to month or get even greater savings with a three-year lease. If you aren’t picky about fancy cars with luxury features, Fair can be significantly more affordable than vehicle ownership.
YoYo offers an unconventional car subscription model in an already unconventional industry, but it’s one that can work for a lot of city dwellers who just need a car on occasion. Signing up takes mere minutes, the sign-up fee is affordable ($99), and then you just pay per mile. Cars are dropped off wherever you are, you can swap vehicles as often as you want, and you don’t even have to worry about fuel costs.
Climate change is one of the biggest causes I champion, which is why I love Borrow. Not only is a vehicle subscription service a better option for the environment (overall fewer cars manufactured), but Borrow deals exclusively in electric vehicles. You can select a term of three, six or nine months.
Borrow is a great test run for those who are considering EVs but have range anxiety. Spend three months driving an EV to see if you ever have to worry about running out of juice while making your daily drives.
4. Drive Flow
I like Drive Flow because of its tiers. You can opt for the Explorer package for just $50 a month and then have access to a vehicle any time you need it. You’ll get 80 miles a day with a daily usage fee — but you don’t have to use it every day. This could be great for a college student who lives 50 miles away from Mom and Dad and likes to go home to do laundry and get a free meal on the weekends.
Drive Flow also offers more advanced subscriptions, but at $899 a month for the next level, it’s harder to justify.
Sixt+ starts to get in the territory where it may not be financially wise to invest, but as the example above demonstrates, if you are frugal and intentional, you can potentially save money over time by using the Sixt+ car subscription service.
Honorable Mentions: LMP Subscriptions, FreshCar, Hertz My Car and Subscribe with Enterprise
The Best Automaker Car Subscription Services
A caveat: Most of these options do not make financial sense to true Penny Hoarders. If you are looking for a way to treat yourself, however, and money is not of concern, here are some of the best car subscription models straight from automakers:
1. Nissan Switch
One of the major non-luxury automakers to get into the car subscription game is Nissan with the Nissan Switch program. You’ll pay a $495 activation fee and then select between the $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. Care by Volvo
Volvo’s all-inclusive car subscription service, called Care by Volvo, is currently available with a free 30-day trial. This subscription service is model-based, so there’s no switching up models as you go. Right now, a 24-month deal on an XC40 T5 AWD R-Design compact SUV runs $700 a month with nothing due at signing.
Also important: Care by Volvo is the only service currently offered nationwide.
3. Porsche Drive
Porsche Drive (previously known as Porsche Passport) is certainly not a Penny Hoarder way of driving, but if you’ve dreamed of trying out a range of the brand’s high-performance models and can manage the $595 activation fee and monthly fees ranging from $1,500 to $2,600, well, knock yourself out.
Timothy Moore is a market research editing and graphic design manager and a freelance writer covering topics on personal finance, travel, careers, education, pet care and automotive. He has worked in the field since 2012 with publications like The Penny Hoarder, Debt.com, Ladders, WDW Magazine, Glassdoor and The News Wheel. He lives in Ohio with his fiance.