Car subscription services

What is a car subscription?

A car subscription service allows you to access a specific vehicle for a certain period of time (such as month-to-month) for a recurring fee, instead of buying or leasing a vehicle. These services may be offered through a car manufacturer, car dealer, rental car provider or a dedicated third-party provider, such as Carbar, HelloCars or Karmo. These services look to bridge the gap between short term car rentals, such as ones you would take out while on holiday, and vehicle leasing, which often comes with a minimum leasing term of several months.

How do car subscription services work?

Each car subscription service will differ slightly in how it operates and how much it costs; however, most third-party services follow a similar sign-up model—and allow you to sign up online. Once you’re signed up, you can choose a new or used car from a range of makes, models and sizes; then make a weekly or monthly payment to subscribe to that car—as you would do with a monthly or weekly fee for a streaming service like Netflix, Amazon Prime or Stan. The price you pay to subscribe will typically include the cost for servicing, insurance, registration and roadside assistance, but may exclude the cost of petrol (or charging in the case of electric vehicles) and other additional usage fees (e.g. road tolls).

Standard car subscription plans will generally allow you to either keep the car you have at the end of your subscription period or return the car and cancel the subscription, usually subject to a notice period (such as two weeks). Some providers may also allow you to switch the car you have with another during or at the end of the subscription period (such as swapping from a hatchback to an SUV), but this may come at an additional cost.

How much do car subscription services cost?

How much you end up paying for a car subscription service will ultimately depend on the make and model of the vehicle you choose and the prices listed by your provider of choice. At the time of writing, prices can range from around $200 per week for an entry-level vehicle to upwards of $800 per week for luxury vehicles. Some providers may also charge other fees, such as upfront, late payment and cancellation fees. It’s important to read the terms and conditions provided by the car subscription service before signing up.

What is the difference between a car subscription and a car sharing service?

Car sharing services, such as GoGet and Flexicar, allow users to access different cars in their area for shorter periods of time (such as by the hour or the day) and then to return it, whereas with a car subscription service you have exclusive access to one vehicle for a longer period of time.

The cars you can access through a car sharing service may be owned by the provider or by people in the area who want to rent out their own vehicles for certain periods of time.

How do car subscriptions differ from car leasing?

With a car lease you will generally have to enter into a set-term contract to lease the vehicle (usually around two to five years) and typically have to wait until the lease term has ended to be able to return the car or upgrade to a newer model. If you cancel before the lease term has ended you may face extra charges.

With a car subscription, your minimum commitment may be as short as one week or one month, and you can usually cancel the subscription at any time (subject to a notice period) or have the option to swap to a different car as your needs change.

What car subscription services are available in Australia?

Here is a list of some of the larger car subscription service providers in Australia at the time of writing:

• Carbar
  

• Carly
  

• East Coast Car Rentals
  

• Europcar
  

• FlexiGO
  

• HelloCars
  

• Karmo
  

• Loopit
  

• Motopool
  

• Simplr
  

• SIXT

Each provider will have its own terms and conditions, as well as application eligibility, which makes it important to research your options before committing to a particular service.

Car subscription service general eligibility

Most car subscription service providers will ask for you to supply the following things when applying:

• A valid driver’s licence (some providers may allow P2 licence holders to apply)

• Other forms of identification, such as a Medicare card or Australian/international passport

• Proof of residential address

• Bank statements, generally about three months worth, which show proof of income and ongoing expenses.

You will usually also have to be 21 years of age or older. A provider may also check your credit history in order to better assess your financial situation.

If you’re interested in your own credit score, you can check it for free with Canstar or via the Canstar App.

Who do car subscriptions suit?

Car subscription services may suit people who:

• don’t want to take on the full annual car insurance and registration costs associated with owning a vehicle.

• want to trial a specific car model before committing to the full purchase.

• want the flexibility to access a variety of vehicle types over a period of time.

• may only require a vehicle for a short period of time, such as a week or month.

You may also be interested in reviewing traditional hire car options in Australia.

Can a car subscription save you money?

Many car subscription services are promoted as an affordable alternative to owning a car, with the savings that can be made when it comes to running costs and vehicle depreciation touted by service providers. However, whether you can save money by using a car subscription service versus buying a car outright, leasing one or taking out a short term rental will really depend on your intended usage.

If you regularly use the vehicle you subscribe to, you may be able to make up what you spend on an upfront joining fee or weekly/monthly subscription fee through the potential savings available on the car’s depreciation, insurance, registration and regular servicing costs (which are often bundled together in the one subscription fee).

However, it may be worth taking the time to calculate the yearly cost of a car subscription against the upfront and yearly ongoing costs for owning a car outright, or under a lease, to gain a better idea of how the costs for each option stack up against the others.

What are the pros and cons of car subscription services?

It’s important to understand both the potential advantages and disadvantages of using a car subscription service before signing up. Some pros and cons include:

Pros

• All-inclusive regular fee: Most car subscription services include registration, insurance, servicing and roadside assistance rolled into one regular weekly or monthly subscription fee. This means these services will also handle all the paperwork for registration and insurance, which may take a lot of the admin work out of using a car.

• Flexible terms: Most services only require two weeks’ notice if you want to cancel your subscription, and also allow you to switch between cars as your needs change.

• Online sign up and delivery: Many providers have an online portal that can make it easy for customers to scroll through the different vehicle options available, and then apply to subscribe. Some services also provide delivery of the vehicle to a customer’s desired address.

• Try a car before you buy: These services can allow you to try out a model or type of vehicle before committing to buying one outright.

Cons

• Limited model choices: Car subscription services through manufacturers or dealers may limit the type of vehicles on offer.

• Limited availability in some areas: Car subscription services are still in their infancy in Australia and may not be available in your area yet, particularly if you live outside of the eastern states or metropolitan areas or reside in rural or regional areas.

• Usage/mileage limitations: Your subscription may restrict how many kilometres you can travel, who else can drive the car, and the use of the car for business purposes.

• No modifications: Since you don’t own the car, you cannot make any modifications to it (such as tinting the windows or adding roof racks).

• Paying depreciation on a car you don’t own: The weekly or monthly subscription cost may factor in depreciation (the fall in value in a car from age and wear and tear), which means you’re paying depreciation for a car you don’t own.

• Additional fees and charges: While the fees for a subscription may look attractive, there can often be pricey upfront joining fees, security deposit and cancellation charges you’ll need to factor in, and accessing some brands can add more to the price than others (for example, a Toyota will often have a lower associated subscription fee compared to a similar Audi or BMW vehicle).

What should I consider in choosing a car subscription service?

It’s important to consider your needs and budget when researching car subscription options. Questions you might find helpful to answer in deciding the most suitable plan for your needs, include:

• How often will you require a car and for how long?

• Do you require a specific kind of car (like a ute, wagon, hatchback or luxury vehicle) or are you happy to drive anything?

• What inclusions are non-negotiable for you (fuel, insurance, roadside assistance, 24/7 access to vehicles, premium brands instead of mass-market cars)?

It’s important to carefully read the terms and conditions of each agreement with a service provider before signing up.

Cover image source: Virrage Images/Shutterstock.com