What is a car subscription and how does it work?

A subscription is a new way of running and using a car – but how does it differ from more ‘traditional’ methods.

Volvo XC40 Recharge
Volvo XC40 Recharge

These days we’re all quite used to paying for services via subscription. Streaming sites, music providers and even food suppliers can be done via monthly subscription and a rolling contract, allowing people the flexibility to pick and choose when they want a certain product.

But up until reasonably recently, running a car via a subscription might’ve seemed like an odd way of doing things. However, this method is gathering pace and even mainstream manufacturers like Volvo are joining in with their own offerings. Let’s take a look at what a subscription is and how it could be ideal for your next car.

So what is a car subscription service?

In the same way that a subscription to a music service means you don’t need to individually download and pay for each track, a car subscription service is a way of using a car without having to buy it.

However, compared with other finance options, a subscription bundles all of the other expenditures associated with driving such as insurance and tax into one monthly payment, making it far less hassle.

How is it different to conventional finance?

Audi e-tron Sportback
Audi’s e-tron is available via subscription service

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Using a car via subscription is different to conventional leasing or financing in that it’s more flexible. So whereas a usual personal contract purchase might see you tied into a contract for a significant amount of time, a subscription service will allow you to cancel with a smaller amount of notice. Most suppliers run contracts of six, 12, 18 or 24 months – but some will offer shorter terms or even a rolling monthly one which will allow you to cancel whenever you like.

So what’s the benefit?

It boils down to flexibility. If you know that you only need a car for a short period of time, then subscribing to a service will make far more sense than renting a car – it’ll be cheaper, too. Plus, many subscription services allow you to change your car more frequently, so if you’re bored of the one you’re driving you can swap to a different model more easily.

Plus, you don’t need to worry about insurance, tax or maintenance – all you need to do is pay for the fuel that goes in the tank.

Does it cost more than conventional leasing?

You do have to pay for the privilege of that flexibility. You’ll see a slight premium over a conventional leasing contract because a subscription bundles all of the additional costs into one monthly payment.

However, remember that when you sign up for a conventional finance deal, you’ll have to commit to a certain length of contract and also sort out those extras such as insurance and tax. For those who want a flexible transport solution, then a subscription could make a lot of sense.

Which providers offer subscription service?

As we’ve already mentioned, Volvo was one of the more recent high-profile names to throw its backing behind subscriptions. In fact, Volvo recently stated that it expects 95 per cent of its retail business for its new electric XC40 Recharged to come through its Care by Volvo Fixed and Flexible subscription packages. The fixed plans cost £619 on a three-year term with no deposit, or £769 per month on an open-ended three-month rolling contract.

However, other manufacturers such as Jaguar Land Rover offer subscription services, while a variety of third-party companies like Cazoo and Onto offer them too.

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