Today we’ll be comparing the differences between car leasing and car subscription.
Car leasing, and subscription will be compared for a long while yet, and we wanted to explain the benefits, and downsides to both and the next time you're in the market for a car you'll know exactly what a car subscription is, how it compares to leasing, and you'll be one step closer to making the best decision on your next car.
First, I'll go through what this article will cover:
Take a sip of your preferred beverage, and let's find out if Car Subscription is really worth all the buzz!
How is car leasing and car subscription similar?
Subscription and leasing are different ways to 'rent' a car. When you subscribe to or lease a car you don’t own the car, and you’ll never have the option to buy the car outright like you can with a hire purchase for example. Let's be real, the reason people subscribe or lease a car are the same, people want to skip the hefty upfront payment of buying a car outright.
With both, you’ll pay a set monthly fee for the car for as long as your contract is. Another similarity is that you’ll have return charges, or at least the possibility of them.
How long can you get a lease?
The most standard length to lease a car is for 24 to 48 months, with the most popular being 36 months.
How long can you get a subscription?
From as long as 24 months, to as short as 1 month. You can choose for yourself. While one month subscriptions may work out as more expensive, you have more freedom over what you’re driving and when you’re driving it.
When you subscribe to a car, you decide the terms with a lot more choice than your standard lease, you get the option to have a month-by-month subscription, or:
The options are usually dependent on our suppliers, but if you use our marketplace it’s easy to find the car you want, on the right terms!
How fast can you get behind the wheel?
With a subscription, you can order your car and get it delivered within a week, and often sooner. Our record is within an hour from login to delivery.
However, with a lease, you can expect at least a 14 day wait, usually called a lead time, once you've ordered it. Especially now, with chip shortages and slowed production, some hopeful drivers end up waiting months at a time just for their car to be delivered.
How much do you pay upfront?
You can pay a bigger down payment upfront to lower the monthly costs of a lease, however, most people don’t usually do that because they would prefer to have slightly higher running costs as opposed to having to part with a big chunk of cash in one go, and part of the reason why people chose a lease over buying is that you pay less upfront.
With a subscription it’s basically the opposite, the only upfront fee you pay for outside of your subscription is a one time admin fee, and a refundable deposit that’s returned to you as soon as your car is.
The benefit of being able to pay more upfront on a lease is that you can lower the running costs, and slightly lower the overall price of the long-term contract.
Can you save money by switching to a subscription car?
Although both leasing and subscription seem like they include a lot already, Kwik Fit’s research shows that on average UK drivers spend £162 a month just running the car, and that excludes the car cost! The table below highlights some of the running costs that Kwik Fit's research shows*:
|
Item |
Average Monthly Spend |
|
Car insurance |
£31.64 |
|
Routine maintenance and servicing |
£15.96 |
|
Unexpected repairs and breakdowns |
£13.26 |
|
Vehicle excise duty (road tax) |
£12.16 |
|
Breakdown cover |
£6.96 |
|
Monthly Average Total |
£79.98 |
So let’s look at these running costs, and see what's included in a subscription compared to a lease.
Mileage
We’ll start with mileage because even though it's not a running cost as such, but once agreed it will change the amount your monthly fee is. Let’s compare Subscription and leasing, and see which one is better value:
The subscriptions available on Wagonex have a mileage limit of around 800-1000 miles per month, the Renault Zoe for example has 800 miles as standard, but Tesla Model 3 has a 1000 miles as standard. There is also often the option to bump up the mileage if needed.
On a lease, you also usually have a mileage limit with the ability to add more miles from the beginning.
Zen Auto states that you can expect to pay 3p, to 30p per mile over the limit, and they make it more expensive than if you initially signed up for extra mileage as part of the lease deal.
Administration fees
Leasing often includes an administrative fee because of the amount of paperwork it takes to get the deal over the line. Even if leasing companies advertise no admin fees, it will have slightly higher monthly payments to cover it.
When it comes to subscription, you will also pay an admin however the amount varies depending on the supplier, so you can pick a car that fits your budget.
It’s important to remember that an admin fee is only included in the initial payment, it won’t be part of your monthly costs.
Maintenance and Servicing
MOTs aren't usually something to worry about when it comes to leasing or subscription. The cars are usually less than 3 years old, so MOTs aren't worth worrying about. However servicing and maintenance will be an extra cost on a lease. If you need a car serviced during your lease, you will either have to pay for it from your pocket or pay more per month by agreeing to a maintenance package that's added on top of your lease.
Volkswagen, for example, currently offers a maintenance and service package that covers 1-year-old cars for £13 a month. If you were to subscribe to a car, that's already part of the bundle and included without the hassle.
Road Tax
The amount you pay for your road tax will be dependent on the eco-friendliness of your car. It’s put into bands.
You would expect most leasing deals to exclude road tax but if you were to subscribe to a car it will always be included.
If you drive a fully electric car, road tax will be £0.
The GOV.UK website calculates your road tax here
Roadside assistance
Car lease contracts don’t include breakdown cover, but they are an added extra if you agree to one of their more expensive packages.
Roadside assistance is already included as standard when you subscribe to a car.
Which one is better value for money?
You can usually expect to pay slightly more per month on a subscription than your standard lease deal because a subscription is a shorter deal. A lease only really includes the car, while a subscription covers:
It’s important to remember that these costs are always included in your subscription fee, and on a lease these running costs aren’t fixed at a monthly rate, unless you pay more for a different leasing package.
If subscription or leasing is right for you is a personal preference that depends on what you want from the car, what’s important to your lifestyle, and how your finances are.
You could, in effect, lease a car for 5 years at a time, see it as your primary car, and then use the subscription as a way to easily access a secondary car when you feel like it, or when you need it.
Maybe you want to drive a Volkswagen Tiguan as your primary car, and only need a second car when you and your family want to drive separately, or you’d like to freshen up your summer with a brand new car.
However, when you’re leasing a car for the long term, you’ll have a cheaper monthly fee, but a lot of extra running costs that add up each month, and you like to know how much you’ll be spending each month, a subscription will consistently be the same price each month.
You might be someone who doesn't see the value in having a car year round, perhaps you live in London, and instead of being stuffed in a car in summer. A subscription just for the winter months could be what you need.
Another thing about London is the ULEZ charge that makes it difficult to commute in London if you drive a petrol car, a subscription makes driving an EV a lot simpler. Just subscribe for a month to make sure you love your EV before agreeing to a longer term subscription, or lease!
Do you just love driving the newest, and most luxurious cars? If you do, you might like subscribing to cars more often than leasing, because you have the chance to swap cars as much as you like! When you lease a car for the long term you don't get that, and when you rent the prices can be exorbitant. Car Subscription might be the perfect way to get you behind the wheel of your favourite cars!
If you like to stay flexible, a subscription might be your next best friend. The ability to go from car to car, month to month without making a huge dent in your wallet makes subscription a great option if you’re the type of person who doesn’t like to be in a long-term commitment!
A lease is a product that we all instinctively understand, and it's a tried and tested way to get behind the wheel - that’s why it’s the most popular way to get a car in the UK.
Subscription is a different version of leasing that gives you more flexibility and a better overall package. It’s a lot easier to subscribe to a car as opposed to leasing one because a car subscription is a lot less daunting.
I hope you've learnt a lot about car leasing and subscriptions, and in the future when you want a car you'll know if leasing or subscription is right for you.
Happy car shopping!
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* Amounts correct at time of publish