Is there any point in getting a car subscription instead of buying one?

Under this model, the company leases the car to the customers for a short period. They do not have to pay down payment or Equated Monthly Installments (EMIs) while buying a car. Instead, a car subscription is a more cost-effective solution with additional costs like insurance, car maintenance as part of the package.

Sunil Gupta, Managing Director and CEO, Avis India said that the car subscription model is specially designed for people in a transferable job or millennials who want a cost-effective, hassle-free, safe and clean personal mobility solution with no direct cancellations. Huh. return procedures.

“Car subscriptions are also ideal for those who enjoy variety when sticking with one vehicle for a long period of time,” Gupta said.

How does the model work?

The car subscription model enables a single all-inclusive monthly rental for using the car. You can subscribe to any vehicle between 6 and 60 months and upgrade, renew or cancel the subscription at any time during the subscription period. When withdrawing subscriptions prematurely, you may be required to pay foreclosure fees.

Gupta said, “Customers will only have to pay a monthly or annual subscription fee, then drive the car. Although the customer will be responsible for the fuel, the car rental firm will cover additional expenses such as registration, insurance, maintenance and road tax. In addition, a subscription plan or an operating lease has tenure options for 12, 24, 36, 48 and 60 months. The subscriber can prolong, upgrade or downgrade the vehicle after the end of the subscription period depending on their needs and convenience can choose to do.”

Let’s take a look at the pros and cons of this model.

Pros: You will not need to sign a long-term contract that binds you financially. You can avoid the hidden cost of automotive depreciation, which affects and depreciates the value of your vehicle throughout your ownership. You are free from long term car loans and down payments. In addition, it also allows you to switch cars When your requirements change. In this way, you have the freedom to drive different vehicles. It offers the facility of an all-inclusive fee that covers your maintenance, insurance, road taxes and roadside assistance.

“Another advantage is that car subscription firms are careful about safety and hygiene. As a result, the firm delivers the car door to door with integrated advanced features like a contactless key,” Gupta said.

Shortcoming: You don’t own a car for life. A subscription plan allows you to rent a vehicle after paying the monthly or annual cost. Thus, you are only paying for the privilege of driving until the car subscription expires. Also, the annual mileage cap may be turned off for some customers. In addition, some may consider the monthly fee to be excessive.

“For example, in a subscription scenario, the customer has to spend 35,000-40,000 per month and can use the car only for the subscription period,” said Sakshi Vij, Founder and CEO, MylesCars.

should you go for it?

Generally, this can be a suitable mobility solution for those who are new to a city or in a transferable job.

“Under car subscription, other costs like insurance, maintenance etc. are a part of the monthly or annual package. Gupta said that you can avail 24×7 roadside assistance, car repair, car towing etc.

Vij said, “Traditionally, one has to pay huge down payments and EMIs for a long period of time to own a car against a financing option. Generally, 3 for car ownership against a financing option Commitment is required for anywhere between 5 years. and can only pay for that amount of time.”

Adil Shetty, CEO, BankBazaar.com said that choosing between car leasing and buying is as much an emotional affair as it is about money. With leased cars, you do not receive any equity in the vehicle. However, buying a car means that the car is your own and has all the pleasures and responsibilities of meeting that milestone. The car is yours which you can use as much as you want and for as long as you want to. “Leasing cars can have mileage restrictions. The lease is also limited to a few years, and there may not always be an option to buy the vehicle after the lease has expired. Lease may also be less attractive in the longer term, Especially if you’re buying a car without taking out a loan. Leases also offer less flexibility than buying because they don’t encourage customization,” Shetty said.