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Is a Car Subscription Service Right for You?

This alternative to vehicle leasing is convenient, but often costly

Volvo Cars' SUV line-up
Volvo SUVs from left: XC60, XC90 and XC40
Volvo
Porsche Carrera Cabriolet
Porsche Carrera Cabriolet
Porsche

Imagine the flexibility of renting a car with the long-term dependability of buying or leasing.

That's the promise of car subscription services, a new model for car use that automakers and third-party companies are rolling out across the country.

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The premise is simple: Skip the hassle of financing and pay a monthly fee in exchange for access to the car of your choice. Your monthly payment typically covers insurance, maintenance and roadside assistance, too.

You might have an option to swap models after a short period, a potential perk for car enthusiasts or anyone interested in the ability to upgrade more frequently than a traditional lease allows.

Despite the buzz, car subscription providers are still finding their footing. Only one service, Care by Volvo, is available nationwide; the remainder have debuted in select markets.

Cost can also be a concern. An analysis from car research and shopping site Edmunds.com found that many subscriptions tend to be more expensive than leasing over the course of three years, even after accounting for factors like insurance.

Still, the convenience and flexibility of a subscription may outweigh the extra cost for some drivers, especially those who need a car for a few months at a time or who want to use their subscription as an extended test drive before buying. Here's what to keep in mind:

Not all services are created equal

Existing subscription services vary substantially from one another in terms of pricing and other features. At the high end are services like Porsche Passport, which offers access to a pool of luxury vehicles for either $2,000 or $3,000 a month (including unlimited “flips” and concierge delivery) for drivers in the Atlanta area.

Care by Volvo, available nationwide, is a more affordable option, starting at $700 a month for the 2019 S60 or 2020 XC40. However, the program requires a 24-month commitment, and you can upgrade to a new model only after the first 12 months.

The least expensive services tend to be third-party offerings. Fair, an app that provides pre-owned vehicles through a network of dealerships in more than a dozen states, offers cars starting around $200 a month, minus the cost of insurance, which can be purchased separately through the app or independently from the company of your choice.

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Financing and fees

Despite the potentially higher monthly cost, the all-in-one subscription fee structure means consumers don't need to worry about a down payment, loan, or separate monthly bills for insurance and maintenance in most cases. Subscription fees also are set in advance, a major plus for those who dread negotiating at the dealership but a drawback for those who look forward to bargaining for a better deal.

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Depending on the service, you may have to pay a one-time activation fee. Mercedes-Benz Collection, available in Nashville, Tennessee, and Philadelphia, has a $495 start fee. Access by BMW, available in Nashville, requires a $575 initial payment.

Finally, while getting out of a lease can be prohibitively expensive, canceling a car subscription is relatively straightforward — just contact your provider to stop service. You'll most likely pay a prorated bill but no extra penalties if you cancel mid-month.

Car subscription services may also be more accessible than traditional financing for those with poor credit. Approval typically requires a “soft” credit check, clean driving record and valid license.

Mileage, models and other limits

Many car subscription services have mileage limits, though some will allow you to increase the cap for an added fee. Canvas, a Ford-backed company, offers 500 monthly miles free and unlimited mileage for about $100 extra a month.

A service also may have limits on how often you swap cars and which models are available to subscribers.

Tech-savvy drivers will enjoy the fact that many subscription services can be activated and updated exclusively online or through a mobile app, but consumers who aren't comfortable with a digital-only experience may want to confirm whether the service offers a telephone help line or other forms of assistance.

Also be prepared for restrictions on how you use your vehicle. Most services require that pets stay in carriers, prohibit smoking in the car, and place limits on who can get behind the wheel — though you may be able to add additional drivers who qualify.

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AARP Membership — $12 for your first year when you sign up for Automatic Renewal

Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine.

membership-card-w-shadow-192x134

AARP Membership — $12 for your first year when you sign up for Automatic Renewal

Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription to AARP the Magazine.