Would You Pay $9,732 More Per Year to Subscribe to a Car?

Since the launch of BOOK by Cadillac early last year, car subscriptions have expanded rapidly in availability and popularity. Ford and Porsche each have their own subscription services and a number of companies, including Volvo, Lincoln, BMW and Mercedes-Benz, have announced upcoming launches. This growth has been attributed to the differing buying preferences of millennials, as subscriptions allow you to opt-in on a monthly basis, switch vehicles as preferences change, and include every feature you might need, from insurance to roadside assistance.

Our research has found that the cost of subscribing to a car is more expensive than leasing the same car—up to $9,732 more per year—depending upon the service you choose. Currently, the option of subscribing to a car is only available in five metro areas but—as this option comes to your hometown, it raises the question of whether a subscription is ever an economically sound option, or just convenient.

The Actual Cost of Subscribing to vs Leasing a Car

The cost of subscribing to a car varies dramatically based upon the service and vehicle you choose, but this figure alone means little without understanding how it compares to your alternatives. To understand the cost of convenience, we compared the cost of a crossover SUV using a subscription service—including the features you'd receive—against leasing the vehicle over the course of three years. To the right, you can see the difference in average monthly costs

As you can see, potential lessors of a Porsche or Cadillac crossover would pay approximately $800 more per month for the convenience of being able to change their mind regarding what car they want to drive, or not having a car to store during months in which they don’t drive.

Ford’s Canvas subscription service is an exception in that leasing the current model of a car would actually cost more than subscribing to the same car, because the vehicles available for subscription are three years older. So, if you’re interested in driving a Ford but ambivalent about the model year, a subscription is actually a good deal as you get the flexibility at a discount.

How Much More it Costs Per Month to Subscribe to a Car vs Leasing It

Porsche MacanCadillac XT5Ford Escape SE*
Subscription$2,014$1,814$543
Lease (All-in Cost)$772$598$379
Lease, Plus Subscription Benefits$1,203$1,030$683
Convenience Cost$811$784-$140

Lease costs are for 2018 model, but subscription option only available for 2015 model Ford.

Even Including Insurance, Subscriptions are Significantly More Expensive

The added benefits associated with subscribing to a car—ones you typically wouldn’t receive as part of a lease—vary depending on the company, but typically include delivery of the vehicle, roadside assistance and car insurance. BOOK by Cadillac—the first subscription service—has also included OnStar, 4G LTE and Sirius XM in their monthly package. Each company advertises that their subscription covers registration, taxes, and other fees, but these costs are included in the all-in cost to lease a car.

The highest-value benefit included in subscription packages is auto insurance—assuming you chose the level of coverage provided by the subscription services, this cost alone could increase the overall monthly cost to lease a car by nearly 80%.

Insurance Can Increase the Cost of Leasing a Car by 79%

VehiclePorsche MacanCadillac XT5Ford Escape SE
Lease (All-in Cost)$772$598$379
Car Insurance Cost$428$380$300
% Increase55%64%79%

Insurance cost based upon coverage provided by corresponding subscription service.

Is the Ability to Switch Vehicles Worth the Cost?

Even including insurance, the cost to subscribe to a Cadillac or Porsche ranges from $9,408 to $9,732 more per year than a lease.

This extra expense is justified by the ability to switch vehicles depending on your needs and mood, and to have a car only at the times you need it. In theory, you may be able to recoup part of this cost by not having to pay for parking year-round, assuming you only use the subscription car on occasion—in Manhattan, for example, you’re unlikely to find a spot for less than $250 per month. However, you’d still be paying hundreds more for the ability to switch between an SUV and a sports car—depending on your preference.

Differences in Regional Availability & Costs

The option to subscribe to a car is only available if you live in or near San Francisco, Los Angeles, Atlanta, New York City, or Dallas and—depending on which metro area you live in—there is likely only one or two subscription companies currently available. However, new companies are launching subscription models and expanding their coverage regions over the coming months.

Since the costs associated with leasing a car vary by region—car insurance rates, alone, vary by 175% between states—the cost-benefit of leasing versus subscribing actually varies based on your location. Ford’s Canvas is currently the only subscription service with pricing that changes depending upon location and the difference is solely due to local taxes. Here, you can see the difference in monthly costs of subscribing to a car compared to leasing by metro area, assuming you get the same benefits.

The Cost of Convenience: Additional Monthly Cost of Subscribing to a Car vs Leasing

When is a Subscription the Better Option?

Subscribing to a car is clearly a more cost-effective solution if you’re interested in driving an older model vehicle—in which case you could save money with Canvas—or you only need a car only a few months out of the year. Leasing periods often start at a minimum of 24 months in length and rentals can be costly and inconvenient—in terms of organizing pickup and dropoff, plus limited availability. And, depending on where you live, you can save hundreds of dollars by only paying for a parking spot when you need a vehicle.

Assuming you would like to use a car for an extended period of time, and want to drive a recent model, the biggest area of cost difference between leasing and subscribing will be insurance. The auto insurance rates you’ll pay with a lease vary significantly based on region and your driver profile. This means that the same Cadillac XT5 might cost anywhere between $582 and $1,446 to insure in New York depending on your age and whether you’ve recently been at-fault in an accident.

If your car insurance costs exceed the difference in price between subscribing to or leasing a car—which may be near $1,200 depending on your region and the car you chose to lease—then subscribing would be the more economically sound option.

Monthly Cost of Auto Insurance

Methodology

Average monthly subscription costs were determined by assuming a driver subscribed to a vehicle for three years, switched cars each month, and drove approximately 15,000 miles per year. Average monthly subscription costs were determined using a 36-month lease on a 2018 model crossover SUV with the ability to put 15,000 miles on the car per year. The all-in cost includes all fees associated with the lease, such as registration, taxes, and dealer fees. Insurance rates were obtained from Liberty Mutual for a 35-year old male driver with no history of accidents or moving violations.

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