In an age when you can order almost any item for instant delivery, consumers don’t have to settle for the more traditional method of leasing or buying a car. The growing popularity of car subscription services, described as the “Netflix model of car ownership,” is a sign that consumers value an alternative method for car procurement, one that is convenient and debt-free. The concept is simple: sign up for what you want and cancel the subscription when you’re finished with it.
Third parties are also getting into the subscription game. Companies like flexdrive offer all-inclusive pricing and a stress-free package. With over 9,000 users, flexdrive is offered in 17 cities and has a plan to go national next year. Fair, another car subscription company, also hopes to change the face of car ownership. At Fair, you can get a car based on advanced data and analytics, not just a credit score. According to the company, you can get approved with a driver’s license and a bank account. Billed as commitment-free, paperless and totally flexible, California-based Fair already has 20,000 subscribers and is growing rapidly. At flexdrive, the average monthly subscription is about $800. At Fair, it’s approximately $350 per month. This includes a limited warranty, routine maintenance, and roadside assistance, but if you want to use Fair’s insurance, it’s an average of $115 per month (if you qualify).
The stress-free, commitment-free, streamlined subscription model sounds great, but is the price right for consumers? The best way to find out is to do the math to determine the best option: buying, leasing, or subscribing. Calculate the cost of car ownership and determine what your priorities are. If you need a car temporarily, or if you run the risk of making a bad car financing decision, a subscription model may be the best and most efficient option. But since it’s definitely not the least expensive option, it’s important to analyze your needs, your habits and the short-term and long-term cost of each option.
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