Car Subscriptions Explained: How They Work and Choosing the Best Plan
Explore how car subscriptions work in this comprehensive guide. Loopit.co National Sales Director David McClatchey uncovers the steps involved, from selecting a service and vehicle, to making monthly payments. Learn to navigate the car subscription landscape and find the perfect plan for your needs.
June 13, 2023
Last updated on
June 14, 2023
National Sales Director
In today's dynamic automotive landscape, car subscription services are emerging as a viable, flexible alternative to traditional vehicle ownership or leasing. For those seeking a tailored solution, free from the strings of long-term commitment and the burdens of incidental costs, car subscriptions present an appealing option. However, due to their newness to the market, understanding the operational intricacies of these services and identifying the most suitable plan can be an unfamiliar process.
This article provides an in-depth analysis of car subscription services, guiding you through the fundamentals of car subscriptions, how to subscribe to a car, and the key considerations involved in choosing a plan.
What is a car subscription service?
A car subscription service is a modern automotive solution that offers individuals access to a variety of vehicles through a monthly subscription fee, effectively providing an alternative to traditional car ownership or leasing. This innovative model, often facilitated by cutting-edge mobile applications, provides subscribers with the flexibility to change cars according to their needs and preferences, typically including insurance, maintenance, roadside assistance, and even concierge services in the package.
With the rapid evolution of personal mobility trends and technological advancements, car subscription services are garnering significant interest, particularly among the younger demographics in the United States. There are numerous reasons why car subscriptions service have become popular in the United States, however these are the seven main driving factors:
Flexible Mobility Solution: Car subscription services offer flexibility that aligns well with the evolving consumer behaviors in the U.S. Subscribers can switch vehicles to suit their needs, whether they require a fuel-efficient sedan for daily commuting or an SUV for a family road trip.
All-Inclusive Pricing: The monthly subscription fee often covers insurance, maintenance, and roadside assistance, eliminating unforeseen costs associated with car ownership. This transparent and all-inclusive pricing model is highly appealing to consumers who prefer predictable expenses.
Tech-Savvy Convenience: With the entire process from selection to subscription management typically handled via intuitive apps or online platforms, car subscription services cater to the tech-savvy U.S. consumers who value convenience and digital solutions.
No Long-Term Commitments: Car subscription services allow users to avoid long-term financial commitments associated with buying or leasing a car. This is especially attractive to younger generations and those with a transient lifestyle.
Alternative to Public Transport: In the wake of COVID-19, car subscription services have seen increased interest from those seeking safer, private transport options as an alternative to public transit.
Growing Urbanization: As urban areas become denser and the costs and challenges of car ownership rise, car subscription services offer a practical solution for city dwellers who need occasional access to a vehicle.
Extended Trial Experience with Electric Vehicles: Electric vehicles are generally more expensive to purchase than their internal combustion engine counterparts. However, car subscription services are making EVs more accessible by eliminating the need for a large upfront investment. They allow users to drive an electric car for a monthly fee, which often includes insurance, maintenance, and charging expenses. Car subscription services also provide an opportunity for consumers to experience driving an EV without making a long-term commitment.
Car subscription services are witnessing a surge in popularity across the United States, owing to their novel approach to personal mobility. The appeal lies in the adaptability and convenience they offer, especially to the younger, tech-savvy generation who value these aspects over traditional notions of car ownership. Millennials and Gen Z, who are accustomed to the subscription-based model of services in various sectors, are particularly drawn to this automotive trend.
How do car subscriptions work?
Car subscriptions work as an alternative to traditional car ownership or leasing, providing users with access to a car for a set period, typically a month at a time.
For customers to get started with a car subscription service, they typically need to meet certain requirements and provide some essential information:
Age Requirement: Most car subscription services have an age requirement. Typically, you need to be at least 21 or 25 years old, but this may vary by provider.
Valid Driver's License: You need a valid and current driver's license. International licenses may be accepted by some providers.
Credit Card: A valid credit or debit card is usually required for the payment of the subscription fee.
Background Check: Some providers might run a background check, including driving history and credit score checks.
Subscription Agreement: You'll need to agree to the terms of the car subscription service, which outlines what's included in the monthly fee, the car return policy, what happens in case of damage or an accident, among other details.
From the provider's side, they handle the complex aspects of car ownership. They manage the fleet of vehicles, maintain insurance coverage, and handle routine maintenance and repairs.
While car subscriptions mostly work the same across different providers there are eight key steps that detail exactly how a car subscription program works and what a subscriber goes through on their car subscription customer journey.
Research Car Subscription Services: Begin by researching available car subscription services in your area. Compare providers based on factors such as available car models, pricing, terms and conditions, and included services.
Select a Provider and Vehicle: Once you've identified a suitable provider, choose a vehicle from their fleet that best suits your needs, preferences, and budget.
Understand the Terms and Conditions: Carefully review the terms and conditions associated with your chosen vehicle, including the subscription duration, monthly cost, mileage limits, and cancellation policies.
Complete the Application: Fill out the required application form, providing personal and financial information. Depending on the provider, a credit and/or background check may be necessary for insurance and security purposes.
Make a Payment: Pay the initial fees, which may include a subscription initiation fee and the first month's subscription cost. Set up a recurring payment method, as most providers will charge you automatically each month.
Take Delivery of Your Vehicle: Arrange to pick up the vehicle or have it delivered to you. Some providers offer concierge services that bring the car directly to your location.
Enjoy Your Subscription: Drive and enjoy your subscribed car, taking advantage of the included services such as insurance, maintenance, and roadside assistance.
Swap or Cancel When Needed: Utilize the flexibility of car subscription services by swapping vehicles according to your changing needs or canceling the subscription when you no longer require the service. Be sure to follow the provider's specific terms and conditions for swapping or canceling.
What are in-car subscription features?
More and more automakers are realising the importance of software features in enhancing customer experience and differentiating their products in a competitive market. In line with this trend, many automakers are embracing in-car subscription features, which allow customers to unlock or upgrade software features on demand. These features offer a new level of customization and flexibility, enabling drivers to tailor their vehicle to their needs and preferences. There are four main categories when it comes to in-car subscription features:
Safety and Driver Assistance: These features aim to enhance vehicle safety and simplify driving. Examples include adaptive cruise control, lane-keeping assist, collision warning systems, and autonomous driving capabilities like Tesla's 'Full Self-Driving' package.
Connectivity and Infotainment: These include features like Wi-Fi hotspot access, advanced navigation systems, music streaming services, and access to an array of apps for entertainment, information, and more.
Vehicle Performance: Some manufacturers offer software upgrades that can enhance the performance characteristics of the vehicle. For instance, Tesla offers an "Acceleration Boost" that improves the vehicle's 0-60 mph time.
Comfort and Convenience: This category includes features that enhance the comfort or convenience of the vehicle. For instance, remote start, personalized ambient lighting, or BMW's heated seat function that can be activated on demand.
However, the news of BMW releasing $18-a-month heated seats and more recently Mercedes-Benz offering subscriptions to added horsepower in some of its EV models, has received some controversial response. Despite many consumers feeling that they are asked to pay for something that's already physically present in the car, like heated seats, the idea that subscriptions could give them access to the latest technology even years after they bought their new car is still appealing. Amidst these controversies, proponents of in-car subscriptions argue that they offer greater flexibility, allowing consumers to pay for only the features they need, when they need them. A recent survey from Autolist reflects this with 69 percent of respondents saying they would not be willing to pay recurring fees, especially if it is mandatory and requires a long-term commitment.
Important factors to consider when choosing the best car subscription plan
For those interested in car subscription, there are many resources out there such as comparison websites and cost calculators that can help with choosing the best car subscription company.
When subscribing to a car, it's important to take into account several key factors to ensure that the service fits your needs and lifestyle. Here are some factors that are worth considering what the best car subscription plan is for you:
Cost: Car subscriptions may seem cost-effective with their all-inclusive pricing, but costs can add up over time. It's crucial to understand all the costs associated with the subscription, including monthly fees, excess mileage charges, and any penalties for damage or early cancellation.
Mileage Limit: Some subscriptions come with a mileage limit. Consider your typical driving habits to ensure the limit suits your needs.
Subscription Terms: Understand the terms of your subscription. Some services require a minimum commitment period, while others operate on a month-to-month basis.
Insurance Coverage: While most car subscription services include insurance, it's important to understand what the coverage includes and if it fits your needs.
Maintenance and Roadside Assistance: Confirm whether maintenance services and roadside assistance are included in your subscription. These services can add a lot of value and convenience.
Vehicle Selection: Consider the variety of vehicles a service offers. If you're someone who enjoys changing vehicles frequently or wants to drive the latest models, make sure the provider's fleet aligns with your preferences.
Cancellation Policy: It's essential to understand the cancellation policy. Some services might charge you for cancelling your subscription early.
Delivery and Swap Process: Some subscription services provide delivery to your location and will also swap vehicles at your request. Understand how these processes work and if there are any associated fees.
About the author
David is the National Sales Director for Loopit. When it comes to accelerating growth, David has a rich background in GTM SaaS strategies where he drove sales for the likes of Employment Hero, Earlytrade and Ansarada.