Car subscription services: Do the numbers stack up?

If you’re considering car subscription as an alternative to traditional car ownership options like buying, financing or leasing, then it’s important to understand the cost factors involved to ensure you’re making the right choice.

As a completely new approach to car ownership, it’s difficult to make direct comparisons between car subscription and buying without fully understanding the variables at play. Here we look at exactly how car subscription works and how it stacks up against traditional alternatives.

What exactly is car subscription?

Car subscription provides you with exclusive access to a vehicle for as long as you like for a recurring weekly payment. The usual costs of car ownership like registration, insurance and routine maintenance are included in this weekly payment meaning the cost of ownership is far more predictable, transparent and affordable. With no lock-in contracts and no ongoing fees, car subscription offers you the flexibility to swap to a new car that meets your changing needs, or return a car when you no longer have a need for it. By leveraging these advantages of car subscription, savvy subscribers stand to save a considerable amount over other means of car ownership.

How much does car subscription cost?

Much like a mobile phone plan, the cost of a car subscription is derived from the plan as well as the chosen car. HelloCars Subscription prices start from $139 per week to subscribe to a basic car, while newer, larger or more luxurious models will attract a premium. Depending on your plan and vehicle usage, an excess kilometre charge may apply while some plans incur a joining fee.

The primary consideration for car subscription is that the cost remains consistent, making it far easier to manage the household budget compared to the yearly sting of car registration and insurance which can often exceed $1,500 combined.

With car subscription, there are no considerable upfront fees to be paid, no balloon-payments, no unexpected costs for repairs and no stress over the yearly insurance and registration fees.

Is car subscription a cheaper option?

Understanding the true cost of car subscription is not as simple as taking the weekly cost and extrapolating this to give you a yearly cost figure. Car subscription offers the flexibility to swap to a car that better suits your needs, or return the car when it’s no longer required with no ongoing fees.

Rather than comparing numbers, let’s consider how real people might use a car and how their needs change over time.

Scenario 1: The World Traveler

Kate is a 25-year-old Sydney local with $10,000 in savings that she plans to use on a 3 month overseas trip later this year. Kate wants a modern, safe and reliable car but doesn’t want to deal with the headache of selling her car before she goes overseas.

Kate chooses to subscribe to a 2015 Ford Focus at $139 per week until she leaves for her trip. Over the 9 months leading up to her trip, Kate will spend $5,720 on car subscription payments before returning her car and heading overseas. With no ongoing fees and free returns after 30 days, Kate won’t incur any additional costs while she is enjoying her holiday.

Consider the alternative scenario if Kate were to finance the same 2015 Ford Focus at a value of $12,250 with a $5,000 deposit, leaving her with a loan of $7,250. After the first year she will have paid:

  • $532 in registration
  • $851 in comprehensive insurance
  • $199 for roadside assistance
  • $250 in routine maintenance
  • $1,690 in depreciation in the first year
  • Around $820 in interest for her loan.

That has left Kate $9,342 out of pocket, not to mention around $2,335 worth of those costs were incurred while Kate wasn’t even in the country and that’s without considering unexpected repairs that might occur.

Overall, that’s a saving of $3,622 by choosing HelloCars Subscription rather than buying the car. Kate might be able to recoup some of those costs when she sells in 5 years time, but that’s no help to her now – especially just before taking an overseas holiday.

Scenario 2: The Growing Family

Karl is a 30-year-old Sydney local that currently drives a 2012 Ford Fiesta that he has owned for the past 5 years. Karl and his wife are expecting their first child and need a new family car that is safe and reliable but need to first sell their current car.

Karl chooses to subscribe to a spacious and practical 2017 Holden Commodore SV6 Wagon at $226 per week. Karl sells his 2012 Ford Fiesta for $9,790 which is enough to cover his subscription cost for the next 43 weeks with no other costs to worry about. To see him out for the rest of the year it will cost Karl $2,034 in subscription payments.

Consider the alternative scenario if Karl were to finance the same 2017 Holden Commodore SV6 Wagon at a value of $27,450 with a $9,790 deposit from selling his 2012 Ford Fiesta, leaving him with a loan of $17,660. After the first year he will have paid:

  • $743 in registration
  • $1,852 in comprehensive insurance
  • $199 for roadside assistance
  • $250 in routine maintenance
  • $3,020 in depreciation in the first year
  • Around $1,000 in interest for his loan.

That has left Karl $16,854 out of pocket in the first year with a new baby on the way.

Overall, that’s a saving of $5,102 by choosing HelloCars Subscription rather than buying the car. In real world terms, it means Karl has been able to get into a suitable family vehicle with the proceeds from selling his previous car funding the changeover for most of the year.

Scenario 3: The Summer Holidaymaker

Ethan is a 42-year-old Sydney local that shares a cheap and reliable 2015 Hyunda i30 with his wife. Ethan walks to the station and takes the train to work while his wife takes the kids to school before driving to work. The summer holidays are about to start and Ethan wants to take his family on a road trip.

Ethan chooses to subscribe to the spacious 2016 Hyundai Santa Fe from HelloCars at $233 per week. Ethan and the family drive to Queensland for a four-week summer holiday with ample room for their luggage and snorkeling gear. Ethan returns the car to HelloCars when he gets back, having spent $998 in subscription payments plus $198 in additional kilometres for a total of $1,196.

Consider the alternative scenario where Ethan decides to rent a car instead. A similarly equipped Toyota Kluger would set Ethan back $2,836 for the same 30 day period.

Overall, that’s a saving of $1,640 by choosing HelloCars Subscription rather than renting a car. Since HelloCars operates a fleet of quality used cars, the equivalent daily rate to drive a car is typically far cheaper than other medium-term car rental services. 

Consider the other alternative scenario where Ethan decides to upgrade from his 2015 Hyunda i30 to a more family-friendly 2016 Hyundai Santa Fe. Ethan decides to finance his $15,595 shortfall after trading in the 2015 Hyunda i30. Compared to his previous smaller car, after the first year Ethan has paid an additional:

  • $211 in registration
  • $448 in comprehensive insurance
  • $150 in routine maintenance
  • $6,242 in depreciation
  • Around $811 in interest for his loan

That has left Ethan $7,862 out of pocket after the first year.

Overall, that’s a saving of $6,666 by choosing HelloCars Subscription rather than buying the car. In real world terms, Ethan’s 2015 Hyunda i30 was more than suitable for 11 months out of the year – so upgrading to a bigger car was an unnecessary expense. 

The Result

In real-world terms, car subscription is often not only cheaper in direct comparison but also becomes even more affordable when you take advantage of the flexibility car subscription offers. Without the burden of yearly household budget blow-outs from registration and insurance, car subscription makes it even easier to manage your finances and avoid unwanted surprises that come with owning a car without warranty.

With no long-term commitments or ongoing fees, there’s no reason not to give HelloCars Subscription a try and experience the benefits for yourself.