Car subscription is a relatively new alternative to traditional car ownership or leasing, where customers pay an ongoing recurring fee to use a car on a flexible term instead of buying or leasing.
The pricing structure of a car subscription service can vary depending on the company providing the service, but generally, it is comprised of the following components:
These are fees that you need to pay upfront before you can start using the car. They typically cover administrative and processing costs, as well as any expenses related to delivering the car to your doorstep. Examples of upfront fees include:
A one-time fee charged by some car subscription services when you sign up, these may also be referred to as activation fees.
Refundable Security Deposit
Some car subscription services may require a security deposit to be held as collateral during the subscription period and is typically refundable and attributed to wear and tear costs.
If the car subscription service delivers the car to your doorstep, you may need to pay a delivery fee.
These are fees that you pay on a recurring basis to continue using the car. They typically cover the cost of the car and related services, such as maintenance and insurance. Examples of recurring fees include:
This is the recurring fee associated with the chosen subscription plan. The fee may vary depending on the minimum length of the subscription, swap entitlements and included mileage.
This fee covers the cost of the vehicle itself, as well as any related expenses, such as maintenance and depreciation. The amount of the vehicle premium will typically depend on the make, model and age of the car.
These are fees that are charged based on how much you use the car, such as the distance you drive or any damages to the car. Examples of usage fees include:
Some car subscription services charge a fee for every mile you drive over a certain limit.
Some car subscription services may include tolls in the subscription fee, while others may charge it separately as a usage fee. This fee is charged based on the number of tolls you use during the subscription period.
One-time charges are fees that may be charged periodically during the subscription period under specific circumstances.
Early termination fee
If you decide to cancel your subscription before the agreed-upon period, you may need to pay an early termination fee. This fee is designed to cover any expenses the car subscription service incurs as a result of your cancellation.
If the car is involved in an accident during the subscription period, you may need to pay an insurance excess fee. This fee is the amount you are required to pay before the insurance covers the rest of the cost. The amount of the fee will depend on the insurance policy and the extent of the damage.
Some car subscription services may allow you to swap the car you are using for a different one. If you decide to do this, you may need to pay a swap fee to cover the cost of delivering the new car to you and picking up the old one.
The amount of the fee will depend on the car subscription service and the location of the cars.