How to make a car subscription plan cost-effective

Many modern consumers prefer to have a car in his or her garage but don't want to have the headaches and complications that come with the vehicle ownership process. For such consumers, car leasing or car subscriptions come as a cost-effective solution, as well as serve the purpose for them. This is why many modern consumers, especially young generation buyers are focusing on car subscription plans rather than opting to buy a vehicle.

In a world where car ownership costs are rising rapidly due to various factors like rising fuel costs and vehicle costs, car subscription plans have become a viable solution for consumers to taste the ownership experience of a personal car without actually owning it. Leasing or subscribing can lower your recurring costs compared to repaying the vehicle loans. However, it can be very costly if you don't pay attention to the fine print of the plan details.

In Europe and the US, the car subscription model has been a popular revenue generation strategy for vehicle dealers as well as offering a cost-effective ownership experience to the consumers. In India, this business model is still in a developmental phase and not very popular compared to buying a vehicle. However, there are many consumers showing interest in this method.

If you are planning to have a car in your garage through a subscription plan, here are some key tips to follow to make it a more efficient experience.

Don't pay huge upfront money

Car dealers often advertise low monthly subscription payments on new vehicles. However, there is a certain amount of upfront cost one has to pay, which covers a portion of the subscription in advance. In case the car is wrecked or stolen during the subscription tenure, the insurance company reimburses the dealer for the value of the vehicle. However, it won't refund the downpayment you have made. In such a situation, you would be out of a car and the upfront money you have paid will essentially disappear. Hence, it is recommended to spend not a hefty amount when you lease a car.

Negotiate the subscription agreement

Several components of a car subscription plan are negotiable. These include the buyout price, disposition fee, gross capitalized cost, mileage allowance, the premium amount etc. Failing to negotiate these points with the dealer could result in you spending seven thousand extra every month, eventually resulting in a higher cost of subscription.

Don't underestimate your driving distance

If you underestimate your driving distance, you are likely to end up paying a higher amount of money to the lender of the vehicle. Consider your daily commute and how often you would take long drives. Assessing those, you can ask for a higher kilometre limit. However, not mentioning that prior to subscribing to the plan would be negatively impactful on your costs.

Maintain the car

You may not feel very eager to maintain the vehicle considering the fact that you don't actually own it, but have taken it on rent. But, if the car gets damaged beyond the normal wear and tear, you could end up paying additional fees when you return it to the dealer. Hence, always keep the car maintained just like you would be doing in case of actual ownership of a vehicle. Also, take extra care while driving to avoid any major damage to the car.

Don't subscribe for too long

Make sure that the lease period of the car matches or is shorter than the vehicle's warranty period. Warranties vary from manufacturer to manufacturer and vehicle to vehicle. Usually, the typical warranty is for three years or 100,000 kilometres, whichever comes early. If you are keeping the car for longer than its warranty period, you may have to consider an extended warranty plan. Otherwise, you will be responsible for the maintenance and repair costs for the vehicle that you don't actually own.

How to make a car subscription plan cost-effective

Step 1 :

Don't pay huge upfront cost

Step 2 :

Don't underestimate your driving distance

Step 3 :

Maintain the car

Step 4 :

Don't subscribe for too long

Step 5 :

Negotiate the subscription agreement