Car subscription vs. leasing: how to make the right decision
Kamilya
Car subscriptions have expanded the options for flexible mobility. In addition to car sharing, a car subscription is the ideal mobility concept for anyone who does not need a car permanently or does not want to commit to one vehicle. What is the cheapest way to drive and what are the advantages and disadvantages of leasing and car subscription - find out what suits you best.
Car subscription and leasing basics
Most people are familiar with car leasing. Car subscriptions, on the other hand, are still relatively new. We at CARIFY explain the two concepts and show you the differences.
What is a car subscription?
You may have heard the term car flat rate before. This describes the car subscription model quite well, because you pay a monthly rate for the car of your choice and everything is included. All additional costs are already included in the subscription rate. In addition, the subscription model offers you the ultimate flexibility in terms of term - from 1 month and up to 48 months, depending on the provider - and mileage. Various monthly free mileage packages cover the needs of infrequent and frequent drivers alike. The monthly rate is higher for a short term than for a long term.
What is leasing?
Instead of buying a car, you can simply lease it. You get a new car without having to fork out a large sum or take out a loan. The leasing option is also available for used cars. Instead, you pay a monthly leasing rate. In return, you receive the exclusive right to use the vehicle, but you do not become the owner. Leasing contracts are limited in time. At the end of the contract term, you hand the car back to the lessor. As a rule, the lessor requires you to take out fully and partially comprehensive insurance and credit default insurance. In addition, you must commit to an annual mileage, which you should not exceed, as additional kilometers will be expensive.
Main differences between car subscription and leasing
With both leasing and car subscription, the vehicle is not yours, but you have exclusive use of it for the agreed period. However, there are some differences between the two models. We'll show you what they are.
Contract term and flexibility
Leasing contracts start from 12 months, but usually extend over 24 to 48 months. Contracts of up to 5 years are even possible. During this time, you are tied to the vehicle and cannot easily exchange it for another model.
As mentioned above, you can often configure the term of a car subscription much more freely than with leasing. Depending on the provider, there are different minimum contract terms. The most flexible car subscriptions start at 1 month.
Costs and fee structures
Leasing contracts are quite complicated. Supposedly great offers such as 0% leasing often turn out to be a sham. And then there are also different leasing models such as residual value and mileage leasing. Which is the best option for you? It's not uncommon for you to be faced with hidden fees when signing the contract, making the leasing agreement a costly affair. What many people also forget: The ongoing vehicle costs are added to the leasing rate.
Car subscription providers like to advertise with cost transparency. But you should also take a close look here, as some charge a basic fee or initial payment. The inclusive services are also not the same everywhere.
Risks and loss of value
New cars lose around 50 percent of their value in the first two years after registration. When leasing a new car, you have to compensate for the loss in value through your monthly installment. Loss of value is also included in the price of a car subscription.
With residual value leasing, the vehicle value is very important: the lessor determines the calculated residual value of the vehicle at the end of the contract term. However, if the car is worth less than the specified value at the end of the contract due to damage, the lessee must reimburse the lessor for the difference. It is important to ensure that the target residual value is not set unrealistically high. Reasons other than damage can also reduce the vehicle value - you have no influence on most of them, such as political conditions or the image of the car brand. As the lessee, you bear this risk with residual value leasing.
Advantages and disadvantages of car subscriptions
Let's take a look at what makes a car subscription so attractive - and what doesn't:
Advantages of car subscription
Flexibility in the term (termination, extension) and free mileage (customizable)
Running costs included
Repair and service included
Disadvantages of the car subscription
Often limited choice of brands, models and equipment
Minimum and maximum age of drivers possible
Only experienced drivers can subscribe to high-quality vehicles
Risk of expensive extra mileage
Advantages and disadvantages of leasing
Lessors often beckon with unbeatably favorable conditions. However, many leasing contracts are not easy for the layman to understand and contain pitfalls. These are the advantages and disadvantages of the model:
Advantages of leasing
Low rates
Possibility to configure the equipment of the car yourself
Free choice of insurance company
Disadvantages of leasing
Long contract commitment
Risk of loss of value
Hidden costs and fees (registration, transfer, final installment)
Interest for credit
Additional costs for insurance, tax, service and repairs
Risk of expensive additional mileage
Workshop commitment possible
Who is a car subscription suitable for and who is leasing suitable for?
There are various reasons for leasing - and many others that make a car subscription preferable. We have summarized them for you.
Personal mobility needs and driving behavior
If the family grows, you will remain tied to the vehicle over the leasing period, even if it has become far too small for the kids. This is where a car subscription offers more flexibility. A short-term subscription is ideal for special mobility needs such as family vacations.
If you change jobs and go from driving very little to driving a lot (or vice versa), it is not possible to adjust the mileage when leasing. With a car subscription, you can usually increase your mileage package and also reduce it after the minimum contract term has expired.
Do you like to try something new? With flexible car subscriptions, you can finally try out an electric car without obligation or book a convertible in the summer.
Long-term planning vs. short-term flexibility
Those who like to plan for the long term and prefer to drive "their" car exclusively for many years are more likely to opt for leasing. But you can also conclude 48-month contracts for car subscriptions.
A car subscription is ideal for occasional drivers who don't want to have a car on their doorstep all the time or only seasonally. It allows you to bridge short-term mobility needs without committing yourself.
Total costs and included services
The services included with a car subscription can be higher than if you take care of insurance, etc. yourself. However, the service saves you a lot of time. Even if the monthly installment is lower with leasing, the running costs add up. You often make a mistake and end up slipping into an expensive overdraft to pay for everything. This is particularly true of unforeseen repairs. These are also included in the car subscription.
Contractual commitment and exit options
With both forms of mobility, you are contractually bound for a certain period of time. The difference is the duration of the contract. This is usually much longer with leasing. It is very difficult to get out of a leasing contract early - and involves high costs. However, some lessors allow a leasing takeover, whereby another lessee takes over the existing leasing contract and assumes the payment and other obligations until the end of the term.
The CARIFY car subscription
CARIFY is the number 1 among Swiss car subscription providers for good reason:
The largest selection of vehicle makes, models and equipment, new and used
Maximum flexibility with terms from 1 month to 4 years
Genuine all-round carefree package including registration, insurance, taxes, service, maintenance, repairs, breakdown service, Swiss vignette
Can be canceled monthly (after the contract term expires)
With us, you can find only one of five mileage packages to suit your monthly mileage. We also offer you three different insurance packages with and without an excess. And if you want to keep the option open to drive the subscription car for longer, simply book the Flex package and extend your subscription as you wish. Found your favorite car? You can even buy our subscription cars at the end of the contract period.
FAQ
What is the difference between car subscription and leasing?
Leasing contracts always run for one or more years, whereas car subscriptions are possible from as little as 1 month. In addition to the leasing rate, there are the running costs for the car. These are included in the car subscription.
Which is better: leasing or financing a car?
That depends on your preferences: Do you prefer to drive your own car for many years or do you prefer to change models every few years? Both options come with additional costs for interest and fees. With financing, unlike leasing, you are not tied to service intervals and garages. Your mileage is also not limited as with leasing.
Which is cheaper: leasing or financing?
With leasing, the lessee bears the full risk of depreciation without owning the car. This makes leasing a new car particularly expensive. With financing, the buyer also bears the loss in value of their property, but can drive the vehicle for as long as they wish. The bottom line is that leasing is usually more expensive.
How does a car subscription work?
With a car subscription, you can subscribe to your desired car for a flexible period of time. You drive it exclusively. The monthly installment includes all running vehicle costs as well as repairs and services.
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