If you haven’t heard yet: car subscriptions are hailed as the next big thing in automotive for millennials. But what is the difference between classic leasing and other traditional financing options? And what is the main selling point? Let’s have a look!
In a time when Netflix, Spotify, and other services are making an abundance of content available on-demand with a click of a button – and only for a small monthly fee – it is easy to think of buying a car in cash as antiquated. Well, in the past few decades there has been some progress. For once, more and more people are leasing their vehicles. But what they trade-in inconvenience, they play with a lack of flexibility and, in a way, freedom. Let me explain: most leasing contracts are for 3-6 years, you are stuck with a specific car that may or may not satisfy your evolving requirements (think kids!) and you still have to pay taxes, insurance, and other annoying paperwork.
Here is where car subscriptions come in to save the day! You simply browse the inventory of the many providers out there, find your dream car, and – with the click of a button – subscribe to it. A few days or weeks later you will have your new ride in the driveway. Okay, so far so good. But isn’t that just like leasing or financing a car? Well, not exactly because a car subscription typically features a few distinct value-adds not found in the traditional leasing model.
Where in the past you were stuck with your car for several years, a car subscription typically runs only 3,6 or 12 months. At the end of the period, you can opt to keep the same car or trade it in for something more suitable.
You only pay one, predictable monthly fee and that’s it. Taxes, insurance, maintenance, and even the cost of depreciation – it’s all there. The only need to do is fill the tank or the batteries!
Especially for younger people, buying a new-ish car is a costly endeavor. If you are lucky enough to buy cash, you save on interest but immediately burn a massive hole in your wallet. If you finance or lease the car, you will need to go through a rigorous assessment of your finance if you already have a credit score that allows for the transaction anyway.
This also allows students to have more financial freedom and not end up in all sorts of debts due to the immense costs they have at that particular stage of life. By considering a subscription you won’t have to borrow a large sum of money for one initial purchase. Instead, you can put a small amount on the side every month and you’ll constantly have an access to a vehicle. Then, if you ever change your mind or you simply regret your choice, switching is very, very easy.
The millennial generation, that tends to value ‘mobility’ and ‘flexibility’ in favor of ‘possession’ and ‘status symbols’, has a much easier way to their first car than ever before. Plus, a lot of the subscription cars are brand new, fitted with economic conventional engines or batteries!
Millennials nowadays expect the convenience of buying a car that they are used to from consuming content on streaming platforms like Netflix and Spotify. In times of Same-day deliveries and e-Scooters on every street corner, it will be difficult for big automotive companies to stand by idly. In fact, many of them are embracing the new model, including Cadillac, Volvo, and the Volkswagen Group.
If you are interested in car subscriptions, check out sites like Abopiloten.
The freedom of multiple choices
Millennials are everything but traditional, and that’s not a secret. A few generations ago people had only one goal, to purchase the most reliable car and use it for as long as it runs, not even thinking about switching to anything else unless they really have to. However, millennials nowadays have a completely different mindset. We live in an age where we’re bombarded by information constantly and we see all types of content on the internet. Most of us like to live a free life, just like the ones they present us on social media and in music videos. Let me simplify.
We want multiple cars, we want choices. However, it’s not easy to become rich enough to permanently purchase all these vehicles. So, the next convenient solution for this “problem” is to actually use a subscription service.
Whenever we get bored with a vehicle, or our needs change, we are not bound down to using what isn’t satisfying enough anymore. Some students use their same first car for more than eight years, but in eight years life can change drastically. Maybe you purchased that car when you were still living alone and starting college, but eight years later you can have a fully-formed family with multiple kids. What I’m trying to say is that needs change, and so should our vehicles.
The only possible downside
Something that people consider a downside when it comes to subscribing for a vehicle is not enough availability provider-wise. Some providers are still not very flexible with this paying option yet, and in some countries, this concept doesn’t even exist. So, we cannot really say whether this particular option is the best choice for you or not, but it’s definitely something that you need to consider if your situation is similar to what we described in the content above.
This paying method will become quite famous in the next couple of months. It was about time for sellers to find a solution that allows students and other younger folks to secure transport for themselves without totally breaking their economy. So, we expect this to become an available option for a lot of brands and in many different countries in the near future.