Car subscription services

Car subscription services offer hassle-free motoring and regular new cars - at a cost

James Mills
Oct 31, 2018
Volvo XC40 front three quarters view

Not everyone enjoys buying a new car. For many, the thrill of knowing you’re the first owner and the unmistakable new-car smell are outweighed by the hassle of haggling with a sales person, getting tangled in finance deals and deciding whether or not to add on extras, such as pre-paid servicing or insurance.

Car manufacturers are waking up to this. An increasing number of mainstream brands now offer subscription services - pay-as-you-go for cars - in an attempt to take the pinch points out of buying and running a car.

Some are essentially a posh version of hiring a car for a day or more. In certain cities, Audi now lets drivers pick a car of their liking and have it delivered to their door, for up to 28 days use, before sending it back or switching to something more practical.

Others, including BMW and Mini, let you pick from a wide range of desirable cars and run it for one month before handing it back. Alternatively, you could stick with it for longer, or let your hair down and change into something else, such as a convertible for the summer months and a four-wheel drive SUV in the winter.

The common theme is that short of having to put fuel in the tank, everything is included in the daily or monthly fee. It means the cost of road tax, insurance, servicing and – in some cases – replacing tyres is taken care of.

But there are pitfalls. Understanding the terms and conditions of any financial product is important or drivers could find themselves stuck with a car they no longer want or, in the worst case, can afford.

And according to most motoring consumer groups, such subscription services are not the most cost-effective way to hit the road in a new car.

However, for many, it’s the simplicity that makes signing on the dotted line so appealing, and the freedom of choosing between different models in a car maker’s range. Here’s what to consider before entering into any subscription service for a car, and the details of manufacturers’ offers.


Who can join a car subscription service?

Assuming they fall within certain restrictions around age, the number of points on their driving licence, insurance claims history and pass a credit check, anyone can sign up to a new car subscription service.

Subscriber beware

It’s not that long ago that people would caution against buying a car on the “never-never”. Finance was viewed with suspicion - living beyond your means, if you like - but today it is the most popular way to pay for a new car.
According to the Finance and Leasing Association, which represents the banks and the finance arms of leading retailers, 88 per cent of new cars sold last year were bought using finance.

Most of the current subscription services are based on finance products, the main one being a personal contract hire agreement.

This is where you pay a monthly fee to use a new car for a defined period of time, and then hand it back when the contract ends. Your payments don’t go toward owning the vehicle.

It means you’ll be entering into a contract with legally binding terms and conditions. So even if someone were to lose their job and want to terminate their contract early, there will be stiff charges to settle.

Andrea Kinnear, of the Finance Leasing Association, advises drivers to consider carefully whether subscription services best suit their needs. “Once you know how the product works, it’s also useful to know what happens if things go wrong – ie, if your circumstances change. HP and PCP offer more consumer protection because it’s easier to leave the agreement mid-term without a penalty than it would be on a PCH agreement.”

With the odd exception (such as Audi’s On Demand and Jaguar Land Rover’s Carpe service) subscription services will stipulate how many miles you anticipate drivingfor the duration of the contract; exceed this number and there will be an excess mileage charge to pay.

And as with most motor finance products, the car has to be returned in good condition or charges for repairs may be levied, following industry guidelines on fair wear and tear.

And finally, check whether there is any excess to pay should you need to make a claim with the provider’s insurer.


Can you use the car for business use?

With most car subscription providers, it is acceptable to use a car for business purposes, assuming you aren’t intending to hire it out as a rally car for a month. Each provider will stipulate the terms and conditions, which should be carefully checked. This includes the total mileage that will be travelled in the car; exceeding it can result in substantial charges.


Ending a subscription service early

Although most of these contracts come with a 14 day cooling off period, this is where consumers must enter into agreements with their eyes wide open. Because the majority of subscription providers will penalise you if you want to return the car before the end of the agreed loan period.

There are many reasons why drivers might want to do this. They may be struggling to make ends meet, they could need a larger car after having children, work could be taking them abroad or there may have been a death in the family.

So even if you handed back the car, there would still remain a sum to pay to settle any outstanding balance as per the terms and conditions of the contract you signed up to. (Below, we outline individual manufacturer’s terms and conditions.)


What to do if you have a dispute with a subscription service provider

In the first instance, contact the subscription provider and address your points with them. If you are unhappy with their final decision, you may turn to the Financial Ombudsman Service or British Vehicle Rental and Leasing Association, which offer a conciliation service.


Guide to UK new car subscription services

Audi On Demand

Duration from 30 minutes to 28 days

If Audi holds true to its promise of expanding on its four current city locations to include Birmingham and London, the On Demand service could become the most flexible new car subscription service.

Currently in Edinburgh, Glasgow, Newcastle and Oldham, models available include the A1, A3, A4 and A5, as well as the Q3 and Q5 SUVs. You can sign up to drive a new car for as little as an hour or as much as a month, and no deposit is required.

You must be aged from 21 or 25, depending on the model required, and meet a host of criteria to satisfy the insurance criteria. Only the driver that makes the book is insured to operate the vehicle, and only within the UK, although there are no mileage restrictions.

After successfully registering online, you’re able to book a car with as little as 30 minutes notice, claims Audi, although it will have to be collected from one of the four dealers taking part. If you want it to be delivered and collected, 24 hours notice is required and you must be within a 30 minute drive of the dealership.

Hours can’t be refunded, but with 24 hours notice, a booking of a day or longer can be, at no charge.


BMW/Mini and Drover

Duration One month or more

Has Drover thought of everything? Almost, it seems. As part of its partnership with BMW (other makes and model of car are also available) it includes a discount on BP fuel, which is a neat touch.

Drivers must be at least 22-years old, and the shortest subscription is for one month, on a rolling monthly basis. However, the company offers discounts to those who agree to a six month or one-year period.

After passing all the eligibility checks, there’s the small matter of a deposit to be paid. This ranges from £300 to £1499, according to the value of the car and the driver’s age, and the deposit is held for the duration of the subscription, and returned after it ends.

A wide range of BMW and Mini models are offered, including the humble 1 Series right through to the i8 sports car, or the Cooper hatch to the Countryman SUV.

Mileage is limited to 800 miles a month, and excess is charged at 10 pence per mile, although it’s possible to increase the monthly allowance at the start of a subscription.

Insurance only covers the UK, but the excess should be a concern to all using the service: it ranges from £750 to £1500. And there are cancellation fees to be paid depending on the duration of the contract, ranging from £50 to £450.


Carpe: Jaguar and Land Rover

Duration 12 months

Carpe has the backing of Jaguar and Land Rover. In a nutshell, it offers drivers a new Jaguar or Land Rover for 12 months, and includes the road tax, insurance for driving in Europe, any required routine servicing and breakdown cover.

At the end of the 12 months you hand back the car and decide whether to change to a newer model, or something different altogether. So if you decide that a Jaguar F-Pace were too big for your needs, you could downsize to the latest E-Pace model, or vice versa.

After passing associated credit checks, no deposit is required but there is a £250 fee and once you have signed the hire agreement. And once your order is placed with the factory for your chosen make and model and added options, changes can’t be made to the car, says Carpe.

The insurance will include a named driver, but both parties will need to be 30 or older and must not have more than six penalty points on their licence, and have made no insurance claims for the past two years.

The car will be delivered and collected again, and the good news is there is no restriction on the permitted mileage.

Should you need to cancel early, Carpe says that customers will have to settle the remaining month in full, then pay 50% of the value of all further months up to the end of the contract. The insurance excess is £500.


Citroen: Simply Drive

Duration 3 years

The Simply Drive service from Citroen predates most monthly subscription services. It gives drivers a car for three years, and after placing a deposit, the monthly fee includes insurance, road tax payments and scheduled servicing.

Strictly speaking, it isn’t a subscription service, because at the end of the period, drivers have the option to buy the car, because the plan is based on a Personal Contract Purchase. However, you’re also able to hand the car back or change it for a new replacement.

It is offered across most of the range of Citroen cars, so whether you need a small city car, like the C1, or a big seven-seat people carrier for all the family to pile aboard, there should be something to suit your needs.

Depending on the car, drivers must be 18, 21, 25 or 30 to qualify for the insurance, and the youngest motorists may not have had any driving convictions for the past five years, or made a claim for the previous three. Up to three other people can be named as drivers on the policy, it can be driven in Europe, and the main driver earns any no-claim discount over time. The insurance excess ranges from £350 to £500.

Uniquely, Citroen is to be applauded for including allowance for involuntary redundancy. Its partner, PSA Finance UK LTD, will waive up to six monthly instalments giving drivers time to find alternative employment. If there is no change in circumstances after six waived instalments, there is the option to hand back the car without further financial liability.


LeasePlan: Subscribe and Drive

Duration 3 months or more

LeasePlan is one of the largest vehicle leasing companies in the UK. So it should probably come as no surprise that its subscription service is one of the most straightforward to use.

Its Subscribe and Drive programme offers four tiers, so drivers can choose a brand and size of car that best meets their needs. Drivers take on a car for three months at a time, and after the first three month can choose to switch to a different make and model, keep what they’ve got or hand the car back.

Also, after that first three months LeasePlan requires just 14 days notice to end a contract at any time, and there are no penalty charges, a fair approach that many drivers may prefer.

It starts at £295 plus VAT, which includes cars like the Citroen C4 Cactus, Renault Captur or Vauxhall Corsa, and as with all tiers this includes road tax, insurance, servicing and consumables such as tyres.

Step up to £365 and the Audi A3, Mercedes A-Class and VW Golf are included, as is the frugal Toyota Prius hybrid.

For £445, there’s a wide-ranging choice of types of car, from a Mercedes C-Class saloon to a VW Tiguan SUV. Want to spoil yourself? For £570 a month, the Mercedes GLC 4x4 and BMW 5 Series are available.

The insurance is available to those aged between 25 and 70, and the excess is £250.


Peugeot: Just Add Fuel

Duration 3 years

The French car maker Peugeot was one of the first companies to bundle everything up for drivers so all they need do is pay for the fuel they use. It launched Just Add Fuel in 2010, and has since expanded it to include young drivers from the age of 18, using telematics-based insurance, and more cars.

Depending on the driver’s age, Peugeot offers its full range of vehicles to subscribers. So there’s everything from a 108 supermini through to a 5008 seven-seat SUV.

The insurance can cover drivers from 18 to 75-years old, although the youngest will require a black box telematics device to be fitted, which will monitor their driving style. Without telematics, drivers from 21 must have two years no claims discount, and driving abroad is permitted but additional charges may apply. Excess fees are between £300 and £500.

The service is built around a personal contract purchase plan, which means consumers have a 14 day cooling off period. The additional products (insurance, service plan and breakdown cover) can be cancelled at any time, but if you haven’t paid off more than 50 per cent of the PCP’s total amount payable, a settlement sum have to be paid before the car can be returned early, something drivers should be aware of.


Volvo: Care by Volvo

Duration 2 years

Volvo sees its subscription service as a cut above the competition. For example, when the time comes for your Volvo to be serviced, a nice person from Volvo will collect it and take it to your Volvo dealer, then return it after the work’s complete. What’s more, unexpected repairs outside of routine servicing schedules are taken care of.

All new Volvos are available on the subscription service, which is based on a personal contract hire credit agreement. Under the terms, the customer will be liable for settling 50 per cent of all outstanding monthly fees should they want to terminate the two-year contract early.

At the moment, Care by Volvo doesn’t suit young drivers, as the insurance is only open to those aged between 30 and 80. They’ll need at least one year’s no claim bonus, and must have been driving for two or more years, while cover is provided across Europe – ideal for family holidays. The excess is just £150.

Because it’s a contract hire arrangement, there’s no option to buy the car at the end, should you take a shine to it. Instead, you hand it back and either renew with another Volvo, or walk away.

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