Today we’ll be comparing the differences between car leasing and car subscription to find out what's the right way to get your next car.

Car leasing, and subscription will be compared for a long while yet, and we wanted to explain the benefits, and downsides to both and the next time you're in the market for a car you'll know exactly what a car subscription is, how it compares to leasing, and you'll be one step closer to making the best decision on your next car. 

First, I'll go through what this article will cover: 

• How is leasing, and car subscription similar? 
• How long can you subscribe or lease a car? 
• How fast can you get behind the wheel?
• How much do you pay upfront? 
• What's included in a subscription and a lease? 
• How does car insurance work for a car subscription, and lease?
• Which one is better value for money?
• Is leasing, or subscription the right way to get your next car?

Take a sip of your preferred beverage, and let's find out if Car Subscription is really worth all the buzz!

How is car leasing and car subscription similar? 

Subscription and leasing are different ways to 'rent' a car. When you subscribe to or lease a car you don’t own the car, and you’ll never have the option to buy the car outright like you can with a hire purchase for example. Let's be real, the reason people subscribe or lease a car are the same,  people want to skip the hefty upfront payment of buying a car outright. 

With both, you’ll pay a set monthly fee for the car for as long as your contract is. Another similarity is that you’ll have return charges, or at least the possibility of them. 

How long can you get a lease? 

The most standard length to lease a car is for 24 to 48 months, with the most popular being 36 months.

How long can you get a subscription? 

From as long as 24 months, to as short as 1 month. You can choose for yourself. While one month subscriptions may work out as more expensive, you have more freedom over what you’re driving and when you’re driving it. 

When you subscribe to a car, you decide the terms with a lot more choice than your standard lease, you get the option to have a month-by-month subscription, or: 

• 3 month 
• 6 month
• 9 month
• 12 month 
• 24 month

The options are usually dependent on our suppliers, but if you use our marketplace it’s easy to find the car you want, on the right terms!

How fast can you get behind the wheel? 

With a subscription, you can order your car and get it delivered within a week, and often sooner. Our record is within an hour from login to delivery. 

However, with a lease, you can expect at least a 14 day wait, usually called a lead time, once you've ordered it. Especially now, with chip shortages and slowed production, some hopeful drivers end up waiting months at a time just for their car to be delivered.

How much do you pay upfront?

Leasing works in the same way a mortgage for a house works, obviously, you won’t own the car but it’s very similar in principle.

You can pay a bigger down payment upfront to lower the monthly costs of a lease, however, most people don’t usually do that because they would prefer to have slightly higher running costs as opposed to having to part with a big chunk of cash in one go, and part of the reason why people chose a lease over buying is that you pay less upfront. 

With a subscription it’s basically the opposite, the only upfront fee you pay for outside of your subscription is a one time joining fee, and a refundable deposit that’s returned to you as soon as your car is.

The benefit of being able to pay more upfront is that you can lower the running costs, and slightly lower the overall price of the long-term contract. 

Can you save money by switching to a subscription car?

Although both leasing and subscription seem like they include a lot already, Kwik Fit’s research shows that on average UK drivers spend £162 a month just running the car, and that excludes the car cost! The table below highlights some of the running costs that Kwik Fit's research shows:

So let’s look at these running costs, and see what's included in a subscription compared to a lease.

Mileage

We’ll start with mileage because even though it's not a running cost as such, but once agreed it will change the amount your monthly fee is. Let’s compare Subscription and leasing, and see which one is better value:

Subscription cars have a higher mileage limit of around 800-1000 miles, the Renault Zoe for example has 800 miles as standard, but Tesla Model 3 has a 1000 miles as standard. We also give you the option to bump up the mileage by an extra 200 miles for around £24 a month. 

On a lease, the monthly prices start at a 5,000 mileage limit with the ability to add more miles from the beginning. When you do the maths, (not one of our strong points) this could mean you’re losing out on extra 400 miles per month when you lease a car.

Generally upping your miles to 8,000 miles will cost you an extra £20 a month, and then upping to 10,000 miles will cost a further £10 a month.

However, this is not a fixed price, and could change depending on which leasing company you use. 

Zen Auto states that you can expect to pay 3p, to 30p per mile over the limit, and they make it more expensive than if you initially signed up for extra mileage as part of the lease deal.

Find out more about over the limit mileage charges when you lease a car by going here.

Subscription mileage limit:

9600 miles per year, or 800 miles a month.

Leasing mileage limit:

5,000 miles, or 416 miles per month.

How much would it cost to upgrade your lease package to approximately the same mileage limit? 

£30 a month

Repairs

With a leased car you’ll have to regularly maintain, service, and repair the car. Your leasing broker would then add up the bill for the repairs after it’s returned, and send you a bill known as ‘lease car return charges.’

The company you leased your car with may want to retrieve as much value they can as wear and tear, alongside charging you for the standard depreciation rate.

Subscription price:

£0 

Lease price:

£0

Administration fees

Leasing includes a higher administrative fee because of the amount of paperwork it takes to get the deal over the line. Even if leasing companies advertise no admin fees, it will have slightly higher monthly payments to cover it.

When it comes to subscription, you’ll pay what’s called a ‘joining fee,’ you'll usually pay a much smaller fee but with Wagonex it’s based on the supplier you choose, and this doesn't change the longer your subscription is. 

Subscription is a lot cheaper on admin fees as you don't have to deal with a ton of paperwork. It's all done online. 

It’s important to remember that an admin fee, or a joining fee is only included in the initial payment, it won’t be part of your monthly costs. 

Subscription price:

£100 

Leasing price:

£100

Maintenance and Servicing

MOTs aren't usually something to worry about when it comes to leasing or subscription. The cars are usually less than 3 years old, so MOTs aren't worth worrying about. However servicing and maintenance will be an extra cost on a lease. If you need a car serviced during your lease, you will either have to pay for it from your pocket or pay more per month by agreeing to a maintenance package that's added on top of your lease.

Volkswagen, for example, currently offers a maintenance and service package that covers 1-year-old cars for £13 a month. If you were to subscribe to a car, that's already part of the bundle and included without the hassle. 

Kwik Fit states that maintenance and servicing costs are an average of £15.96 a month.   

Subscription price:

£0 

Leasing price:

£15.96

Road Tax

Road tax can cost you around £150 a year, so it'll cost you just over £10 a month. The amount you pay will be dependent on the eco-friendliness of your car. It’s put into bands. 

You would expect most leasing deals to exclude road tax but if you were to subscribe to a car it will always be included. 

If you drive an electric car, road tax will be £0.  

Subscription price:

£0

Leasing price:

£12.50 a month.

The GOV.UK website calculates your road tax here

Breakdown cover

Car lease contracts don’t include breakdown cover, but they are an added extra if you agree to one of their more expensive packages. 

Breakdown cover, or roadside assistance is already included as standard when you subscribe to a car. 

Subscription price:

£0

Leasing price:

£6.50 a month.

Which one is better value for money? 

You can expect to pay slightly more per month on a subscription than your standard lease deal because a subscription is a shorter deal, so you can expect slightly more just for that, but it’s important to remember that a subscription is an all-inclusive type of leasing. A lease only really includes the car, while a subscription covers: 

• Road tax
• Roadside assistance
• Breakdown cover 
• Servicing and MOTs 
• Repairs

It’s important to remember that these costs are always included in your subscription fee, and on a lease these running costs aren’t fixed at a monthly rate, unless you pay more for a different leasing package. 

What's the overall cost of a lease?

When you include the price to have the same mileage limit as you would in subscription car, it would cost: 

£64.96 a month, or an extra £779.52 a year.

What does that mean for you? 

The results are quite shocking, you aren’t paying an extra £10 a month for a lease, it's more like £60! That’s a substantial amount that could really change your life, £800 a year could be the difference between your family deciding whether they want to go abroad or not.  

If you were to lease a car for three years the savings would add up to £2,337. This could be a wake-up call to lots of drivers who consider leasing as the only option for the budget-savvy driver. 

What should you do now?

The next time you’re comparing prices, think back to the added £60 a month worth of benefits that subscription can give you, and ask yourself if you want to be in a long-term lease, or a more flexible subscription? 

Remember, the prices will be different when you select different contract lengths, so the shorter the subscription the pricier it gets. 

Is leasing, or subscription the right way to get your next car?

If subscription or leasing is right for you is a personal preference that depends on what you want from the car, what’s important to your lifestyle, and how your finances are. 

You could, in effect, lease a car for 5 years at a time, see it as your primary car, and then use the subscription as a way to easily access a secondary car when you feel like it, or when you need it.

Maybe you want to drive a Volkswagen Tiguan as your primary car, and only need a second car when you and your family want to drive separately, or you’d like to freshen up your summer with a brand new car. 

However, when you’re leasing a car for the long term, you’ll have a cheaper monthly fee, but a lot of extra running costs that add up each month, and you like to know how much you’ll be spending each month, a subscription will consistently be the same price each month. 

You might be someone who doesn't see the value in having a car year round, perhaps you live in London, and instead of being stuffed in a car in summer. A subscription just for the winter months could be what you need.

Another thing about London is the ULEZ charge that makes it difficult to commute in London if you drive a petrol car, a subscription makes driving an EV a lot simpler. Just subscribe for a month to make sure you love your EV before agreeing to a longer term subscription, or lease! 

Do you just love driving the newest, and most luxurious cars? If you do, you might like subscribing to cars more often than leasing, because you have the chance to swap cars as much as you like! When you lease a car for the long term you don't get that, and when you rent the prices can be exorbitant. Car Subscription might be the perfect way to get you behind the wheel of your favourite cars! 

If you like to stay flexible, a subscription might be your next best friend. The ability to go from car to car, month to month without making a huge dent in your wallet makes subscription a great option if you’re the type of person who doesn’t like to be in a long-term commitment! 

Summary of Leasing vs Subscription

A lease is a product that we all instinctively understand, and it's a tried and tested way to get behind the wheel - that’s why it’s the most popular way to get a car in the UK.

Subscription is an upgraded version of leasing that gives you more flexibility and a better overall package. It’s a lot easier to subscribe to a car as opposed to leasing one because a car subscription is a lot less daunting. You have an all-inclusive package, only a refundable deposit to start, and you decide how long you want the car. In terms of transparency and more control it’s the much simpler option. 

I hope you've learnt a lot about car leasing and subscriptions, and in the future when you want a car you'll know if leasing or subscription is right for you.

Happy car shopping! 

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