Car Leases vs. Subscriptions: What are the Differences?
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Car leases and car subscription plans are both attractive alternatives to buying. A car subscription gives you access to a fleet of vehicles, maintenance costs, and insurance for a flat fee—whereas leasing is a more economical short-term option.
Car insurance comparison shopping app Jerry has put together all the information that you need to compare leasing and subscription services so you can drive away with the best rental plan for you.
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Leases vs subscriptions
Leases and subscriptions both offer drivers access to vehicles without the commitment of buying. But there are a lot of differences between the two popular options.
While leases have been around for a while, car subscription services are relatively new on the scene. The main highlights of car subscription services are ease, flexibility, and convenience. Drivers can activate and customize their service options from month to month using a simple app.
Leasing, on the other hand, is often seen as a shorter-term alternative to buying. Drivers commit to making rental payments on the same vehicle for at least a couple of years. They’re responsible for costs like servicing and insurance, but will probably enjoy better value as well.
What is a car subscription?
When you sign up for a subscription service, you pay a flat fee every month to enjoy access to a range of different vehicles. You’re free to take out a car if and when you need it, whether for a few days or a whole year. You can often swap out your car for another one on short notice, and many services offer concierge delivery.
The monthly fee that you pay to join is all-inclusive. It covers helpful extras like insurance costs and maintenance fees. Many subscription services will include roadside assistance, too, but you’ll be on the hook for your own fuel costs.
Most subscription services are operated by car manufacturers, so you’ll be able to choose your vehicle from the models that they assign to the fleet. The cars are probably not brand new but typically won’t be more than three years old.
A car subscription service is a membership plan where you pay a flat fee to use vehicles in the fleet.
What is a lease?
When you take out a lease on a vehicle, you essentially agree to a long-term rental from the dealership.
The lease term stipulates the length of the lease—usually 36 or 48 months. Since monthly lease payments tend to be less than monthly payments for a purchased vehicle, leasing is often used as an affordable short-term alternative to purchasing a car outright.
Your monthly lease payments take into account factors like rental charges, length of the lease, vehicle sale price, and expected mileage. You’ll drive the same vehicle for the duration of your lease term. Once the term is up, you agree to return the car to the dealership.
A lease contract is a concrete agreement; it lays down everything from how many miles you can drive without accumulating extra fees to the sale price of the vehicle if you choose to buy it when the lease term is up. Most leases require you to purchase full-coverage insurance, including both comprehensive insurance and collision insurance.
If you want to find the best prices on insurance for your leased car, the Jerry app has you covered. As a licensed broker, Jerry does all the hard work of finding the cheapest quotes from the top name-brand insurance companies and purchasing your new policy. Jerry will even cancel your old policy and handle your renewals for you.
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A lease is a 36–48 month rental contract with a dealership on a single vehicle.
Leases: Pros and cons
Leasing is generally a better option for drivers looking for a more affordable long-term solution. But you will have to sacrifice much of the flexibility and convenience that subscription services offer.
The pros of leasing
Affordability: Most leases come with monthly payment plans that are more affordable than the cost of a monthly subscription. Leasing also offers lower monthly payments than buying, making them a good solution for anyone who wants to get behind the wheel of a great vehicle for less.
Try before you buy: Leasing is a great choice if you want to try out a vehicle for a few years before committing to buying it. Most leases have a sale price built right into the contract, so you can choose to buy once the lease is over if you want to.
Drive the newest models: Leasing is a great way to get behind the wheel of the latest makes and models without dealing with the depreciation that comes with a long-term commitment. By the time the vehicle is three or four years old, the lease will be up and you can lease another cutting-edge pick.
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The cons of leasing
Less flexibility: The minimum term for most leases is 36 months. You might be able to negotiate a shorter contract, but leasing is not ideal for anyone who only uses a vehicle for part of the year or is looking for a short-term vehicle solution.
Can’t switch your car: When you sign a lease contract, you agree to drive one vehicle for a certain amount of time. You can’t switch out your car halfway through the lease or try out different makes and models during the lease term.
Insurance costs: Insurance is not included in your monthly lease payments—it’s your responsibility. Most leases require you to carry full insurance coverage, including comprehensive and collision insurance.
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Leases offer an affordable long-term solution if you’re ok with driving the same car for the entire term and covering your own insurance.
Car subscriptions: Pros and cons
Car subscription services are perfect if you’re looking for a short-term commitment or access to a variety of models. Generally speaking, though, most people will get more value and freedom out of a lease contract.
The pros of subscribing
Keep it casual: One of the biggest perks of car subscription services is that you can choose from a range of different cars. Most allow you to switch up your pick on a monthly basis, and some even offer concierge delivery of your ride or the ability to swap your car on short notice for a fee.
All-inclusive fees: The monthly membership fees for subscription services cover both regular maintenance and insurance costs—both of which you’re on the hook for with a lease contract. Some subscriptions include roadside insurance coverage, though fuel is always your responsibility.
Only use it when you need it: Most subscription plans work on a monthly renewal basis. At the end of the month, you can either renew or skip your membership for the next month. For this reason, subscription services can be more affordable than leasing if you’re a seasonal driver or looking for a short-term vehicle solution.
The cons of subscribing
The vehicles are usually used: While most cars in a subscription fleet are less than three years old, they likely won’t be hot off the lot. If you want to try the newest makes and models, leasing is a better option.
Restrictive mileage limitations: Some subscription plans have mileage restrictions that could easily limit the way you use your vehicle and might even rule out the possibility of long daily commutes. If you want to take the odd road trip, some plans offer annual mileage restrictions similar to what you would find on a lease contract—but the fees for exceeding your mileage limits are steep.
More costly in the long term: Your monthly subscription fees will almost always cost more than the monthly lease payments on the same used vehicle. If you’re looking for a year-round, longer-term solution, leasing is usually the more affordable option.
Car subscription is a great option for irregular drivers who need flexibility and don’t mind paying more for it.
What is the better option?
The answer to this question depends on your needs and preferences.
Subscription services are a great choice for anybody looking for no-muss, no-fuss, flexible vehicle access.
Leasing is almost always the more affordable option for regular drivers who don’t mind making a longer-term commitment.
Using Jerry to buy your car insurance will help you free up money in your monthly budget to get behind the wheel of the car you want to be driving.
If you’re hesitant to switch plans or insurance providers because you’re worried about the work involved, don’t be. Jerry does all the paperwork for you. You’ll never have to print out anything, go to the post office, or get on the phone. Jerry handles it all. Oh, and it’s completely free to find and compare quotes!
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