New option for owning car available to drivers
Three options: Buying, leasing or subscribing
HOUSTON – If you are in the market for a new car, you probably thought you only had two choices -- buy it or lease it.
But now there is third option: subscribing. It may end up being a cheaper, easier option for some of you out there who like paying one flat fee.
The option, which is already being offered at some dealerships, is similar to what you do when you sign a two-year plan for a brand-new phone.
Chris Shimp, the general sales manager at a Volvo dealership, said the dealership has received a lot of calls about the new subscription program.
It is called the Care by Volvo plan, and Shimp said the interest in it is overwhelming, especially because all the subscriber has to do to sign up is go online and there is no down payment required.
"Essentially, it's a 24-month subscription, and it's inclusive of everything," Shimp said.
That means the monthly payment includes the financing for the car, the insurance, car maintenance and roadside assistance. Such things as oil changes, brake checks and repairs for any regular wear and tear are all included in the price.
"Don't have to come out of pocket for anything except gas, which is pretty exciting," Shimp said.
The cost starts at $600 a month, which gets you a sleek new Volvo XC40 compact crossover SUV. When you break down all the costs, subscribing can end up creating big savings for you.
"I think it’s something that is going to be exciting for a lot of people," said Shimp.
Let’s say you bought and financed your car and your monthly payment runs about $350 and your insurance runs about $250. That's already $600 right there, not including the hundreds of dollars you might spend for regular yearly maintenance or to buy new tires, brakes, filters and the like.
The same would be true if you leased a car for $450 a month and had insurance for only $150. You're still on the hook for maintenance, tires and any mileage overages.
But, as we discovered, subscribing is not for everyone.
As there would be on a lease, there is a mileage allowance for the XC40 -- 15,000 miles. Anyone who drives more than 39 miles a day will blow right through that limited amount of miles.
If you've had an accident or speeding ticket, expect to pay more. For insurance, Care by Volvo has teamed up with Liberty Mutual, which will examine your driving record.
But if you live close to work and have a clean driving record, subscribing could be the option for you.
Shimp said he thinks it will be attractive to millennials, especially those from overseas who may be attending college or are in a work-related program.
"You just make your payments and, at the end, you're done," said Shimp.
Lincoln Motor Co. plans to launch a similar subscription program in California soon, and Ford started its own subscription program last May.
Right now, Ford's Canvas program is only offered in San Francisco and Los Angeles. Porsche and Cadillac also offer subscriptions, but at a much higher price point. Book by Cadillac starts at $1,800 a month and is currently offered in New York, the Dallas metro area and greater Los Angeles.
The Porsche Passport subscription starts at $2,000 a month and boasts unlimited mileage for that price tag. Right now, the plan is only offered in the Atlanta area.
Clutch is another monthly car subscription service only offered in the Atlanta area.
There's also something called Flexdrive, a subscription service that offers you the car you want when you want it for however long you need it. The website states that, in order to be approved, you must have a valid driver's license with a current home address, be at least 25 years old, have at least three years of clean driving history, have a valid credit card for payment and have a mobile phone in your name to receive alerts. There is also a refundable $250 deposit in some markets. The subscription service works with local authorized dealers, who determine the weekly and monthly subscription fees for each vehicle they offer.
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