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Ordered A 'Subscription' Car
Old 04-25-2018, 12:14 AM   #1
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Ordered A 'Subscription' Car

I have just ordered (it may take to mid July for delivery) a new car a new way. When I was in high school (1960s) I did some handyman work for some wealthy executive types in Gold Coast Chicago. I was surprised that several of them did not own a car. They had standing arrangements with Hertz for a car whenever they wanted one. Well I ordered a new Volvo XC40 on a subscription basis. Like a cell phone contract it is a two year contract, $600 a month but it covers everything except gas. All wear items, maintenance and insurance. At the end of two years I can just turn it in. But wait, theres more, if I like it, at the end of the first year I can get a new car every year. It does push out the contract one year, so eventually one car has to go two years. I do think it is cheaper to buy long term and even a 3 year lease would work out a little cheaper but I was looking at another $35/40K car and realized how much depreciation there is , it would cost as much or more if I wanted to change my vehicle. This is new for me, I think I averaged 10 or 11 years on previous cars and usually passed them on to kids or relatives. But I AM NOT thinking long term, had some serious medical issues and I feel more like George Burns who said, ‘at my age I don’t buy unripe bananas’.
It will be some time as things work through the system but I will report back with whatever insights come from my experience. With all the new safety and electronic systems it may the future not to own cars.
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Old 04-25-2018, 03:57 AM   #2
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I just bought a Volvo XC60 the old fashioned way (cash), but I was reading about their new subscription model for the XC40 and I really think they're on to something. It should be a popular option for some people. Good idea to try it out with the XC40 since DW really fell in love with that car when she saw it at the factory showroom. She's still at least a year away from a new car, so nothing happening now. I'll be interested in your impressions of the subscription plan as you go through it.

Here's an overview of the idea:
Care by Volvo
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Old 04-25-2018, 04:17 AM   #3
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I saw this on TV but thought they were talking about leasing. Other than insurance being included how is this different from a lease?
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Old 04-25-2018, 05:40 AM   #4
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I just switched to a three year lease this year from my long term buy approach in the past. The rate for shorter leases was higher than the three year so I didn't consider less. I don't see the advantage of this approach over a standard lease. I get the first two oil changes free. After that I can take it to one or two at my local guy's shop. Then I am done with the lease. Seems like not much difference other than the insurance as Marko noted. As long as the return turns out to be painless I may continue with leases -- I like getting new tech and it seems to be improving at an ever increasing rate of change.
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Old 04-25-2018, 05:49 AM   #5
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I ordered a new Volvo XC40 on a subscription basis. Like a cell phone contract it is a two year contract, $600 a month but it covers everything except gas.
When I purchased my current car it cost $600/month for two years. Then I owned the car outright.

I expect to keep the car for at least 10 years total.
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Old 04-25-2018, 06:20 AM   #6
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We read an article about car subscriptions in "Wired" magazine - Mr. A. said "How is this different from renting a car?"

It was a poor article, in that it didn't address this obvious question. It was written so as to imply that "subscriptions" are something totally new, cool, and young.

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Originally Posted by marko View Post
I saw this on TV but thought they were talking about leasing. Other than insurance being included how is this different from a lease?
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Old 04-25-2018, 06:20 AM   #7
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Interesting concept. I still prefer to buy and hold on the car for many years. To me it is still cheaper and I will get something for it when I sell it. Just my opinion.
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Old 04-25-2018, 06:24 AM   #8
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Interesting concept. I still prefer to buy and hold on the car for many years. To me it is still cheaper and I will get something for it when I sell it. Just my opinion.
Yep. See earlier thread on monthly payments. My own priority is travel- I'll drive and older but reliable car and spend the $600/month on travel! YMMV- I know cars are a passion for others. I'd just hate to see younger people latch onto this- it ties up a lot of money that could be used for saving for a down payment on a house or kids' educations.
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Old 04-25-2018, 06:50 AM   #9
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$600 seems a lot for a Volvo. My 2018 BMW lease is only $431pm for 3 years. Insurance is $365 every 6 months.
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Old 04-25-2018, 06:53 AM   #10
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Sounds like a good opportunity to pick up a used XC40 in a couple of years at a reasonable price!
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Old 04-25-2018, 07:14 AM   #11
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Subscriptions offer more convenience than a lease, but you do pay a significant price.

E.g. per leasehackr.com forums, a "good deal" on a negotiated lease is a monthly payment of 1% of the sales price, so $400 on a $40,000 vehicle.
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Old 04-25-2018, 07:16 AM   #12
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Subscriptions offer more convenience than a lease, but you do pay a significant price.

E.g. per leasehackr.com forums, a "good deal" on a negotiated lease is a monthly payment of 1% of the sales price, so $400 on a $40,000 vehicle.
That is a good metric. I think we did well as the MSRP on our BMW was ~$49k our lease payment is only ~$431 including taxes, GAP insurance and all maintenance for 3 years.
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Old 04-25-2018, 07:26 AM   #13
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Do these subscriptions have mileage limitations like a lease does? IOW, if I use it for 2 years and run up 60k or 100k miles do I owe more?
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Old 04-25-2018, 07:35 AM   #14
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Subscriptions offer more convenience than a lease, but you do pay a significant price.

E.g. per leasehackr.com forums, a "good deal" on a negotiated lease is a monthly payment of 1% of the sales price, so $400 on a $40,000 vehicle.
Thanks. But there has to be some assumed lease length with that.
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Old 04-25-2018, 07:38 AM   #15
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Thanks. But there has to be some assumed lease length with that.
Sorry, typical lease would by 36 months, 12,000 miles/year.

Though the best current GM deals are for 24 months, 12,000 miles/year.
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Old 04-25-2018, 07:45 AM   #16
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Do these subscriptions have mileage limitations like a lease does?
The Volvo subscription has a 15,000 mile/year limit.

Quote:
IOW, if I use it for 2 years and run up 60k or 100k miles do I owe more?
Yes.
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Old 04-25-2018, 08:08 AM   #17
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Sorry, typical lease would by 36 months, 12,000 miles/year.

Though the best current GM deals are for 24 months, 12,000 miles/year.
Thanks.

For me, 10K/yr is plenty. With more miles, I pay higher for more than I need.
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Old 04-25-2018, 08:33 AM   #18
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I don't see this as different than a typical lease. When I read subscription, I was thinking a lot more flexibility. I was talking to a friend and they mentioned a subscription concept where you're not tied to a particular vehicle. Basically you subscribe to have transportation. The thing that intrigued me was that if you wanted a sedan, you picked one up. If you need a pickup truck for a week, you swap for that. Need a top down vacation driver, go get it. I'd be more inclined to accept a premium for that type of service rather than what this appears to be which is just packaging together all costs and charging you a monthly fee.
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Old 04-25-2018, 08:48 AM   #19
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Looking forward to hearing details as the months go by. Seems like the dealer could choose to come up with a plan that has a minimal excess fee for this plan over the cost of buying, once resale of the vehicle is factored in, and the dealer is choosing customers that are of minimal risk.

I've never leased a vehicle as I feel like I didn't know the financial side well enough to do it.
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Old 04-25-2018, 09:25 AM   #20
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With the subscription plan, do you have to pay sales tax?

I know with a lease you have to and in Texas that is especially bad since the state requires you pay the sales tax upfront on the FULL retail price of the car, not just the leased portion. That's why a lease car in Texas is not such a good idea.
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