Can't decide whether to purchase a car or subscribe to it? Read below to know what suits your needs the most.
Whether you use it to commute to work or take long road trips with your friends and family, a car today is a necessity.
But that comes with its own challenges. Based on your finances, you will need to decide how much to spend on a car, can you actually afford a car in India or are there better options?
Due to the high cost associated with owning a car, most millennials are inclined toward subscribing to a car. But is a car subscription worth it? Let's understand it.
Car Lease vs Car Subscription
Before we dive into how advantageous subscribing to a car is, we must understand the primary differences between a lease and a subscription to a car.
Although both are great alternatives to car\buying, there are a few slight differences.
Pros of Car Subscription
1) Drive the Latest Cars From Leading Manufacturers
India is gradually getting accustomed to renting or subscribing to a car over owning one.
Apart from third-party automobile dealers, many leading car manufacturers like Hyundai, Maruti Suzuki, and Nissan-Datsun are also offering their latest fleet on rent on a yearly subscription basis.
Based on your budget and interest, you can subscribe to a car for up to three years. Don't like it? Return it. No questions asked.
2) No Expensive EMI
Not all of us can afford to buy a car in solid cash.
Most of us prefer car loans. But with it comes high-interest rates.
Hence, you have to pay a substantial amount as interest.
3) No Down Payment
When subscribing to a car, you only have to pay a predetermined fee, unlike a loan.
If you are taking any car loan, you have to pay at least 10% of the car value as a down payment, which is a considerable amount to arrange for many millennials.
Hence, a subscription makes having a car much more accessible.
4) No Stress About Servicing, Road Tax, Roadside Assistance, and Insurance
Your monthly car rental fee commonly includes these fees.
Also, if the car needs servicing, you wouldn't have to take the stress of getting it to the repair shop or making payment.
It's the responsibility of the rental company. Hence, you can enjoy a hassle-free car driving experience.
5) Tax Rebate
The tax rebate is one of the highlights of car subscription plans.
Yes, you can avail a tax rebate of up to 30% on your subscription fee.
Hence, renting profits you in this manner as well.
6) No Need To Be Concerned About Reselling
Since you are subscribing to a car, you do not need to be concerned about its resale value if you want to upgrade to a better car.
You can return it to your dealership without any loss due to the heavy depreciation of its value.
Cons of Car Subscription
While all the parameters mentioned above make car subscriptions exceptionally lucrative, you must also consider their downsides before making any decision.
1) Expensive Cost
Slowing production, inventory shortages, and dealer markups have made the decision more difficult.
For starters, there are fewer cars to subscribe to in 2022 than in previous years, making subscriptions more expensive.
2) Limitation in Customization
A subscription is not for you if you like to customize your car with better accessories, machinery, or color.
Since the company owns the car, you are not allowed to change it permanently.
While returning, you must ensure it is in the same condition as when you subscribed.
3) You are not owning anything despite paying hefty money
While in the short term, a subscription seems lucrative, its value for money is much lesser than owning it.
For instance, if you are paying ₹15,000 monthly for 4 years of using a hatchback, you are paying ₹7,20,000. But, a standard hatchback car you can own is ₹5,50,000.
So, despite spending an additional ₹1,70,000, you do not own anything.
Buying a new vehicle, like purchasing a home, is one of the most significant financial decisions you'll make.
So, before you make any hasty or emotional decisions, ensure you calculate the payment, your existing expenses, cost of maintenance, and resale value. Evaluate what works best for your budget and requirement, then take the decision and enjoy a stress-free driving experience.