Car subscription vs car sharing vs owning a car vs leasing

For many of us, having access to a car is a necessity. But thanks to the rise of car subscription and car sharing services, there are now alternatives to the traditional approach of buying or leasing a vehicle. Of course, the right option for you will depend on how often you drive, your financial situation and a range of other factors.

In this guide, we’ll compare car subscriptions vs owning a car, car sharing and car leasing to help you find the right option for your needs.

At a glance: Car subscription vs car sharing vs owning a car vs car leasing

Which option is the best choice for you? Check out the table below for a quick guide to when a car subscription, car sharing, leasing or buying could be best for you.

What is a car subscription?

A car subscription works in much the same way as a Netflix or Spotify subscription. Basically, you pay a monthly fee to use a vehicle – either for a fixed term of a few months or on an ongoing basis. Your monthly fee includes the use of the car, plus costs such as vehicle registration, insurance, routine maintenance and roadside assistance.

The vehicles offered by car subscription services are usually new or slightly used. You can generally choose from a range of brands and vehicle types, and may be able to switch vehicles as you wish. Most car subscription services have no fixed contracts and you can cancel your subscription when you want.

Roam is an example of a car subscription in Canada.

Pros of car subscriptions

• Ongoing access to a vehicle as long as you need it. Unlike car sharing, you have exclusive access to a vehicle for as long as you remain subscribed.
• No long-term commitment. You’re generally able to cancel your subscription at any time or at the end of the current billing period.
• Drive recent-model vehicles. Car subscription services typically offer a range of new or slightly used vehicles, which means you can access the best on-road performance and in-car safety tech.
• Ability to change vehicles as you need. Many subscription services let you swap your vehicle when you want.
• Try before you buy. If you’re thinking of buying a specific make and model of vehicle, you can use a subscription to take it for a long-term test-drive.

Cons of car subscriptions

• Can be expensive. The weekly or monthly subscription fee can often be quite high and you don’t have the benefit of owning the car as an asset.
• Other fees apply. Be aware that you’ll typically need to pay a refundable security deposit, while some services also charge a membership fee.
• Vehicle choice may be limited. The range of vehicles you can choose from will be smaller than if you were to buy a car.
• Watch out for insurance deductibles. If the vehicle is damaged while in your care, you may be required to pay a sizable deductible to help cover the cost of the insurance claim.

How much does a car subscription cost?

There are several costs to consider when choosing a car subscription company:

• Rental cost. Your subscription fee covers the cost of renting the vehicle and varies based on brand and class. It also includes insurance, registration and routine maintenance.
• Sign-up fee. Some car subscriptions in Canada require you to pay a sign-up or membership activation fee.
• Return fees. You could be charged fees if you return the vehicle late or in less-than-perfect condition.
• Fuel. You have to cover the cost of gas and tolls out of your own pocket.
• Security deposit. You’ll often need to pay an initial deposit that’s refunded once you cancel your subscription, provided you haven’t damaged the vehicle.

What is car sharing?

Car sharing is a form of car rental that lets customers use a vehicle on a short-term basis, whether that’s for a couple of hours, days or weeks. The cars are either owned by companies, like Zipcar, or by individual owners who rent out their vehicles when they don’t need them on marketplaces like Turo.

Booking vehicles is easily managed using car sharing apps. Once you’ve signed up for an account, you can book the vehicle you want for a specified time period. In some cases, you’ll need to visit the car sharing company’s physical location to collect and return your vehicle, but some car sharing services have vehicles parked in various city locations and provide self-serve access.

Pros of car sharing

• Only pay for a car when you need it. You have the flexibility to choose when and for how long you rent the car.
• Range of vehicles to choose from. Most car sharing services have a range of vehicles available, meaning you can choose different vehicles for different occasions.
• Not responsible for repairs and maintenance. You don’t need to pay for repairs or servicing.
• Avoid other hassles of car ownership. When you use a car sharing service, you can also avoid ongoing hassles like finding somewhere to park your vehicle near your home when not in use.
• Better for the environment. The eco benefits of driving less should not be underestimated. By using alternative transport, you can do your bit for the environment.

Cons of car sharing

• Choice of vehicles may be limited. You may find the type of vehicle you want isn’t available when you need it.
• Vehicle pick-up. You generally need to pick up and drop off the vehicle from a designated area, which may be inconvenient or prohibitive depending on your location.
• Availability depends on where you live. Car sharing programs are popular in urban areas where there are many convenient pick-up and drop-off locations. But if you live in a more rural area or even just not in the inner city, this option may not be available.
• Insurance deductible. It’s also a good idea to check just how much you’ll be out of pocket if the vehicle is damaged or stolen while in your care.

How much does car sharing cost?

Here are the costs you need to consider when using a car sharing service:

• Security deposit. You’re generally charged a security deposit that’s refunded if you return the car in good working condition.
• Rental cost. Your payment covers the lease of the car and varies depending on the type of vehicle you rent.
• Fees. You may be charged fees for driving long distances, getting the car dirty, returning it without a full tank of gas and a host of other reasons.
• Fuel. You generally have to cover the cost of gas and need to refill the tank before returning the vehicle.

Leasing a car

When you lease a car, you don’t pay to own the vehicle. Instead, you pay to drive a new vehicle for a specified period of time, typically between two and four years. You make a down payment upfront and then make monthly payments throughout the term of the lease, but unlike a traditional car loan, you don’t own the vehicle once the term finishes.

When you come to the end of your lease, you can either return the vehicle to the dealership or purchase it at its residual value.

Pros of leasing a car

• Flexibility. A lease gives you the flexibility to switch vehicles every few years if you want, without the cost and effort of committing to long-term car ownership.
• Drive newer models. Leasing lets you drive new vehicle models that have the latest tech and safety features, the best performance and that are much less likely to have mechanical issues than older vehicles.
• Lower monthly payment than car loan. Because you’re only paying to use the vehicle rather than buy it, your payments cover the cost of depreciation. As a result, the down payment and ongoing monthly payments on a lease are smaller than with a car loan.
• Avoid maintenance costs. Lease contracts vary, but some dealerships will cover the cost of routine maintenance during the lease term, potentially saving you hundreds of dollars.
• Option to buy. If you decide that the vehicle you’ve been leasing is perfect for your needs, you can buy it when the lease term finishes.

Cons of leasing a car

• The car isn’t yours. Despite making regular payments, you don’t own the car. A lease is basically a long-term rental, so when the lease ends, you’re no closer to owning a car.
• Expensive for the long term. Leasing may cost less initially than buying a car, but if you plan on moving to a new lease every few years, it’ll end up costing you more than purchasing a car.
• Fees apply. You could be charged a fee for excessive wear and tear of the vehicle, while a lease disposition fee commonly applies at the end of the lease.
• Mileage caps. There’s a limit on how far you can drive the vehicle each year, commonly around 25,000km, which won’t suit everyone’s needs.
• Good credit required. You’ll typically need a good credit score to qualify for a car lease in Canada.

How much does it cost to lease a car?

Leasing a car includes the following costs:

• Down payment. Making a down payment will increase the chance of your lease application getting approved and it’ll also result in more manageable monthly payments.
• Monthly payments. Your monthly payment covers the cost of using the vehicle, depreciation, interest and taxes.
• Security deposit. You may be required to pay a security deposit, usually equal to one monthly payment, when you take out a lease.
• Administrative fee. Most leasing companies will charge an admin fee to assess your application and set up your lease agreement.
• Wear-and-tear fee. Check the fine print to find out what fees apply for excessive wear and tear, and how the leasing company differentiates between acceptable and excessive.
• Lease disposition fee. This fee is charged at the end of the lease, but you may be able to avoid it by buying the car or taking out a new lease.
• Lease termination fee. This fee will also apply if you want to exit the lease early.

Owning a car

Car ownership involves purchasing a vehicle outright, either by using your own cash or by getting a car loan. The car is considered your personal asset and you’re free to use it as you wish. You can also sell the car at any time, as long as you’ve paid off your loan.

If you go this route, it’s helpful to figure out how much you should spend on your vehicle considering both cash and loan options.

Pros of owning a car

• Ongoing access to a vehicle. As the owner, you have complete use of the car whenever you need it.
• Greater choice of vehicle. You can choose whatever vehicle you want that suits your budget and needs, and you aren’t limited to the selection of vehicles available from a sharing or subscription service.
• You can use your car how you want. Want to let your dog ride in the car, work as a food delivery driver or make modifications to the vehicle? If you own it, you can.
• The car is your asset. You can sell the car whenever you wish and use the funds for something else.

Cons of owning a car

• Big investment. After buying a home, purchasing a car will likely be the biggest purchase you’ll ever make.
• Depreciating value. Cars are generally a depreciating asset and lose value over time. If you plan on selling your car, you’ll likely get less than what you originally paid for it.
• Limited to one type of vehicle. You’ll be limited to just the one type of vehicle you choose to buy, so you’ll need to make sure you choose the right car.
• Repair and maintenance costs. As the owner of the car, you’re responsible for any repair and maintenance costs. You also need to cover the costs of registration, insurance and car servicing.
• Cost of finance. If you need to get a car loan to purchase the vehicle, you’ll also need to cover the cost of repaying the interest on the loan.

How much does it cost to own a car?

There are several costs to budget for as a car owner:

• Purchase price of the vehicle. This is the biggest single cost of car ownership and can be covered by either your own savings, a car loan or a combination of the two. According to the autotrader.ca October 2022 Price Index, the average cost of a new vehicle is $57,519 and the average cost of a used vehicle is $37,141.
• Repairs and maintenance. You’re responsible for paying for all necessary repairs and servicing the car needs.
• Registration and insurance. You need to have the car registered and meet your province’s minimum insurance requirements to drive.
• Fuel. You need to cover the cost of gas. The Canadian Automobile Association offers a handy Driving Costs Calculator you can use to work out the annual cost of fuel, registration, maintenance, insurance and depreciation when you own a car.
• Cost of financing. If you use a car loan to purchase your vehicle, you’ll need to make monthly payments. Check out our guide to car loan interest rates in Canada to find out the current average rate.

Bottom line

Car subscriptions, car sharing apps, leasing a car and buying a car all have their pros and cons. The right choice for you varies depending on your budget, how often you drive and even where you live, so compare a range of choices to find a driving solution that suits you.

Frequently asked questions

• How is leasing a car different from a lease-to-own plan?

  When you lease a car, your payments cover the cost of using a car for a fixed period. Your money doesn't go towards any ownership stake or equity in the vehicle. With a lease-to-own plan, also known as a rent-to-own plan, you make regular rental payments that go towards owning the vehicle. However, be aware that lease-to-own plans can be expensive and you may end up paying two to five times the purchase price.

• What is the difference between car sharing and renting a car?

  Both options allow you to access a car for a short amount of time. The key difference between car sharing and car rental is that car sharing is an essentially self-run and automated process. Renting a car usually involves reserving a car in advance, waiting in line, signing papers and paying at the car rental company's physical location. Car sharing differs from car rental in that most of the process is done online or through a car sharing app, and can be done within minutes before picking up your car.

• What happens if I use a car sharing or car subscription service and get a ticket?

  You're responsible for paying the cost of the ticket. Depending on the company that owns the car, you may also be responsible for paying a processing fee directly to the car company.

• Do I have to pay for gas with a car sharing or car subscription company?

  Most companies require you to pay for gas, though some car sharing programs may have complimentary gas cards available for you to use.

• Is car sharing cheaper than buying a car?

  It depends on how often you use a car. If you only use a car occasionally, you may be able to save money with a car sharing service. But if you drive daily, you'll generally spend less if you buy a car of your own.

Written by

Tim Falk

Writer

Tim Falk is a freelance writer for Finder. Over the course of his 15-year writing career, he has reported on a wide range of personal finance topics. Whether you're investing in stocks and ETFs, comparing savings accounts or choosing a credit card, Tim wants to make it easier for you to understand. When he’s not staring at his computer, you can usually find him exploring the great outdoors. See full bio