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Would you “Subscribe” to a Ram or even another vehicle?

troutspinner

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I’ve taken notice to the Volvo’s subscription plan they introduced about a year ago. It’s called Volvo Care. In short, you pay a monthly subscription price for 2 years. The example I seen was $600 for roughly a $36K car. If you’d like, After 12 months, you can trade the car in and select a new one, your subscription would restart at 2 years. They allow you 15k miles per year. I do not know of the overage fees but I would assume it works like a lease.

Their pricing seems right inline with what you would finance a car for but here is the interesting point of it. All taxes, maintenance and repairs are in that subscription fee and here is the big one for some, insurance is also included. Essentially, other than the subscription price, the only other thing you pay for is gas.

In an example from a dealer on YouTube, he mentioned the insurance as a huge benefit as you could be 23 years old living in NY and that subscription price is the same. You don’t get slammed by insurance for age or location.

I just found it interesting and would be curious if anyone here would consider doing that with a Ram or any other vehicle for discussion purposes. Is this just a new trend or is this the future of car “buying” similar to how many people pay / finance their cell phones today.
 

Wakesnowb

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Very similar to simply leasing a car. The California dealers are fighting this: https://www.theverge.com/2019/1/17/18187120/volvo-subscription-car-dealers-stop-fight-lease

To each their own and there is definitely something to be said about having a set payment with no surprises on maintenance costs. The insurance piece is nice. Definitely worth it if you swap out cars often (such as always get a new car every 2 or three years). For me personally, I try to get the most value for the long term. I enjoy not having a car payment after the financing period is over. I have not had a car payment for the last 15 years and have kept my 2003 vehicle until 2019. For me. it all comes down to how long you intend to keep a vehicle. Also, do they restrict modifications to the vehicles? Manufacturers make changes like this to make more money (make you spend more money over long term) therefore I do not like the idea of a subscription service personally.
 

CompuDav

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I like to lease cars and buy them out if I want to keep them. For me, it’s a low cost “trial run” that I can use to decide if I like or don’t like the car and also decide if it’s a lemon or not. I like that I can just say I will pay $25k or whatever on the lease over 3 years and if life changes/I don’t like the car/it’s a lemon, I just hand it back and walk away. But if I do like the vehicle then I can buy it out long-term and get the long-term value. I think of it a little like a “cheap” loan.

So... no I wouldn’t do this subscription option. Instead of paying about 33% the value of the car over 3 years or about 11% per year (my Ram residual was 55% of MSRP, or 67% of negotiated final price) at $600 a month for a $36k vehicle, you’re paying $14,400 total or 40% over 2 years (20% a year). And that is assuming you pay full MSRP on the $36k car.

Yes I get the 20% includes taxes and so on but even adding that in for the standard lease option you’re still better IMHO doing the standard lease. My lease on a $60k MSRP truck works out to just under $8,000 a year TTL included and without factoring in a trade in. In this example you’re paying $7,200 a year TTL + insurance on a $36k (60% cost) MSRP vehicle. Mathematically I think it is a rip-off.

I think this is aimed at millennials who just prefer to pay a fixed monthly fee as opposed to owning something outright. And for them maybe it works. Instead of paying for a bunch of Ubers or ZipCars, just pay this flat ~$20 a day and you have unlimited car access rather than having a more complex car lease/finance/cash outlay situation.

It’s worth noting that with both scenarios the vehicle is under warranty because the 36 month manufacturer warranty covers the lease. The difference is that under the two year subscription they get the car back and can sell it under warranty for 1 year. It works out really well for the dealership. The only added benefit seems to be insurance which you can easily get for less than the “subscription premium”.
 
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troutspinner

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Under both scenarios the vehicle is under warranty because the 36 month manufacturer warranty covers the lease. The only added benefit seems to be insurance which you can easily get for less than the “subscription premium”.

Maintenance is to be considered but it is cheap in that time period. Insurance is actually huge if you are in an area with high rates. For me, it would not be a benefit but I could see it as a big benefit in NY or CA.
 

CompuDav

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Maintenance is to be considered but it is cheap in that time period. Insurance is actually huge if you are in an area with high rates. For me, it would not be a benefit but I could see it as a big benefit in NY or CA.

I lived in CA. At most it was $100 a month and that was because I had a speeding ticket or two on my record. But yes if you have a terrible record or are a new driver it could be huge. I will concede that.

Yes maintenance is to be considered. That is true. And maybe on a Volvo it is more but I think you’d be looking at maybe 10 oil changes (one change per 3k miles) if you’re really aggressive with them so maybe $1k at most?

Idk, I just think this seems like a bad deal at those terms. At different terms I could see it being a great thing for buyers. I could see it being really cool if a) it didn’t hit your credit because it wasn’t a loan but a fee and b) if you always wanted that awesome fun “mid-life” crisis car but don’t want to commit to a ton of money or repairs. Like if Lamborghini or Aston Martin offered this, I could see it being more attractive.
 

Love2driveRAM19

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I have never leased a vehicle so my comments are from the outside looking in. I have always seen leasing-- chunks of down payment $2500 to $5k, then lowered payments for 24-36 months.

This would eventually lead to reducing the number of dealerships out there from a big picture standpoint as the manufacturer cut them out or minimizes how many are needed which leads to link Wakesnowb provided.

I could see saving some money with the insurance included, as long as all the other fees aren't there such as signing down payments, security deposits.

The example you gave of $600 payment on $36k car, breaking that down the other way (conventional loan) as an example:

-$36k financed at 4% for 60 months is $663
-insurance estimate $125
total---------$788/month VS $600/month subscription

This of course goes to keeping the consumer always on the hook of paying a monthly vehicle payment vs finally completing last payment and being payment free (of course still insurance).

Since I typically keep vehicle for years, the key for me would be after the "subscription" of 2 years, what is the cost on that vehicle (residual) that I may now keep and refinance the conventional way/is it worth it???

I am curious how Volvo comes out in the end? If the people continue to flip into new vehicles its a win for them. The resale value of the returned vehicles make it a profitable marketing strategy??? When you buy from manufacturer you can normally cut out the middle man (dealerships) but you still need a base of dealerships to buy from instead of everyone going to manufacturing plants.

free enterprise---prevent monopolies---(all the laws) whats in the best interest for the citizens??!!!
 

silver64

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its called creative selling. Its just another way to capture your business if you like the terms.
 

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