Is a car subscription plan the right choice for fresh graduates?

It seems like car subscription programmes are all the rage nowadays, with car manufacturers like Renault, Nissan, and third party providers coming up with their own subscription services. With all the talk about depreciation when it comes to car ownership, we start to wonder if a car subscription is the way forward.

While alternative car ownership methods such as car leasing has been a common practice in many Western countries, these concepts are still relatively rare in Malaysia, where hire-purchase dominates the market. 

While subscribing to a car might sound weird, it isn’t too much of a stretch when we look at the bigger picture; by signing up to these services, you are essentially paying the provider a monthly fee for the usage of the car, not unlike online services like Netflix or Spotify. 

Subscription service providers like Flux promises peace of mind “ownership” by taking care of the laborious tasks like renewing your insurance and road tax, roadside assistance and carrying out car maintenance, giving you access to cars without the need of paying a down payment.

The Kia Picanto – the logical choice for fresh graduates.

Sounds too good to be true? Well, let’s get into the details. Say you are a fresh graduate looking for a simple car to get to and fro from work and the occasional mamak session with your friends, a small car such as the Kia Picanto will be the logical choice. The Kia Picanto is the lowest priced car available on Flux at RM814 per month (on a 3-year tenure period). Ignoring the refundable 1-month security deposit, the total cost of subscription after three years works out to be RM29,304

On the other hand, purchasing the same car through a regular hire-purchase – a seven-year loan period based on a 2.80% interest rate and 10% down payment – works out to be roughly RM639.30 per month in loan repayment. Seems like a steal, but we still have to tack on the annual road tax, insurance premium and general servicing costs. More importantly though, you will be paying that amount for the full seven years, as well as forking out almost RM5,000 for the down payment itself. 

The Honda City is a capable B-sedan, but is it something a fresh grad should be looking at?

For the sake of an additional data point, let’s have a look at the best-selling non-national B-segment sedan. A Honda City S that we found on the Flux website costs a monthly fee of RM1,314; the car typically retails for RM73,836 (without insurance). With the same hire purchase terms as the previous example (7 years on 2.80% interest), we worked out the monthly loan repayment to be about RM946.20 per month. Over three years, subscribing to the car costs about RM47,304, while costing about RM41,446 for a regular hire-purchase. 

If we are looking plainly at the numbers, the cost of “ownership” through a subscription plan does look pretty enticing, considering the added savings from your annual insurance premium, as well as maintenance fees. Moreover, you are also entitled to more flexibility and convenience with a subscription service. 

For those with a more exotic taste, Nissan offers their fully-electric Leaf through a subscription programme.

However do bear in mind that acquiring your vehicle through the traditional methods of hire purchase or even cash purchase, you are likely to receive discounts and ‘free’ maintenance packages from dealers and manufacturers.

At the end of your loan repayment, you also get to legally own the car, whereas customers of a subscription service will have to return their cars after the contract ends. Having a car to sell or trade-in can also help with financing your next car purchase, or better yet pass it on to a family member or friend in need!

Car subscription programmes like these certainly pose as an interesting option into car ownership, and we even had quite some discussion of our own at! Just like property, we Malaysians still can’t seem to come to an agreement between purchasing and renting, as both of these options do possess their own benefits and disadvantages. 

Proton recently announced that they are offering up to 100% financing for fresh graduates, with free maintenance too!

With this brief overlook, we think that car subscription services might be suitable for fresh graduates who do not have much in savings, or are not yet ready for long-term commitment of a car purchase. There are of course the option of pre-owned cars as well! 



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