Car leasing vs car subscription: what’s the difference?

What’s the difference between car leasing and car subscription and how do they compare? Our guide explains everything you need to know.

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By Cazoo editorial team

Leasing is an established way of paying for a new or used car that can offer competitive monthly payments and the choice of a wide range of models. A car lease is not the only option if you want to pay monthly for a car, though – as well as traditional finance methods for car ownership such as hire purchase (HP) or personal contract purchase (PCP) there’s an increasingly popular new solution called a car subscription.

With a car subscription, your monthly payment includes not only the cost of the car but also your tax, insurance, maintenance and breakdown cover. It’s a flexible, convenient option that might work better for you. Here, to help you decide, we take a look at how a Cazoo car subscription compares with a typical car leasing deal.

How are car leasing and car subscription deals similar?

Leases and subscriptions are both ways of getting a new or used car by paying monthly for it. In both cases, you pay an initial deposit followed by a series of payments for the use of the car. Although you’re responsible for looking after the car, you never actually own it and you generally don’t have the option to buy it at the end of the contract.

With subscription or car leasing, you don't have to worry about any value depreciation or selling later, since you don't own the car. Both options feature monthly payments that can help you to plan your spending better, and the all-inclusive nature of a subscription makes this especially easy to do.

How much deposit do I need to pay and do I get it back?

When you lease a car, you usually have to pay a deposit upfront. Most leasing companies or brokers allow you to choose how much deposit you pay – it’s usually equivalent to 1, 3, 6, 9, or 12 monthly payments, so it could be anything up to several thousand pounds. The bigger your deposit, the lower your monthly payments will be, but the total cost of the lease (your deposit plus all your monthly payments) stays the same.

If you lease a car, you don’t get your deposit back when you return your car at the end of the contract. That’s because although it’s often referred to as a ‘deposit,’ this payment is also known as an ‘initial rental’ or an ‘initial payment’. In fact it’s best to think of it as a chunk of money you pay upfront to reduce the size of your monthly payments, similar to purchase agreements such as HP or PCP.
With a Cazoo subscription, your deposit is equal to one monthly payment, so you could be paying a lot less money up-front. The big difference compared with leasing is that it’s a conventional refundable deposit – at the end of your subscription you get the full amount back, usually within 10 working days, as long as the car is in good mechanical and cosmetic condition and you haven’t exceeded your mileage limit. If there are any extra charges, they’ll be deducted from your deposit.

Is maintenance included in the price?

Generally speaking, leasing companies don’t include the cost of servicing and maintaining your car in the monthly payment – you have to pay for that yourself. Some do offer leasing deals with maintenance included, but these will have higher monthly rates and you usually have to contact the lease provider to find out the price.

With a Cazoo subscription, servicing is included in the price as standard. We tell you when your car is due for a service and arrange for the work to be carried out at one of our customer centres or an approved garage. All you have to do is drive the car there and back.

Is road tax included in the price?

Most car leasing packages and all car subscriptions include the cost of road tax in your monthly payments for as long as you have the car. In each case, all the relevant paperwork (even if it is online) is taken care of, so you don’t need to worry about renewals or admin.

Is breakdown cover included in the price?

Leasing companies generally don’t include the cost of breakdown cover in the monthly payments on your car, so you have to arrange – and pay – for it yourself. Full breakdown cover is included in the price of a subscription. Cazoo provides 24/7 breakdown and recovery with the RAC.

(If you’ll be using your car for services or transport in exchange for payment, we’re unable to include RAC roadside assistance.)

Is insurance included in the price?

It’s highly unlikely that you’ll find a leasing deal with insurance included in the monthly payment. A Cazoo subscription includes fully comprehensive insurance on your car, so long as you meet eligibility criteria. You can even add cover – at no extra cost – for two extra drivers if your partner or a family member will also drive the car.

How long is a car leasing or car subscription contract?

Most leasing contracts are for two, three or four years, although one-year and five-year terms are available from some companies. The length of your contract affects your monthly cost and you usually end up paying slightly less per month for a longer contract.
Much the same is true of a car subscription, although you get the choice of a shorter contract as well as the option of easily extending your contract if you want to keep the car longer than you expected.
Cazoo offers car subscriptions with 6, 12, 24 or 36-month contracts. A 6 or 12-month contract may be ideal if you know that you’ll only need a car for a short period, or if you want to try out a car before you buy one. It’s a great way of seeing if switching to an electric car would suit you before committing to one, for example.

When your Cazoo subscription ends, you can return the car to us or keep your contract going on a rolling monthly basis that allows you to cancel at any time.

How many miles can I put on the car?

Whether you lease or subscribe to a car, there will be an agreed cap on how many miles you can drive each year. Lease deals that look temptingly cheap may come with mileage limits way below the UK’s average annual mileage of around 12,000 miles. Some may give you an annual limit of as little as 5,000 miles, although you usually have the option to increase the mileage allowance by paying a higher monthly fee.

All Cazoo car subscriptions include a mileage limit of 1,000 miles per month, or 12,000 miles per year. If that’s not enough for you, you can increase the limit to 1,500 miles per month for an extra £100 per month, or 2,000 miles for an extra £200 per month.

What does ‘fair wear and tear’ mean?

Car leasing and subscription companies expect to see a certain amount of wear and tear on a car when it’s returned to them at the end of a contract.

The amount of damage or deterioration allowed is called ‘fair wear and tear’. The British Vehicle Rental and Leasing Association has set specific guidelines for this and these are applied by most car leasing and car subscription companies, including Cazoo. As well as the condition of the car’s interior and exterior, the guidelines also cover its mechanical condition and controls.

At the end of a lease or subscription contract, your car is assessed using these guidelines to make sure it’s in great mechanical and cosmetic condition for its age or mileage. As long as you’ve looked after your car properly you won’t have to pay any additional fees when you return your car.

Can I return the car?

A Cazoo car subscription includes our 7-Day Money Back Guarantee, so you have a week from when the car is delivered to spend time with it and decide if you love it. If you change your mind, you can return it for a full refund. If you had your car delivered, your delivery fee is also refunded. If you cancel your subscription after seven days but before 14 days there’s a £250 charge for us to pick up the car.

After the first 14 days, you’re entitled to return your lease or subscription car and cancel your contract at any point but there’ll be a charge for doing so. By law, leasing and subscription deals have a 14-day cooling off period that starts when your contract is confirmed, giving you some time to decide if the car you’ve chosen is right for you.

With a car lease, most companies will charge you at least 50% of the remaining payments owed on the contract. Some charge less but this could still add up to a significant sum of money, especially if you want to cancel within the first year or two. If you want to cancel a Cazoo subscription any time after the 14-day cooling off period, there’s a flat £500 early termination fee.

Can my monthly payments go up while I have the car?

Whether you’re leasing or subscribing, the monthly payment indicated on the contract you sign will be the amount you pay every month until the contract ends.

You can now get a new or used car with a Cazoo subscription. Simply use the search function to find one you love then subscribe to it entirely online. You can choose to have it delivered to your door, or you can collect it from your nearest Cazoo Customer Centre.