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Car subscription service Flux has launched a new Subscribe to Own feature which, as the name suggests, allows users to purchase the car at the end of the subscription period. The company touts greater convenience and a smaller initial outlay compared to a conventional hire purchase car loan.
As usual, a Flux subscription fee covers road tax, insurance, maintenance and general wear and tear, with customers able to select a 12-, 24- or 36-month plan. The fleet includes new and used vehicles from mainstream and premium brands, and the company has now added pick-up trucks to the fold as well.
The subscription begins once the user pays the start fee and the monthly fee. This means that they will pay less during the first year vis-à-vis a loan, Flux says, as the start fee is claimed to be at least 50% cheaper than the average downpayment.
The option to purchase the car is presented at the end of the subscription, at which point the user can pay the Guaranteed Future Value (GFV) – which itself can be financed using a car loan – to take ownership. They will have until the last 30 days of their tenure to choose to either exercise that option, extend the subscription, select another car to subscribe or simply return the car and walk away.
Included in the GFV are the processing fees for the transfer of ownership – such as to Puspakom or the Road Transport Department (JPJ) – but not road tax and insurance, giving the buyer the freedom of negotiating their own insurance premium. As with servicing and repairs, the entire process will be handled by a concierge, and the car will be delivered to the customer at the end.
To help illustrate how the whole scheme works, the company provided an example of purchasing a Honda HR-V 1.5 E (which retails at RM108,800) using Subscribe to Own on a 36-month plan, compared to a typical five-year hire purchase agreement with an interest rate of three percent per annum.
According to the table, the start fee is 58% less expensive than a 10% downpayment, at RM4,558 instead of RM10,880. Add to that a reduced monthly payment (RM1,868 versus RM1,877) and the elimination of ownership costs like road tax, insurance, maintenance and wear and tear, and you’re looking at a total spend of RM26,997 for the first year, a reduction of 33% compared to a regular loan.
The monthly fees will add up to a total of RM67,259 over the three years. At the end of the plan, the HR-V can be purchased at the GFV of RM72,888, which is nine percent lower than the projected market value. Financing the GFV with a two-year loan and RM3,936 in interest would put the total expenditure (minus ownership costs for the fourth and fifth year, which would be identical for both options) at RM148,640.
The final figure is six percent more expensive than the RM140,779 you pay via a hire purchase agreement, which would translate to RM131 more per month. Flux contends, however, that the buyer will enjoy greater benefits during the subscription period, including the aforementioned lower spend on the first year, a concierge service, driver and passenger personal accident coverage, emergency and roadside assistance, the availability of a replacement car during accidents and breakdowns and theft recovery services.
Flux also says its subscription does not impact a user’s credit score, and that its GFV is not affected by resale value fluctuations. All vehicles are independently inspected when they enter the fleet, and the company offers customers a three-day, risk-free return policy.
Users can also switch to a cheaper or more expensive vehicle at any point if they so wish, although they will need to pay a new start fee and monthly fee (the RM375 switching fee has been abolished). If they want to purchase that vehicle, they will also need to subscribe to a new plan, with a new GFV.