Is a Car Subscription Cheaper Than Owning in Melbourne?

Cars
October 21, 2025

Is a Car Subscription Cheaper Than Owning in Melbourne?

By Kelly Fletcher-Jones

The Melbourne car market is evolving, and car subscriptions are emerging as a compelling alternative to traditional ownership. But when you crunch the numbers, is a subscription actually cheaper than buying? The answer depends on your driving habits, lifestyle, and how you value flexibility.

Understanding the True Cost of Car Ownership

Before comparing subscriptions to ownership, let’s break down what owning a car in Melbourne actually costs. Most people focus on the purchase price and fuel, but the reality is far more expensive.

For a mid-range vehicle worth around $35,000, Melbourne drivers face significant annual expenses. Registration in Victoria runs approximately $850 to $950 depending on your vehicle type. Comprehensive insurance typically costs between $1,200 and $2,000 annually, though this varies based on your age, location, and driving history. Service and maintenance average $800 to $1,500 per year, with luxury vehicles costing considerably more.

Then there’s depreciation, the silent killer of car ownership. A new car loses roughly 15-20% of its value in the first year alone, then continues depreciating at 10-15% annually for the next few years. On a $35,000 vehicle, that’s $5,250 to $7,000 vanishing in year one.

Add fuel costs of around $2,000 to $3,000 annually for average Melbourne driving, plus tyres, parking, tolls on CityLink and EastLink, and unexpected repairs, and you’re looking at a total cost of ownership between $12,000 and $15,000 per year, including depreciation.

What Car Subscriptions Include

Car subscription services bundle everything into one weekly or monthly payment. Your subscription typically covers the vehicle itself, comprehensive insurance, registration, routine maintenance and servicing, roadside assistance, and often the flexibility to swap vehicles.

In Melbourne, subscription prices vary widely. Budget options start around $350 to $500 per week for basic models, while premium vehicles run $700 to $1,500+ per week. Most services include a kilometre allowance, typically 1,000 to 2,000km per month, with excess charges for additional distance.

The Break-Even Analysis

Let’s compare a typical scenario. You’re considering a Toyota RAV4, which retails for around $45,000 new. If you finance this vehicle with a 20% deposit and a five-year loan at 7% interest, your monthly repayments would be approximately $715.

Adding insurance ($120/month), registration ($75/month), maintenance ($100/month), and fuel ($200/month), your total monthly cost reaches around $1,210, not including depreciation. Over five years, the vehicle might depreciate to $25,000, representing a $20,000 loss or roughly $333 per month.

Factor in depreciation, and your true monthly cost is approximately $1,543. A subscription for a similar vehicle might cost $600 to $800 per week, or $2,400 to $3,200 per month. At first glance, ownership appears cheaper.

However, this comparison shifts dramatically if you don’t drive much, don’t need a car full-time, or value flexibility highly. It also changes if you’re comparing against buying a new car every few years rather than running a vehicle for a decade.

When Subscriptions Make Financial Sense

Car subscriptions shine in specific circumstances. If you only need a vehicle for 6 to 12 months, perhaps while working on a contract in Melbourne or between permanent relocations, a subscription eliminates the hassle of buying and selling.

For professionals who need different vehicles for different purposes, the ability to swap between a sedan for city driving and an SUV for weekend getaways adds genuine value that’s hard to price. Young drivers or those with limited credit history often find subscriptions more accessible than securing car finance and affordable insurance.

The flexibility factor matters too. Life changes quickly, and being locked into a five-year loan or stuck with a depreciating asset can be costly. Subscriptions let you scale up or down based on your actual needs, without the commitment.

When Ownership Still Wins

Despite the appeal of subscriptions, traditional ownership makes more sense for many Melburnians. If you drive more than 20,000km annually, excess kilometre charges on subscriptions quickly become expensive. Long-term ownership, especially if you keep your vehicle for seven to ten years and maintain it well, significantly reduces your per-year costs.

For families needing a reliable vehicle day in and day out, the predictability of ownership outweighs subscription flexibility. Once your car is paid off, your costs drop dramatically, while subscription payments continue indefinitely.

There’s also the equity consideration. While cars depreciate, they retain some value. With a subscription, you’re left with nothing at the end except paid invoices.

The Melbourne Factor

Melbourne’s unique characteristics influence this equation. The city’s excellent public transport in inner suburbs means some residents only need occasional car access, making subscriptions attractive. Conversely, Melbourne’s sprawling outer suburbs often require full-time vehicle access, favouring ownership.

Toll roads like CityLink and the Eastern Freeway add costs for regular commuters, though both ownership and subscription models face these equally. Parking in the CBD costs a fortune, but if you’re paying for parking, you probably need regular car access anyway.

The Verdict

Is car subscription cheaper than owning in Melbourne? For most people planning to keep a car for five-plus years and driving regularly, traditional ownership remains less expensive, especially if you’re comfortable buying a quality used vehicle rather than new.

However, subscriptions offer compelling value for short-term needs, those requiring flexibility, or people who want to avoid the headaches of maintenance, insurance shopping, and eventual resale. The “cheapest” option isn’t always the best option when convenience and flexibility have real value.

The smartest approach? Calculate your actual driving needs, consider how long you’ll need a vehicle, and factor in your lifestyle. For some Melbourne drivers, paying extra for subscription flexibility is worth every dollar. For others, the discipline of long-term ownership builds better financial habits and lower costs.

The car subscription model isn’t about being universally cheaper. It’s about offering a different value proposition that makes financial sense for specific situations. Understanding where you fit in that equation is the key to making the right choice for your Melbourne lifestyle.