We have had XM for 8 years or so, and as far as I know, there is no contract. You purchase the radio, then the monthly premium. If you prepay for a year, you get a better deal.
We use the Onyx in our car. I use an in-line FM modulator, and the sound is excellent. You have a choice of purchasing portable units, or your car may already have a stereo that is "XM or Sirius Ready". That means you would only need a permanent mounted tuner installed in your car.
Most newer cars come with radios that have XM or Sirius built into the radio, with a trial subscription. If you have one, you simply activate it and pay the monthly subscription.