Should I Lease or Buy a Honda?
Should you buy or lease a Honda? It’s a common question, and it really depends on your goals, preferences, and financial situation. As you look at various Fairfield dealerships, keep these considerations in mind while you weigh your options.
|Who Owns It||You||Financial Institution|
|Up-Front Costs||Down Payment / Trade-In||1st Month Payment & Fees*|
|Future Value||Sales / Trade-In Value||–|
|End of Payments||Vehicle is 100% Yours!||Return vehicle, Purchase, or Trade it in!**|
* Leases often do not require any type of a down payment. All you usually have to pay is the first month’s payment, a security deposit, the acquisition fee and other fees and taxes. But, as with a purchase, if you want to lower your monthly payments you can always pay more upfront.** Most people return the vehicle at the end of the lease term. But some like to purchase it during their lease or at the end. Others like to trade it in before their lease is over. Just ask us about these different options before signing any paperwork and we’ll make sure you have your lease set up the way you want it.
Now that you’ve decided it’s time to buy a new vehicle, one of the factors you’ll need to consider is whether to buy or lease. Both have advantages and disadvantages, so it’s more about selecting the one that best fits your driving habits, lifestyle, and needs. To help you make an informed decision about buying versus leasing, the Performance Honda team would like to explain the advantages and disadvantages.
What Does It Mean To Buy a Vehicle?
You have a couple of ways to purchase a vehicle, but either way, you’ll end up owning the vehicle as personal property in the end. One way to purchase a vehicle is to pay the sticker price in full and walk away owning the vehicle outright. Most people can’t afford to put thousands down on a vehicle, so financing is the other way to purchase a vehicle.
When financing a vehicle, you’ll select a financial institution, such as your bank or credit union, to borrow funds for the bulk of the vehicle cost. The dealership can also typically set you up with offers from various lenders through its finance department, giving you ample choices regarding monthly payments, interest rates, and required down payments. Regardless of the lender, you agree to make monthly payments, including interest, over a set term to pay off the vehicle. Once the vehicle is paid in full, the lien will be released, and you’ll own the vehicle outright.
Your credit history and score will affect the interest rate and term offerings from various lenders. Those with a higher credit score typically receive the best or lowest interest rate offers. Lower interest rates mean a lower monthly payment or shorter term, keeping your payment at one you can afford. You can usually finance a vehicle between 24 and 72 months, depending on the age and value of the vehicle, with some institutions extending that as far out as 84 months. Shorter loan terms also typically mean lower interest rates.
Advantages of Buying a Vehicle
Purchasing or financing a vehicle, where you end up with personal property in the end, has several advantages, such as:
- Your vehicle is an asset.
- You have no limits on mileage driven each year.
- You can add customizations and upgrades to your vehicle to make changes that fit your needs or personality.
Disadvantages of Buying a Vehicle
Buying also has a few disadvantages, depending on your driving habits and needs, including:
- Higher monthly payments.
- Higher down payment required.
- Top-of-the-line trim level may be out of your budget.
- Newest model year is out of your range, forcing you to purchase a pre-owned vehicle.
- Lack of remaining warranty, making you responsible for all repairs and maintenance.
What Does It Mean To Lease a Vehicle?
Leasing is similar to an extended rental, as you borrow the vehicle from the dealership for an allotted amount of time and intend to return it when the lease expires. The dealership limits the miles you can put on your vehicle during the lease. When your lease expires, you have the option to buy out the lease or return it. If you choose to return it, you can either lease another vehicle or purchase one; either way, you won’t have the original vehicle as a trade-in or asset once your lease is up.
The monthly payment for your lease will be calculated using the vehicle’s expected depreciation during the lease term, plus interest and fees. You should carefully read the following information in your lease agreement:
- Monthly payment amount.
- Length of the lease.
- Current value of the vehicle.
- Expected depreciated value.
- Fees that can be added at lease end.
- Interest fees, rent charges, or money factor (i.e., the interest rate on which the lease is based).
- Early termination fees.
- Mileage limit and per-mile overage fees.
- Normal wear and tear definition and any fees for excessive wear and tear.
- Missed-payment penalties.
A credit score of 700 is generally required to qualify for leasing a vehicle, with higher scores lowering your monthly payment. You may still qualify for a lease with poor credit, but be prepared to pay higher interest rates and associated fees.
Advantages of Leasing a Vehicle
Leasing a vehicle can have several advantages, depending on your driving habits and wants. These advantages include the following:
- Lower monthly payments.
- Lower down payment requirements.
- Top trim levels with high-end features within your monthly payment budget.
- Latest model year within your budget.
- Vehicle covered by original manufacturer’s warranty.
- Not responsible for selling or trading the vehicle once your lease expires.
Disadvantages of Leasing a Vehicle
Just like purchasing a vehicle, leasing can have disadvantages, such as:
- Leasing may cost more in the long run.
- Most vehicle depreciation happens at the start of the vehicle’s life, which is the part of depreciation you pay on a lease.
- Early termination can be challenging and expensive.
- No customizations are allowed, as you don’t own the vehicle; if you choose to add customizations, you may owe penalty fees.
- When the lease expires, you have no vehicle.
Which Is Right For You: Buying or Leasing?
Buying and leasing are right for different drivers based on their needs and driving habits. Buying a vehicle might be your best choice if you drive many miles annually or prefer to customize your vehicle to fit your needs. Leasing could be better if you choose to have the latest and greatest vehicle model with high-end features. It might also be advantageous if you don’t drive many miles each year and want a lower monthly payment.
Let the Finance Team at Performance Honda Help
A valuable asset in the decision-making process for buying versus leasing can be the dealership you select. The finance department at Performance Honda is highly trained and knowledgeable on both options. One of our experts can discuss your driving needs and habits to help you decide whether you should buy or lease your next vehicle.
You can find us at 5760 Dixie Highway in Fairfield, Ohio with sales hours from 9 a.m. to 8 p.m. Monday through Friday, 9 a.m. to 6 p.m. on Saturday, and closed on Sunday. Call us at (513) 829-7300 or complete our secure online form to get started today.