Should I lease or buy my Honda?

Leasing a Car VS Buying a Car

When making the decision to purchase a brand new vehicle there are generally 3 options people have.

The first option, and much less common option, is to come in with cash and purchase the vehicle outright. This is great for those who have the extra cash laying around, but often times you will miss out on discounts from manufactures offering financing and lease rebates.

The Second option is to apply for financing. This is a very common and popular option. You have the choice of finding your own financing prior to shopping or having the dealership help you find financing. It’s always worthwhile to see what the dealership’s financial department can offer you. Oftentimes financial institutions work directly with dealership offering low interest rates and rebates in order to encourage consumers to finance with them.

The third option is to lease. Leasing can be the best option because you only finance the depreciation of the vehicle. The drawback for people is often that they do not get to keep their vehicle at the end of the lease; however, there are always options to make an offer to buy at the end of your lease if you truly love your vehicle.

Paying cash isn’t an option that normally falls within the means of your average American buyer. So, for most, the choice comes down to one question. Should I buy a car or lease a car? Both are great options. This choice generally comes down to your vehicle needs and financial situation.

Should I Lease a Car, Truck, or SUV?

First, you might want to ask yourself these questions:

1. Do I plan on putting less than 15,000 miles a year on my car?
2. Will I want a new car in 3 years?
3. Do I want be able to drive the latest models year after year?
4. Would I prefer a smaller monthly payment?
5. Do I want a vehicle that is fully covered by warranty?

If you answered yes to these questions, then a lease option is probably right for you. Leases offer a lower monthly payment because you are not financing the entire value of the car. You only have to finance the calculated depreciation during the length of your lease. Leases often come with additional service fees so it is important to understand your lease agreement fully before signing. Also, a down payment on a lease will go directly toward that depreciated value cost and lower your monthly payment. The benefit here is that if your car costs $26,000, and your depreciated value over your lease term is 50%, then you are only paying on $13,000.

Should I Finance a Car, Truck, or SUV?

First, you might want to ask yourself these questions:

1. Do I plan on putting more than 15,000 miles a year on my car?
2. Will I want to keep this car for more than 5 years?
3. Will I be happy with this model year until I’m ready to trade-in?
4. Am I ok with paying a larger monthly payment?
5. Am I ok with paying extra each month for warranty coverage, or will I do the mechanic work myself?

Financing is a popular option. Banks are generally more than happy to make great financing offers on new cars and it isn’t too hard to find a great interest rate. Additionally, sometimes manufactures will offer rebates for financing through them. The difference between financing and leasing is that your monthly payment is based on the total value of the vehicle. So, if your vehicle is $26,000, then your calculated monthly payment is based on that total amount. In this case the owner incurs the cost of any depreciation in the vehicle.

If you are interested in learning more about the differences between financing and leasing, then call our financing department at Rairdon’s Honda of Sumner. Our financial team can help you understand the ins and outs of each agreement so you can decide which is best for you.