Honda Hot Topic: Car Leasing vs. Financing
Purchasing a car can be a significant decision. You want the peace of mind that you are making the best choice for your needs, which can often be challenging to determine. One of the big decisions in this regard involves financing or leasing a Honda. Here's a look at some of the pros and cons of each option from Brandon Honda to help you make the ultimate decision for you.
Pros of car financing
- You own the car:
The thought of being called a new car owner is an attractive proposition. You'll have the car to sell or trade-in when you're ready for a new one. Once you make your last loan payment, the car is yours, and you can do what you please. This can be great if you plan on selling it or passing it down to someone someday.
- You can build equity:
With each loan payment, you are building equity in the car, which can be helpful if your plan involves selling or trading it in. If you ask why building equity is so significant, ask yourself how much your home is worth. Equity is what you own, or the value of your investment, in something. Building equity through vehicle ownership can be beneficial for several prospects.
- You may get lower payments:
Leasing a Honda will cost more per month than financing one. So, financing may be the better option if monthly payments are a big concern. However, the catch involves a good credit score and some tax breaks. Your credit score sets the ground and is a significant determining factor in attaining a car loan.
Cons of car financing
- You have to make a down payment:
Most lenders require a down payment of 10-20% of the car's total value. This value may fluctuate depending on what you're willing to pay and what requirements the lender has set. Sometimes there can be a minimum amount required as well. You will have to set aside a significant amount even when you're in with monthly payments and car insurance premiums.
- You have to pay interest:
Interest is money you will pay on top of your loan amount. The yearly percentage rate (APR) can vary based on your credit score and other factors. If you happen to be one of the unfortunate ones with a high-interest rate, you will end up paying more money than you did through leasing or cash buying.
- You are responsible for repairs:
Unless you have an extended warranty, you will have to pay for all repairs and maintenance once the car's original contract expires. That is probably among the most significant downsides of car ownership, where no matter the magnitude of damage, you will have to pay out of your pocket.
Pros of leasing a Honda
- You can drive a new car every few years:
Leasing terms are typically two to four years. You can turn in your car and start leasing or financing a new one as your lease ends. So let's say your leased Honda Accord no more gives you that feeling of driving a new car. You can always get a newer model, such as Honda Civic 2022, once the lease on your previous vehicle is over.
- You have lower monthly payments:
Monthly lease payments are significantly lower than loan payments because you're only paying for the car's depreciation during the lease period plus interest, taxes, and fees. So while you're giving up your vehicle at the end of the lease, you're also not responsible for its resale value or any maintenance and repair costs that might come up.
- You don't have to worry about repairs:
As we said, leasing a Honda means you're not responsible for damages down the line. So wait, what happens when something goes wrong, and you need repairs? While your leasing company will likely cover some of the costs, it's ultimately up to the dealership to decide how much they'll charge you for things like excess wear and tear.
- You don't have to worry about selling the car:
When your lease is up, you can simply turn in the car to the dealership. You don't have to worry about finding a buyer or haggling over price.
Cons of leasing a Honda:
- You have to be careful of mileage limits:
Most leases come with mileage limits, typically between 10,000 and 15,000 miles per year.
You'll have to pay an ascertained fee for each extra mile if you cross the limit. So if you're someone with a long commute or who likes to take road trips, leasing may not be your best choice, and you should consider a car loan.
- You have to ensure the car is in good condition:
At the end of your lease, you'll be responsible for any damage to the car above normal wear and tear. So, if you are leasing a Honda Civic, you can't return it with dents all over the body or a cracked windshield. And if you do, be prepared for leasing companies to try and make you pay for the repairs.
- You might not be able to get out of the lease:
Some leases come with rigorous policies and fees if you try to cancel early. So, if you're leasing a Honda and then life circumstances change (a new job in another state, for example), you might be out of luck – and much money.
While financing on leasing a Honda, you should keep in mind the interest rates, down payment, and the length of the loan. Get creative with leasing or financing by researching all your options before you settle down for an alternative.
If you're looking for a trusted Honda dealership in Pinellas County, FL, look no further than Brandon Honda. With our extensive range of new and used Hondas, we commit to helping you find the perfect car for your needs. Our easy credit financing helps our customers to get behind the wheel of their dream Honda.
Start your application today!
- Financing your car lets you enjoy ownership.
- When you lease a car, you're just renting it for some time, but you pay taxes on it.
- Monthly payments differ for each option, but leasing is overall less expensive than financing.
- Leasing a gives you more freedom of choice in car selection.
- Brandon Honda, serving Pinellas County, deals in the best Honda cars for leasing and financing.