The process of choosing a new car often comes down to the age-old question: should I lease or buy? Both options have their pros and cons, and the right choice depends on individual needs and preferences. When it comes to purchasing a new Honda, it's important to carefully consider all factors involved, including budget, driving habits, and future plans. Let's dive into the details of leasing and buying a new Honda to help you make an informed decision and find the best solution for your unique circumstances.
Leasing a car is a type of alternative financing option that allows individuals to drive a new vehicle for a set period of time, typically two to three years, in exchange for regularly scheduled payments. Instead of owning the car, the lessee is essentially paying for the vehicle's depreciation over the lease term. At the end of the lease, the lessee has the option to purchase the vehicle, trade it in for a different car, or return it to the leasing company. The monthly payments are typically lower than a traditional car loan because the lessee is only paying for a portion of the car's value, rather than the entire amount.
Nearly one fifth of all new vehicles were leased in 2022. Depreciation is a cost that car buyers typically absorb; leasing a car takes this burden off of the buyer. Additionally, the leasing company often assumes the responsibility for maintenance and upkeep of the vehicle, ensuring that it remains in top condition for eventual resale after the lease period has ended. Many people who lease a car often buy the vehicle at the end of their lease.
When purchasing a new vehicle outright, many people don't realize the true cost that financing can add to the final price of the car over the lifetime of the loan. Assuming a new car valued at $25,000, with a 4.5% interest rate, and no down payment, and after sales taxes, you are likely looking at a payment of about $470 per month. The amount of interest paid for a 60-month loan will be just under $3,000.
When you lease a new vehicle, you have lower monthly payments with a lower down payment. You also can get a better car for less money. Repair costs and other service fees are often covered by the factory warranty and service contract. Instead of waiting to purchase a new car every five years, leasing a car lets you upgrade after two or three years, depending on the length of your lease contract.
Leasing a vehicle isn't for everyone. You don't get to keep the car at the end of the lease, though many dealers give you the option of buying your leased Honda at the end of the lease. Typically, leases limit your monthly mileage. If you go over the mileage, you pay a fee at the end of your lease. Wear-and-tear chargers are often an unpleasant surprise for some people at the end of their lease.
When you buy a car, you own it right. You can modify the vehicle as you want, drive it as many miles as you want, and you save money over the longer term if you buy a car. Over the life of the vehicle, you will pay more for interest if you have a longer loan term. It's also easier to be upside down on your car loan if you don't make a large enough down payment.
When you lease a vehicle, you agree to a set mileage. The most common lease allows you to drive your vehicle 1,000 miles per month over a three-year period. When you go over that mileage, you pay a fee when you return the leased vehicle to the dealership, which can range between $.10 to $.30 per mile.
Wear-and-tear fees are another hidden cost of leasing a vehicle. Generally speaking, your Honda lease will allow for between $500 to $1,000 of normal wear and tear. Your leasing contract will have all the details when you go to lease your vehicle.
Most people also don't realize that they have the option of buying the vehicle at the end of the lease. This is a great advantage because you can potentially finance the car for a lower monthly payment.
According to a 2020 study by the US Department of Transportation, the average Florida resident drove about 13,240 miles each year. If you are looking to lease a vehicle, you are a great candidate if you:
Many people who take public transit to work will often lease a vehicle for their personal use. A leased vehicle is often great for use on the weekends and for other recreational purposes. For many people, leasing a vehicle often allows them to drive a luxury trim without the higher payments.
If you are in the Miami area, you should consider working with Brickell on your next new vehicle. Whether you decide to lease or buy, our knowledge sales staff will help you find the right model and trim. Additionally, we can make sure that you are happy with your vehicle.