Leasing vs. Financing a Honda: Which is Right for You?

When the time comes to find your next ride at the dealership, you have one of two options: you can finance a vehicle and pay it off over time or lease it for a few years.

Both have their own unique benefits that are worth considering, and we figured we’d take a moment to highlight them so you can make an informed decision the next time you find yourself at our Honda dealer in Goleta, CA.

Benefits of Leasing a Car

When you lease a vehicle, you’re essentially signing up for a long-term rental, which typically lasts 2 to 3 years. You still make monthly payments, but after the lease ends, you simply bring it back to the dealership and turn it in.

Low Monthly Payments

When you lease a vehicle, your payments are calculated based off the value of the car at the beginning of the lease term vs. its estimated value at the end. The upshot is, since you’re not taking out a loan for the full value of the vehicle like you would when you finance a car, monthly lease payments are often lower. Sometimes, they may be significantly lower. This has obvious appeal because it can make a lease payment easier to fit into your monthly budget.

Drive the Newest, Nicest Models

Because the vast majority of leased cars are new models, and because the monthly payments are often lower, you may be able to afford a much better car when you lease. This allows you to pick a higher-level model or trim, which can give you access to tech, comfort, and safety features that you may have a harder time paying for otherwise.

Warranty Coverage

Since new vehicles are covered under the factory warranty, it’s highly unlikely that you’ll ever have to worry about paying for major repairs on your own. Many manufacturers also have complimentary maintenance programs like Honda Service Pass, which can take care of things like oil changes and tire rotations to save you even more money.

Lease-End Buyouts

One of the major things that deters shoppers from leasing is the lack of real ownership. Well, many lessees actually have the option to buy their car at the end of their lease term for a locked-in price. This can work in the customer’s favor, because sometimes, the car may be worth more than originally projected at the beginning of the lease, allowing them to buy it at well under market value.

Potential Financial Advantages

Some folks consider leasing to be a bad investment, but in reality, it depends on your situation. For instance, if you’re the type of person who likes to drive a new car every few years anyway, leasing can make much more sense than financing. You also avoid the possibility of winding up “upside down,” which can happen on an auto loan when you owe more than the car is worth. Furthermore, certain people may be able to reap some tax benefits if they use their lease for business purposes.

Benefits of Financing a Car

Financing is pretty straightforward—you take out a loan through the dealership or a personal financial institution, and that loan pays for the car. Then, you make payments over time, usually somewhere between 4 to 7 years. After the loan is paid off, you own the car free and clear.

Eventual Ownership

The simple fact is that some car shoppers are uncomfortable with leasing because of the mental aspect of not owning the car. When you finance, as long as you make the payments on time, it’s your car to modify however you see fit, and after the loan is paid off, it’s yours for as long as it runs and drives.

Long-Term Investment

Financing a car may cost more up front due to down payments, and it may also cost more monthly than leasing, but eventually, those payments will end. After that, as long as the car is still in decent shape, you can potentially drive it for years with very little money invested. This is particularly beneficial if you don’t put excessive miles on the vehicle during the loan period, and it can make for a much better investment than leasing.

Fewer Restrictions

When you lease a vehicle, there are restrictions on how many miles you can put on the car, and this may not work for shoppers who drive a lot or travel for work in their personal vehicle. You’ll also be expected to return your lease in good condition. Break either of these rules, and you may be charged a fee at the end of your lease, but when you finance, none of these stipulations apply.

More Flexibility

Lease contracts are pretty ironclad, and if you decide that you want out of your lease early, it could be costly. On the flip side, financing a car gives you more options to reorganize your finances if you need to, whether that means selling, trading in, or refinancing your auto loan to get a lower interest rate.

Pre-Owned Cars Available

Generally speaking, most dealerships only lease new vehicles. One of the biggest upsides to financing a car is that it gives you more access to used and certified pre-owned cars. This can give you way more buying options, and it’s also a great way to find an affordable car with lower monthly payments.

Honda Lease and Finance Deals Near Lompoc, CA

Still unsure which is right for you? Don’t worry, that’s what we’re here for. If you have any other questions about the leasing vs. financing debate, or you’d like to take a look at rates on our new vehicles, call us at (805) 755-4648 or contact us online.

While you’re at it, don’t forget to check out our new vehicle specials for low APR financing deals and low monthly lease payments on a brand-new Honda.