My Thoughts about Leasing

So you’re shopping for a new car and you’re from the Okotoks, High River or even the Calgary area - no matter if it's North, South, East or West. You’ve been researching the web for sometime and you know which model you want. But now you’re at a standstill - how should you pay for it? Who should you buy it from? Who do I trust? Exit everyone else - enter myself, our team and Okotoks Honda. Let us help.

Situational Analysis: Let’s say you wanted to finance your next Honda. Doing so with a finance loan could require a $600 monthly payment, whereas that very same Honda could be leased for maybe $350 a month.

It’s one of those perpetuating questions, and everyone you know seems to have an opinion. The low hanging fruit and easiest way to take care of this dilemma is to LEASE = cash flow. Sure, if you continue to lease, you will always have a monthly payment. But who doesn’t these days...

Let me help you break down the difference between a financed loan and a lease:

If you buy a Honda outright and you just don’t have the cash to pay for it, you would have to take out a loan - either through your own financial institution, one of many lenders dealerships offer and in our case, Honda Financial Services. Assume you have no cash down payment and the car price is $30,000; that means you would have to take out a loan for $30,000 (plus any applicable taxes and fees) PLUS potentially dealing with interest charges for borrowing that money.

Now, with a lease, instead of borrowing the full purchase price of the car ($30,000 plus taxes and fees), you only borrow the amount the car would depreciate over the term of the lease. If you chose the average lease term of 4 years, the expected market value (also known as residual value) would be approximately be $15,000 based on regular wear and tear. This essentially means you would only have to finance the difference between the purchase price and the residual value. Financing $15,000 would yield a lower monthly payment than financing $30,000+, even with a shorter lease term. This is the single most important reason lease payments are lower than finance payments.

So with leasing, you get peace of mind. Furthermore, you also have the upgrade wow factor. Let’s break this down. Since lease options are generally between two and four years, Honda's are almost always going to be fully covered by warranties and driving them should be stress and problem-free. This sweet spot are the best years of a Honda's life. Once the lease term is up, you can easily trade in your Honda for the latest model without having to inject any additional cash (unless there are punitive damages) and keep your payments similar to your original lease payment. Of course, all things must be equal (trim, lease term, mileage allocation, condition of vehicle etc)

On the other hand, if you opted to choose a five-year finance plan to purchase the car, monthly payments would stop after five years and you would solely own the vehicle. However, historically and traditionally, you warranty coverage would be completed, mileage would be higher and potential issues could arise.

Going through this process, you would have to consider more than just the difference between monthly payments and term. Over longer periods of time (example: 7 year term), there will be major maintenance requirements that need to be factored into the equation. However, for the most part, a person who drives responsibly and pays attention to Honda Canada’s routine maintenance will come out ahead of the game.

There is no rule or law that says you have to drive your bought Honda into the ground. If you want to upgrade and have the latest and greatest, you have the option of selling the car any time. After a few years, there should be equity built in the car which can then be used as a down payment on the next vehicle.

As usual, there is a HUGE tradeoff. With the leasing option, you will pay a premium in exchange for a lower monthly payment and very few concerns and stress about Honda's reliability, quality and routine service. With the finance option, you would gain if you make the commitment to follow Honda’s maintenance and resist the urges of potential vehicle upgrades.

For more information on why leasing your next Honda is the best option for you, send me a DM and it'll be my pleasure to help. Why does Okotoks Honda do what we do? Why do we stand out from the rest? We focus on the total customer experience. No matter where our clients come from - North, South, East or West. Calgary our out of town. With our seamless, easy and transparent CLEAR Philosophy. Our catered customer experience was designed to provide a completely transparent purchase experience. This is what makes it efficient and easy to buy a Honda from us with the benefits of our value added services. There are many reasons to visit Okotoks Honda, South of Calgary – the #1 Google Rated and Reviewed Honda Dealership in Okotoks, Alberta, Canada. Make the trip and find out.

Our family-run business is committed to providing the highest customer satisfaction possible without any hassle or stress.