Why Lease vs Finance

Why Lease over Finance?

Leasing is more than just a lower payment.  Many think leasing is similar to renting an apartment and in the end you don’t own anything.  Like a finance every payment you make reduces the unpaid balance of the lease.  The date your lease expires you will have paid down to the vehicle’s residual/lease end value, also known as the guaranteed trade in value. At this time, you have many options available:

  1. Trade it in – replace it with a new lease.
  2. Sell it yourself – often you can make a profit
  3. Buy it out – own the vehicle you have loved and driven
  4. Walk away – avoid any unexpected losses from market conditions

Leasing gives you many options

Lower your monthly payments – in most cases the lease payment is lower than the finance payment over the same term.  This is a great option to drive the car you want at a payment you can afford.

Lower your down payment – to achieve the payment you want, often you have to put down hard earn savings.  Leasing helps achieve your desired payment with as little as zero of out of your pocket.

Drive more vehicle – many customers find themselves leasing a vehicle they didn’t think would fit in their budget.

Lower maintenance costs – Avoid long term and expensive maintenance costs, the older a vehicle gets more is required to keep it in top running condition.  Leasing is short term and you can avoid higher mileage maintenance costs, ie spark plugs, timing belts, water pump and in many cases tires and brakes replacement.

Get top trade in value. – never have to worry what you will get for a trade in again.  A lease has the trade in value pre-determined and listed on the contract before you take delivery.

Have better record keeping for tax purposes. – for business use writing off your lease payment is much simpler to calculate come tax time, especially if you are a GST registrant.

Always have the latest safety features and technology. -  Honda engineers and design teams are continuing to make improvements with all their models.  Safety is so important to Honda that almost 100% of the new models have Honda-Sensing standard.  These safety features include; Forward Collision Warning, Collision Mitigation Braking System, Lane Departure Warning System, Lane Keeping Assist System, Road Departure Mitigation System, Adaptive Cruise Control.

Early termination. – Have the ability to terminate your lease early.  A lease like a finance may be terminated at any time through out the finance/lease contract. You would be responsible for finding find a buyer for your vehicle. The lessor or dealership can be an immediate buyer, banks/credit unions do not buy vehicles back.  The price will be compared to the lease companies or financial institution lien payout amount.  If the sale price is more; you can actually make a profit. if it’s less you will be responsible of the difference.  Both programs allow you to terminate early, the lease has an advantage because the taxes are not capitalized.

Depreciation protection – new vehicles start depreciation the day they are purchased/leased.  Any vehicles that are in a repairable accident can cause the vehicle’s value drop further and unexpectedly.  This can add extra cost’s at time of trade in.  With a leased vehicle you are protected from this as the value is pre-determined and listed on your contract.  Only the owner is responsible for these costs.

Frequently Asked Questions

  • I drive too many kms and I’m worries about mileage penalties so leasing wouldn’t work for me.
  • Actually, leasing makes the most sense for someone who drives high mileage rather than financing. In most cases we see people take a long-term finance to keep the payments low or similar to the lease payment. What happens is you end up depreciating the car very quickly and creating a high risk of reverse equity at time of trade in, this can cost thousands.  In a lease, extra mileage can be built in so you will have worry free driving and reduce the fear of extra costs at the end of the contract
  • the lease program sounds good, but after the lease is over, I don’t have anything.
  • Leasing creates options vs obligations. In a lease are only making payments on the difference between the sale price and the lease end value (residual). If ownership is your goal at lease end, simply pay the amount you haven’t pay for, we can help with those payment options as well.
  • What if I’m in a collision and my car is written off, what happens with my lease contract?
  • in event of a total loss your insurance company will treat the collision the same way if you owned or financed it. In a lease you are protected with GAP protection (deficiency between insurance settlement and bank payout) at no charge. 
  • Do I need to buy extra Liability insurance with a lease?
  • In an HFS lease you are required to have a minimum of $1,000,000. Of third liability insurance. The Lessor carries additional liability insurance as the owner, paying for extra is not necessary. 
  • Is it easier to get approved on a lease than a finance?
  • In some cases if debt servicing is an issue, because the payments are reduced it can be easier to get approved. 
  • Am I stuck in the lease contract for the full term of the lease?
  • A lease like a finance may be terminated at any time through out the finance/lease contract. Leasing has the tax savings advantage because the taxes are not capitalized, allowing for more flexibility. 
  • Do have to fix every dent and scratch?
  • No, Honda Financial Services allows for regular wear and tear. Minor scuffs and scratches are going to be expected.  Prior to your lease expiration Honda with arrange a third-party inspection to review the condition of the vehicle.  Any chargeable damages will be clearly laid out before you are required to return the vehicle.  Consider protecting your lease with Honda Lease Guard to fully protect your vehicle for the added piece of mind. 
  • Is there a difference in insurance premiums on a lease vs financing?
  • No, insurance companies don’t charge more for a lease over financing. But you may find savings in GAP and third-party insurance premiums with a lease.  Honda Financial Services has no charge GAP insurance and only requires a million-dollar third-party liability protection.  
  • Do I have to follow the maintenance schedule from Honda on a lease?
  • The requirements for maintaining your Honda is the same as owning or leasing it. 
  • Do I have to put a down payment on a lease?
  • You can put down as little as zero up and to a maximum of 25% of the selling price. 
  • Do I have to buy the car out after the lease is over?
  • All Honda leases are closed end leases, which means Honda Financial Services is responsible to guarantee the end value/residual value. The customers have options to walk away or buy it out or re-lease another Honda. 
  • What if I go over the mileage before my lease is up?
  • It’s Important to tailor your lease to the mileage you normally drive to avoid mileage overages. At time of lease end, there maybe mileage charges that will depend on what is set on your lease contract.  Contact us so we can review your options, many customers are able to re-lease with little to no charges. 
  • Can I extend my lease after the contract is expired?
  • There is some cases where HFS will grant a lease extension after the maturity date. In most cases a new vehicle is on order and its arrival date is past the lease end date.