Leasing Answers and Information

The Myth Of Ownership vs. Leasing

Many people are leasing right now…they just call it "Owning". Do you have clear title to your automobile, or does the bank own your car? If you dispose of your automobile prior to paying it off, and taking clear title to it, then you merely have the use of the vehicle for a portion of its useful life. Even if you do become an owner, long-term automobile retention has its disadvantages. You now have an automobile worth a fraction of its original value that may not be as safe and reliable as it once was. In addition, the inevitable repairs can be costly, time-consuming and inconvenient. So, do you drive the old vehicle that you own and hope it does not break down, or do you acquire a new automobile and another monthly payment?

What Is Leasing?

Leasing is an alternative way of paying for the use of a vehicle. Leasing is a way to drive a new vehicle as often as possible with as little money changing hands as possible. No wonder this simple concept is becoming so popular! There are many misconceptions of leasing i.e., leasing is for business use only...leasing is for low mileage drivers...there is no equity in a lease...leasing is the same as renting...leasing requires a large payment at the end...you cannot trade in your vehicle on a lease, to name a few. The leasing industry is exploding because with lifestyle changes, tax law changes, inflation, and in a more service-oriented society more and more people are realizing the benefits of leasing.

Cash Flow Benefit (Money)

The cash flow benefits from leasing are-lower monthly payments and no down payment. Since you only pay for the depreciation that occurs during the lease term, your monthly payments tend to be lower. Lessees that meet strict financial requirements will not be required to make a down payment. Often times lessees choose to structure their lease with a cash reduction, perhaps from the equity of a trade-in, to further reduce the monthly payment. The beauty of leasing is the opportunity to invest your cash flow savings in appreciating assets while driving the automobile of your choice! Perhaps the worst "investment" you can make is your automobile.

Convenience Of Leasing (Time)

Typically, leasing is ideal for someone who changes vehicles often enough to always have a monthly payment. Buying is more suitable for someone who retains a vehicle for many years. So, the magical question is: "How long do you keep an automobile?" If there are no tax considerations, the financial comparison is virtually a toss up. If you use the vehicle for business, the comparison will almost always weigh on the side of leasing.

Lease Structuring

Duval Honda can give you objective advice in choosing the right automobile to lease. We believe that getting a new vehicle should be fun! We will provide you with a stress free, information rich environment in which to make a decision. All questions are good questions. In addition to helping you evaluate which vehicle will fit your needs, we will make sure that any questions you have will be answered by a knowledgeable professional.

Common Concerns

Concern #1: "I finance my cars so I can eventually pay them off."

Response: Only 19% of people who get a 60-month financing keep their vehicle long enough to make the 60th payment. If you trade before you pay off the loan, you have actually leased the vehicle without enjoying any of the benefits of ownership, including not worrying about your mileage and wear-and-tear charges, when you trade in the vehicle.

Concern #2: "I like to own my cars."

Response: If you are financing your car, the lender really owns it. You're likely to trade it in before you actually own it.

Concern #3: "I drive too many miles to consider leasing."

Response: If you drive a lot of miles and trade frequently, you really can't afford not to lease. You will end up paying for your miles in the form of a lower trade-in allowance when you trade your car in. With a Honda Financial Services lease, you can buy additional miles at 10 cents a mile. But when you trade in a vehicle, extra miles usually cost about 16 cents per mile or more.

Concern #4: "There are too many fees with leasing."

Response: The only Honda Financial Services fee is a $595 acquisition fee, which includes Guaranteed Asset Protection (GAP) insurance. There are no disposition, early termination, turn-in or purchase option fees with Honda Financial Services. Most car buyers want the GAP if they purchase or lease to protect you against many circumstances in case your vehicle is totaled.

Concern #5: "I don't want to have to worry about the wear and tear on the vehicle."

Response: Honda Financial Services waives the first $1,500 of wear and tear.* A 2007 industry wide poll taken by the National Automobile Dealers Association (NADA) showed that the average wear and tear charge on lease vehicles was $780. So the $1,500 waiver should cover most drivers.

Do you have additional questions? You can also speak directly to a leasing agent. Call us at (888) 536-4499.