Thinking about getting into a new vehicle but unsure whether you should buy again or consider leasing?
You’re not alone.
While an estimated 28 percent of Americans were leasing their vehicle in 2014, last year that number had climbed to around 32 percent.
While the decision depends on various factors, such as how long you plan to drive the vehicle and how many miles you’re likely to drive, leasing does offers some specific advantages.
In general, lease customers prefer to drive a new car every three years or so, although longer leases are available, and appreciate lower monthly payments. Certain business customers find additional tax advantages with leasing.
Customers who purchase their vehicles tend to drive them for five to 10 years and appreciate driving without mileage limitations.
“There are a lot of hidden benefits to leasing that people don’t know,” notes Lynnwood Honda’s New Car Sales Manager Gabe Moreno.
Here’s a look at some of the specifics:
- Drive the Vehicle at its Prime – In a lease, you contract to enjoy a new vehicle for a specified time, such as 36 or 48 months. “It’s an affordable way to drive a new car; when the lease is done, you can return the vehicle to the dealer, buy it and pay the residual value, or trade it in, and often you’ll have equity to apply to the new vehicle,” Moreno says. Some Honda Certified Pre-owned vehicles are also a leasing option, he adds.
- Less Cash Up Front – Another big advantage of leasing? It typically doesn’t require a substantial down-payment. AND, you can often pay the sales tax as part of your monthly payment, rather than a lump sum.
- Lower Monthly Payment – Monthly lease payments are generally lower than traditional financing because payments are based on the vehicle’s estimated depreciation. (You’re contracting to use a portion of the car’s value, rather than buying the entire car, Moreno explains.)
- A New Car More Often – Short-term leasing makes it easy to drive a new car more frequently, so if life changes demand a larger or smaller car in a few years, it can be easier to plan and adapt. You’ll also benefit from the most current technology and fuel efficiencies.
- Guaranteed Future Value – You needn’t worry about resale value. If your car depreciates more than the estimated residual value in your lease contract at full term, you can turn it in following your lease term. If it’s worth more, you have the option of purchase.
- Tax Advantage for Business Use – Leasing vehicle for business may offer larger tax deductions than buying – ask your tax advisor if this applies to you.
Where might purchasing be the better option?
If you typically keep your vehicle for five to 10 years, Honda Financial Services’ competitive rates and flexible terms may be your best choice for a new vehicle.
Some owners like that payment by payment, ownership equity may increase, and the longer they drive the vehicle after the contract, the more value they get from their investment. There’s also no restriction on mileage and you can alter the interior or exterior to suit your taste.