Finance vs. Lease
How can we help you with financing your next car? It can be confusing, but doesn't have to be. Your auto finance choices are broader than ever, with various terms, great rates and leasing options.
When you lease, you pay only a portion of a vehicle's cost, which is the part that you "use up" during the time you're driving it. Leasing is a form of financing and is not the same as renting. You have the option of not making a down payment, you pay sales tax only on your monthly payments (in most provinces), and you pay a financial rate, called money factor, that is similar to the interest on a loan. You may also be required to pay fees and possibly a security deposit that you don't pay when you buy. You make your first payment at the time you sign your contract for the month ahead. At lease-end, you may either return the vehicle, or purchase it for its depreciated resale value. You may be charged a lease-end disposition fee.
As an example, if you LEASE a $20,000 car that will have, say, an estimated resale value of $13,000 after 24 months, you only pay for the $7000 difference (this is called depreciation), plus finance charges, plus possible fees. You return the car at lease-end, or buy it to own it.
What are the benefits to leasing?
Leasing is like renting, you only pay for what you use. Payments are based on the difference between the lease end value and the vehicle cost plus lease finance charges. Taxes will be included in the monthly payment rather than the full cost of the vehicle.
- A New Car More Often: With lower monthly lease payments over a shorter period of time, you can drive a new vehicle more often.
- Flexible Terms
- Keep More Cash to Use or Invest
- Low Monthly Payments: Lease payments are traditionally lower than retail payments on the same vehicle.
Excessive Wear and Tear
If you are returning your vehicle at lease end, your vehicle will be inspected by an independent company to determine if there is any chargeable damage. Chargeable damage can include: dents, paint damage, missing equipment cracked or chipped glass, mechanical damage, holes, tears or burns to upholstery. You are responsible for either repairing identified damage to acceptable standards prior to returning the vehicle or paying the amount indicated on the inspection report plus applicable taxes.
The yearly kilometer allowance with HFS is 24,000 or 20,000 if you decide to go with a low km option. At lease inception, you can purchase additional kilometers.
Automatic Guaranteed Asset Protection (GAP)
If your leased vehicle is involved in an accident, vandalized or stolen the vehicle may have to be written off. To insurance companies a "write off" means fair market value minus your deductible. Your insurance settlement may not always satisfy your monetary obligation. Our Future Value Lease offers you protection against these situations. The monetary GAP between your insurance settlement less your deductible and your lease obligation is covered automatically by our GAP. Some conditions may apply. See your local dealer for details.
Total Cost of Lease Transaction
The total cost of lease is the total monthly payments plus any amounts paid to reduce the cost of the vehicle ie: cash down payment, vehicle trade-in plus applicable taxes, vehicle licensing and registration fees.
Lease Down Payments
Down payments are not required on a lease. In a lease situation, you may choose to make a down payment in order to reduce the monthly lease payments. Down payments on leases cannot exceed 30% of the Total Lease Price.
Leased Vehicle Price (Total Vehicle Price)
Gives you the transaction price and is also used to calculate your lease payment. While taxes are not included in this price, it does include all equipment, accessories, freight and dealership fees.
You are responsible for insurance coverage. Required coverage typically is detailed in your lease agreement.
Closed End Lease
At the completion of the lease, you can choose to purchase the vehicle for a pre-determined price shown on your lease contract plus applicable taxes or return it without further obligation. If you decide to return your car, all you have to do is make sure you have not exceeded your kilometer limit, that any outstanding fines have been paid, and there is no excess wear and tear on the vehicle.
Cash Due At Delivery
Most lease agreements require a first monthly payment on delivery of the vehicle, licensing, Tire Stewardship Fee & Air Conditioning Recovery Fee.
Why Buy or Finance?
When you pay for the entire cost of a vehicle, regardless of how many miles you drive it or how long you keep it. Monthly payments are higher than for leasing. You typically make a down payment, pay sales taxes in cash or roll them into your loan, and pay an interest rate determined by your loan company based on your credit score. You make your first payment a month after you sign your contract. Later, you may decide to sell or trade the vehicle for its depreciated resale or trade value.
When you BUY, you pay the entire $20,000, plus finance charges, plus possible fees. You own the car at the end of your loan, although its value is less than the $20,000 you initially paid.
With the Honda Financial Services regular program you can tailor your purchase to reflect your individual needs. Your equal monthly payments are determined using competitive rates and 24 - 84 (84 offered on new contracts up to 72 on used) month terms. Together with the dealer you can work out the financing arrangements that suit your budget and your needs best.
- Simple interest method to calculate interest charges
- PPSA registration fee
- No kilometer charges
- No wear and tear charges
Monthly loan payments are typically higher than monthly lease payments because you are financing the total cost of your automobile which includes all applicable sales taxes and purchase price.
Open Retail Loans
All retail loans are open and you may pay out the finance contract at any time without prepayment penalties.
You are responsible for insurance coverage. Required coverage typically is detailed in your financing agreement.
You are responsible for maintaining the automobile. A maintenance schedule is outlined in the owner's manual.
One of our Financial Services Managers would love to sit down and meet with you to go over our finance and lease options we can offer you! Contact one of our Financial Services Managers for more information or call (705) 949-7222.