Should I Lease or Finance My Next Car?
Leasing vs. Financing
Comparing the two options
Should I buy or lease my next car? In short, there is no clear-cut answer. There are pros and cons to both options. The answer for you will depend on your finances and lifestyle. Financing, or buying, a new car is often cheaper long term, but usually requires higher monthly payments and a higher down payment. Leasing a new car will keep you in the newest models with lower monthly payments, but may surprise you with mileage and wear and tear fees at the end of your contract. We’ve written a few pros and cons down to help you decide what is best for you.
Financing a Car: Pros
Monthly Payments: Once you have finished paying off your car, it is yours. Until you decide to buy another car, you won’t have a monthly payment to worry about. The amount you will pay monthly is determined by several factors; including the down payment amount, interest rates on your loan, time-frame of the loan, trade-in value from a previous vehicle.
Equity: Throughout the length of your loan payments, you’re building equity, as long as your payments are outpacing the depreciation of the vehicle.
Wear and Tear: If you intend to use your car for anything other than impressing clients, this can be a huge pro. Life happens. Average wear and tear is covered in a lease, but you know you and what how you will use your car. If you don’t want to be worried about every scratch and crumb, stick to buying your vehicle.
Modifying the Vehicle: Once you drive the car off the lot, the car is yours to customize however you would like.
Mileage: You can take as many road trips as you would like. There is no mileage caps.
Credit Score: It is often easier for someone with not-so-good credit to finance a car than it would be to lease one. You may end up with high interest rates, but at least you would have a car.
Financing a Car: Cons
Monthly Payments: Depending on interest rates and your down payment, your monthly payments could be higher. Keep in mind that a purchased vehicle is considered a depreciating asset. Meaning it will lose value over time. Value goes down 20% just for driving it out of the lot. If you want to sell it later, or use it for trade-in value, it will not be worth what you paid for it.
Maintenance: The longer you have a car, the more repairs it will need and you will be responsible for them. Extended warranties are often available, but they won’t cover everything. Once the car’s warranty runs out, you will start having to pay out of pocket for all repairs.
Leasing a Car: Pros
Monthly Payments: Usually cheaper each month and leased cars used for business can be deducted from your taxes. You only pay the difference between the car’s price and what it’s expected to be worth at the end of the lease, or its residual value.
Maintenance: Many leases last about 3 years so the car is usually covered under warranty the entire time. You still must maintain the car, oil changes, tire rotations and recommended maintenance, but most unexpected repairs will be covered.
Newest and Shiniest: If you like having the nicest car on the block every 2-3 years, this is the option you’ll want. You will get a new car about every 3 years and you won’t have to worry about selling the old one. You bring the old keys to the dealership and they hand you the new keys. Of course, there will be a little more to the process, but in a nutshell, it’s really that easy.
Leasing a Car: Cons
Extra Fees: Mileage Overage Fees, Wear and Tear Fees, and it can be expensive to break your lease agreement early.
Buying the Vehicle: You may decide you want to buy the car at the end of your lease agreement. If so, you will then have to take out a loan (if you don’t have the cash on hand) that will often have higher interest rates because it is now a loan on a used vehicle.
Modifying the Vehicle: Be prepared to have all modifications undone before you return the car. You borrowed the car for a few years, the dealership likes it returned in the state it was given to you.
Credit Score: Leasing is rarely even a option if you have poor credit. It is not impossible, but can be more difficult.
Conclusion
Driving a new car is exciting. Always make sure to check and understand the terms of the financing option you choose. We always recommend running the numbers yourself. Be honest about your budget, needs in a vehicle, your lifestyle and your credit history.
Contact Waldorf Honda Today!
7 Things Your Car Dealer Usually Won’t Tell You
7 Things Your Car Dealer Usually Won’t Tell You
Here at Waldorf Honda, we want you to be informed about what to expect when you enter our dealership. There are many old tricks that car dealerships use that we want you to be informed of before coming in.
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That Advertised Price was a stripped down model
Saw that new car in the paper for $9499, only to find that 90% of cars on their lot are $15,000 or more? It was stripped down, manual transmission, roll up windows, with tiny 4 cylinder engine.
The Honda Difference. We don’t do that at Honda. Power Windows come standard on all our models, our ad prices are usually automatic transmission options, and turbocharged engines at the top of their class comes standard on many of our 2018 models.
2. You’re not the only one annoyed with sleazy used car dealers.
The industry has gotten a bad name by some rotten eggs. The truth is, the consumer protections that have rolled out into the car industry in the last 20 years were a direct result of people being treated unfairly.
The Honda Difference. We are the best reviewed dealership in Waldorf for a reason. We treat people right, and our old name Ken Dixon still stands for something in this town. We treat people right, and we make more money when you are willing to return again, or give us your friends as a referral
3. Get it in Writing.
On used cars especially, you need to get promises in writing. If any dealership, including ours, makes you a promise, ask them for a “we owe” which says in writing if you buy this car “we owe” you what ever we promised, like new tires, or fixed air conditioning.
4. Shopping around scares us.
We want to make a deal with you today. People that say they’ll come back tomorrow, often don’t. Maybe they find another car at another dealership that suited them better.
The Honda Difference. We are part of a network of over 20 dealerships. If you wanted your CRV with leather, we probably have one within our network of dealers. Just tell us what you want, let us find you the car, and move on to some other aspect of your life than buying a car.
5. It was in an accident.
If you live long enough, you will eventually buy a car that has gremlins. Maybe it has a pull to the right that an alignment just won’t fix. Maybe you realize in certain lighting that an entire side of your car has been repainted. Why? Its been in an accident, and it often devalues a car by several thousand dollars as soon as you take possession of it.
The Honda Difference. We are a certified Carfax dealer. Every car we sell comes with a free car fax report. Don’t get duped again.
6. The salesman you dealt with last year may not be around next year.
The auto business is notorious for churning and burning salesman. They don’t get treated right, and so they leave to find work elsewhere. They are used and abused.
Our difference. Many of the employees we have here, including Anna, Danny, Stormy, Saeed, and dozens of others, are still with us from the days when we were called Ken Dixon. Come on, you probably still have one of our pens!
7. Once we sell the car to you, you are forgotten
Many people complain that once the car dealer has their money and their signature, the salesman fall off the grid, and become unresponsive.
The Waldorf Honda difference. We didn’t get to be the best reviewed car dealer in Waldorf by treating people poorly. We stand behind our warranties, have an incredibly great service department, and we really really want to sell you another car when you’re ready for a new one.
Conclusion
We do things a little bit differently here, the old fashion way, and we’re doing quite well as a result. Come to our showroom, call us, or browse our inventory on our website to get more information.
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