Leasing versus financing can be a confusing topic for consumers. Hopefully our explanation will take the confusion and fear out of this important discussion. Leasing has provided tremendous benefits for thousands of our customers; however everybody has different financial and driving requirements.
LEASE - If you enjoy driving a new car every three or four years, want lower monthly payments, like having a car that has the latest safety features and is usually under warranty, don't like trading and selling used cars, don't care about building ownership equity, have a stable and predictable lifestyle, drive an average number of kilometers, and desire overall lower maintenance costs - then you should lease.
BUY - If you don't mind higher monthly payments at first, like holding on to your cars, prefer to build up some trade-in or resale value (equity), enjoy the idea of having ownership of your car, like paying off your loan and being payment-free for a while, don't mind the unexpected cost of repairs after warranty has expired, drive more than average kilometers, prefer to drive your cars for years to spread out the cost, like to customize your cars, might have lifestyle or job changes in the near future, and don't like the risk of possible lease-end charges - then you should buy.
Questions & Answers
Question: I typically grow tired of my automobile in four to five years. Should I lease or buy?
Answer: You should probably lease. Typical finance terms are 60-72 months - why pay the higher payments if you are changing your vehicle before the loan is paid? When you finance your vehicle, you bear the cost of declining resale values.
Question: My car was involved in a severe accident and the repair cost was close to $10,000. Who would be worse off - a person who leased or one who financed?
Answer: The person who financed is in trouble here because the accident will cause a considerable drop in the vehicle's value. Providing the vehicle is repaired correctly, the person who leased can return the vehicle to the leasing company. The leasing company absorbs the depreciation caused by the accident.
Question: What is the difference between an OPEN versus CLOSED lease?
Answer: The consumer is responsible for the lease-end value in an OPEN lease. Conversely, the leasing company is responsible for the lease-end value in a CLOSED lease.
Typically, many third-party leasing companies have OPEN leases, whereas Honda Canada Finance has CLOSED leases. A CLOSED lease protects the consumer against vehicle depreciation.
Question: What is GAP Protection?
Answer: Most leases have automatic built-in gap coverage, while car purchase loans almost always do not. Gap coverage, or gap insurance, pays the difference between what you owe on your loan or lease, and what your vehicle is actually worth if your vehicle is stolen or destroyed in an accident.
Why is gap insurance important? In these days of long-term loans, refinanced loans, and little or no down payment, to be "upside down" - to owe more on your loan or lease than your car is actually worth is a regular occurrence. If your vehicle is destroyed, you could be "upside down" thousands of dollars without GAP protection.
Honda Canada Finance leases have GAP protection included!
Question: I have MORE questions!!
Answer: Ask us. Our job is to help you make an educated and informative choice with respect to leasing or financing.
We represent the majority of Canadian financial institutions and will secure the rate and term that suits your requirements. Many of our vehicles have finance specials through Honda Canada Finance Inc. (HCFI) that are simply too good to pass - see us for details!
We lease our vehicles exclusively with Honda Canada Finance Inc. (HCFI) because there is no better! HCFI leases have attractive rates, included GAP Protection, and guaranteed lease-end values. If you truly want peace-of-mind leasing, you've come to the right place!