Expert Advice from a well-known consumer advocate magazine:

More than one-third of consumers lease their vehicles instead of buying them.  The greatest benefits of leasing are that you drive a newer vehicle that is almost always under warranty and seldom needs more than routine maintenance.

Before you either embrace or reject leasing, having a better understanding of this alternative to buying should make it easier to decide which is better for you.

What You Should Know

The basic allure of leasing is that you don't have to pay for (or finance) the entire cost of a vehicle, you only pay for the use of it for a specific period, usually from two to five years.  With a lease, your monthly payment is based on the difference between the vehicle's transaction price (the "capitalized cost") and what the vehicle is estimated to be worth at the end of the lease term (the "residual value"), financed at a particular rate of interest.

To keep costs down, choose a model that has a higher resale value.  Honda consistently have higher resale values than the average vehicles in each of the model classes that they compete in.  A higher resale value means that the lease will have a higher residual value and a high residual value means a lower lease payment.

Benefits of Leasing

The greatest benefit of leasing is that your monthly payments are lower with a leased vehicle than one purchased outright, which can enable you to obtain a larger or better-equipped vehicle for the same monthly cash outlay.  Alternately you may want a more expensive vehicle that you cannot afford on a loan, but on a lease the monthly payments become more affordable.

Typically you can secure a lease with very little money down.  When the lease period is up, you simply return the vehicle to your dealer without having to worry about a trade-in or selling it to a private party.

Leases also give you the option of purchasing the vehicle at the end of the contract at a predetermined price (the residual value).  Commonly with leases, one downside is that it is difficult to have any cash equity in the vehicle.   However with most Hondas the retail market value for off lease vehicles is often higher than the standard residual values applied to your lease.  This means that people are buying the same vehicle that you have just finished leasing for significantly more than it will cost you to buy the vehicle that you have been driving since new!  If the residual value is lower than the resale value then with a bit of effort on your part you may be able to get equity from your leased Honda vehicle.

Leasing can also be beneficial to those who claim their vehicle as a business expense.  Nearly all leasing expenses attributed to business purposes can be deducted.

Read the Fine Print

Leases do come with distance limitations.  If you have exceeded the total distance allowed when you return the vehicle, you’ll be assessed an overage charge.  However, if you know you’ll be putting on additional distance beyond what is normally allowed, you can purchase extra distance allowance at the star of the lease at a discounted rate.  Purchasing additional distance allowance at the start of the lease also has the advantage of lowering the option to purchase value for the end of the lease.

If you tend to be hard on your vehicles, think again about leasing, or consider purchasing “end of lease walk away insurance”.  Leased vehicles must be returned in excellent condition, with the proper tires, without large dents, deep scratches, window cracks, or torn upholstery, and with all accessories in working order; otherwise you may be assessed "excessive wear and tear" fees at the end of the lease period, which can be steep.  The “end of lease walk away insurance” offered by the dealer is an insurance policy where you are reimbursed for all charges related to the condition of the vehicle at the end of the lease.  After you are assessed and pay the damage charges to the leasing company, the insurance company reimburses you for those charges, up to a pre-determined limit.  The cost of the insurance is related to the amount of limit they will pay back at the end of the lease.  The cost of this insurance can be added to the lease payments and is often a negligible amount relative to the substantial potential costs associated with some lease returns.

If you're uncertain about your financial future, borrowing money (through a lease or a loan) might not be right for you.  Once you enter into a lease or a loan, it is binding for the entire length of the agreement, and it can be difficult and/or expensive to terminate early.  If you decide you want to get out of a lease or a loan to acquire another vehicle, you may be able to have the first lease or loan "assumed by someone else," or the dealer may take the car back as part of the new deal.  Having a loan or lease assumed is a process where a new person takes over your existing contract and they become responsible for the payments, insurance and all costs for the vehicle, which frees you up to acquire the new vehicle of your choice.

Government regulations require certain facts to be disclosed on lease orders and agreements, including the capitalized cost (borrowed amount), interest rate, up-front fees and taxes, any value credited for a used-car trade-in, the lease residual value and the amount to be depreciated (the amount you pay off through the term of the lease).  Make sure you understand the terms of the agreement that you are entering into, so that there are no hard feeling later.

Great Deals are Just the Beginning!

Leasing a Honda vehicle offers significant value to our customers.  With High Resale Value, Low Annual Maintenance Costs, Exceptional Safety, Ride Features and Fuel Economy and a Very Attractive Package of Lease Interest Rates for all of our Honda Models, there has never been a better time to Lease a New Honda Vehicle!