Buy or lease a new vehicle?
When it comes to acquiring a new vehicle, many people wonder whether it's better to lease or finance their purchase. At Lombardi Honda, we understand that this decision can be complex and depends on many factors. In this article, we will guide you through the advantages and disadvantages of each option to help you make an informed choice.
The advantages of financing
Long-term ownership
The main advantage of financing is that at the end of the payment term, you own your vehicle. This is particularly beneficial if you plan to keep your car for several years. Additionally, with current interest rates, financing plans are often more advantageous than those offered by traditional financial institutions.
Competitive interest rates
Financing options for purchasing a new vehicle generally include very competitive interest rates, often between 0% and 5.9%. These rates are often lower than those offered by banks, making financing more attractive.
Even if you have the funds for an outright purchase, financing your vehicle can be more strategic. Financing at a low rate allows you to invest your money in more profitable ventures, such as a portfolio generating a 7% annual return. This also preserves your liquidity, leaving funds available for unexpected expenses or other financial opportunities.
The disadvantages of financing
Long payment terms
One of the main disadvantages of financing is the duration of the payments. While it may be tempting to choose a longer repayment period to reduce monthly payments, this can lead to higher interest costs and a situation where your car is no longer covered by the manufacturer’s warranty before you finish paying for it.
The advantages of leasing
Flexibility and fewer responsibilities
Leasing is ideal if you like to change vehicles every 3 or 4 years. You avoid the hassles associated with resale and can always drive a new vehicle, benefiting from the latest technologies and safety innovations.
Lower monthly payments
One of the major advantages of leasing is that the monthly payments are generally lower than those for financing. In fact, you only pay for the use of the vehicle over a specified period, rather than its full value.
For example, for a vehicle valued at $40,000 over 48 months, the monthly lease payment would be approximately $458.33, totaling $22,000, compared to $833.33 per month for financing, where you pay for the vehicle's full value plus interest.
This reduction in monthly payments allows you to better manage your budget, leaving more liquidity for other expenses or investments.
The disadvantages of leasing
Mileage limits
When you lease a vehicle, you must adhere to an annual mileage limit, often 24,000 kilometers. If you exceed this limit, additional fees may apply, making leasing less advantageous for those who drive long distances.
No ownership
At the end of the lease period, you do not own the vehicle unless you pay the residual value, often at a higher interest rate. If you plan to buy the vehicle, it may be more advantageous to finance the purchase from the beginning.
Final considerations
Before making your decision, ask yourself some essential questions:
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Duration of ownership: How long do you want to keep your vehicle? If you like to change frequently, leasing might be more suitable.
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Annual mileage: How many kilometers do you drive per year? If you drive long distances, financing might be more advantageous.
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Monthly budget: What is your monthly payment capacity? Leasing generally offers lower monthly payments.
Why choose Lombardi Honda?
At Lombardi Honda, we offer a range of financing and leasing options to meet your specific needs. Whether you are looking for a Honda SUV in Montreal, a Honda Civic sedan, or a Honda hybrid vehicle, we have flexible and advantageous solutions for you. Visit us today to discuss the best option for your next vehicle.
Don't miss our special offers! Visit Lombardi Honda in Montreal to discover our promotions on new and used vehicles, and talk to our experts to find the financing or leasing solution that best suits you.
