Auto Loans vs. Honda Leases | What's the Difference?

If You're Unsure About Whether You'd Like to Lease or Buy With a Loan, Check Out the Advantages to Each Below:


Not everyone takes the same path to the driver's seat of that new Honda; some folks from Farmington Hills prefer leasing their Honda Accord, Civic, HR-V, CR-V, Odyssey, or Ridgeline, while others would rather buy with a loan. Neither one is inherently better than the other, it really just matters what you want out of your personal Honda ownership experience. In the section below, we're going to explore some advantages to each, so you can see which one would work best for your unique financial situation.


Benefits, Advantages, & Drawbacks of Leasing or Buying a New Honda Model:

Leasing

Pros & Cons to Leasing:

  • Pros:
    • While both leases and loans require monthly payments, those payments reflect different costs; leases are based on the cost of depreciation, while a loan payment goes toward paying for the overall cost of the vehicle, plus the interest of the loan. On average, monthly lease payments will generally be lower than monthly loan payments.
    • Another great advantage to leasing is the ability to move onto something new, fresh, and fantastic every few years. Simply trade your leased vehicle in at the end or your terms and move onto a great new Honda lease. Simple, easy, exciting!
    • Lease-end options also mean that you can choose to purchase your leased vehicle at the end of the lease if you really can't bear to part with it!
    • You generally only lease a new vehicle, which means that vehicle will very likely remain covered by the manufacturer warranty for your entire lease. This can be a great advantage since many repairs could be totally or partially covered for the entire time you have the vehicle in your possession.
  • Cons:
    • There's a little less freedom with leasing: you have to stick to a maintenance schedule or risk a penalty fee at the end of your lease. You also cannot make customizations or unapproved alterations/repairs to the vehicle.
    • There's also a provision for mileage when it comes to leasing, so driving over that allotted mileage could also result in penalty fees. Same goes for excess wear and tear. A little wear is expected, but dents or truly excessive damage will get you penalized.

Buying

Pros & Cons to Buying with a Loan:

  • Pros:
    • While monthly loan payments tend to be higher than monthly lease payments, they do go toward building equity in your vehicle. When you lease, your payments don't build value for you.
    • When you lease, you can't customize your vehicle at all, but when you buy, customization is yours to explore. This is because you own the vehicle and you won't be returning it to the dealership at the end of any lease terms!
    • Owning your vehicle brings with it another benefit you might not consider when you're looking at buying a new vehicle: the ability to sell. You certainly can't sell a leased vehicle, but when you own your vehicle, you can choose to sell it if you'd like.
  • Cons:
    • As we alluded to in the outset, though monthly payments for an auto loan will work toward building equity, it could be considered a drawback that your monthly payments for a loan also tend to be bigger than monthly lease payments.
    • Another potential downside: depreciation. When you lease, your payments are based on the cost of depreciation, but when you buy with a loan, you experience that depreciation yourself. This can sometimes make GAP insurance necessary-it covers the difference between what you own on your loan and the value of your vehicle after its big depreciation hit.

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