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Everyone in the market for a new set of wheels is always talking about “buying” a car, but the truth is that there are more ways to get the keys to your dream ride than simply writing a check for the MSRP. In fact, we’d say that a strictly cash purchase is hardly common. Instead, most buyers opt for one of two options: leasing or financing.
These are two very different solutions that are equally compelling for their own reasons, which is why many are often unsure about how they compare. As a trustworthy Honda dealer near Woodbury, seeing this confusion inspires us to demystify the car lease. To do that, we’re turning to Noah Hanneman, General Manager of Buerkle Honda.
As our store’s GM, Noah has seen just about everything there is to see in the world of Minnesota car sales, which means he’s an expert on all things leasing. Whether it’s comparing leasing vs. financing costs or understanding how leases work, Noah knows it all like the expert he is. He kindly sat down and addressed these and many other points for the following leasing Q&A, so check out what he has to say -- then visit us to sign your own CR-V or Civic lease at our White Bear Lake Honda dealership.
Auto Leasing Q&A with Noan Hanneman, Buerkle Honda General Manager
How much of a down payment do I need to lease a car?
Ultimately, there’s no set number -- you can put down as much as you prefer, up to and including zero down. Many customers choose a “sign and drive” lease which means zero down. This means that the tax and licensing fees are rolled into the lease, thus increasing the monthly payment. The general rule of thumb is for every $1000 of down payment or equity, the monthly payment is reduced by roughly $30.
What additional costs will I be responsible for when leasing a new car?
Your state-required insurance would be your responsibility, as would damage that isn’t considered normal wear and tear. Some leases include complimentary vehicle maintenance for the lease term, but if that’s not the case, you may be responsible for routine service costs as well. Many leases make maintenance an “out-of-pocket” expense or offer add-on packages to cover this. Most additional costs can be minimized with available options discussed at the time of finalizing lease paperwork.
Can I lease a car with no credit or bad credit?
All vehicle brands have an assigned lender partner which handles the “financing” of lease transactions. Lease approvals begin with credit scores of 620+. The best or “advertised” lease offers are typically for credit scores of 700+. Exceptions are granted occasionally in situations where there are offsetting factors like good work history, residency, cash down, equity or history of on-time lease payments.
What’s the best length for a car lease?
36 months is a typical lease term. Preset mileage limits (without penalty) range from 10,000 - 15,000 miles per year. Note that the annual mileage is just a guide, and that the total mileage allowed is determined at lease inception. So, a 12,000 miles-per-year lease is 36,000 miles at the end of three years. Any mileage beyond this will result in an added depreciation cost.
Can I buy my leased car at the end of the lease?
Absolutely! You have three options at the end of your lease. The first is to buy it out for the predetermined amount based upon your residual value. The second is to turn it back in to the dealer and walk away. Third, you can have the dealer provide you with a value and determine if there is any equity to apply to another lease. Also, many brands offer loyalty incentives for you to re-lease.
Does a lease come with a warranty?
Yes! One of the benefits of leasing is that your car is typically always under warranty. You also will be driving the vehicle when everything is new, so consumables like tires and brakes should last the entire lease period.
How can I get the best lease rate?
Lease rates are typically referred to as a “money factor”. Thebest rates begin with credit scores around 700-720. However, there are many other factors which are considered. Our Business Manager can discuss this further with you at the appropriate time.
How much are monthly car payments for a lease?
Promotoded lease payments are a method of advertising. This means the advertised payments are typically lower and conventional financing. We regularly run specials on leasing and you can find an example of starting leasing payments by visiting our specials page at New Vehicle Specials
What happens when my lease ends?
You’ll be required to either turn in the car or arrange purchasing it at the stated residual value. To avoid rushing into this decision, we suggest keeping in contact with our team during your lease term. A good time to check in with our lease specialists is during your regular service appointments, as this kind of due diligence can result in learning about applicable Honda sales and specials before your lease is up. If you decide to wait, a good time to reach out to our team is about six months out from lease-end.
Is leasing a car cheaper than buying?
Leasing can be cheaper than buying if you compare the cost of leasing against the first three years of a traditional six-year financing contract. The first three years are considered the “honeymoon phase” of vehicle ownership. The next three years can result in additional expenses like tires, brakes and other maintenance. In other words, when you traditionally finance a car, the period during which the car is 3-6 years old is when out-of-pocket service expenses begin to accrue. Knowing this, leasing can be cheaper and less of a headache than financing and ownership, making it an ideal option for many shoppers.
Lease a Honda Near Me
This Q&A is just the tip of the iceberg when it comes to our knowledge and expertise on leasing a new Honda in Minnesota. If you have follow-up questions or want some personalized guidance in deciding if leasing is right for you, pay a visit to our showroom -- we’re the local Honda lease specialists you can trust. Contact Buerkle Honda today to work with one of our many car lease gurus!
