Are you happy with your HONDA LEASE?

[DesignDawg]

Hey all,

Wife and I found a lease deal on an Accord that's hard to pass up today. I have been reading up on lease details and how they figure them, and I am thinking we're getting a pretty good deal. I want to hear soem feedback before I decide, though. I fyou are leasing a new vehicle from honda, how do you feel about it?

Ricky
DesignDawg

 

[DataFly]

We're about to make a similar lease, though on a different car, so I am wondering the same thing.

Bump

 

[DesignDawg]

Thanks for the bump. Hey peeps. If you're not CURRENTLY leasing one, have you before? Back in the day, leases sucked, especially on cars with bad resale value. What I'm wondering is, since hondas have such a high resale, did you feel that you had any considerable equity on your lease when it was done?

Ricky
DesignDawg

 

[DesignDawg]

Wow. Nobody leasing hondas, huh?

Ricky
DesignDawg

 

[RossMAN]

Just curious, I am going to buy a new car in late 2002 and will have to choose between the Toyota Camry and Honda Accord. I wish the Camry would get a new updated styling revision.

What qualities made you choose the Accord over the competition?

 

[PattySmear]

Well I am leasing. Not a honda though... a VW Bettle.

 

[DesignDawg]

RossMAN,

One nig feature: The price. You can't touch the wheel on a Camry for the price we're paying for this Accord. Also, Accords are higher in resale value than camrys. KEEP IN MIND, camrys are #2 on the list, not far behind. Resale value is a big consideration, because it's how they determine the lease payment. THey take the car's new value, subtract the estimated value at the end of your lease, and that's what you pay. If the car depreciates very slowly and very little, you don't have to pay as much.
Like I said, Accords are much cheaper than Camrys. Can be, anyway.

Patty,

So how do you feel about your lease? Good? Bad? Why?

Ricky
DesignDawg

 

[IBhacknU]

how long is the lease... what is the residual value. Some of the leases that seem really good have such a high residual value there's really only one option at lease end; give the car back.

 

[DesignDawg]

IB,

Obviously, the residual is very high. It's a promotional residual on this particular accord that makes its lease cheaper than the lease on ANY civic in the lot. The lease is for 39 months, which isn't bad. However, despite the high residual, giving it back isn't the only option, because with this particluar lease, the purchase option at the end of the lease isn't the residual value. It's a fixed amount stated in the lease. --And it's less than the residual. That's why I think this lease is too good to pass up. If we decide to buy the car in the end, we actually wouldn't end up paying much more than if we had bought it outright to begin with. That's the info we have gotten so far, which is why I want to jump on it. However, I want to hear from some other people on honda leases, and see if they got similar deals, and how well it's working out.worked out for them.

Ricky
DesignDawg

 

[DesignDawg]

As a matter of fact, IB, since you seem to understand leases pretty well, let me lay this one you:

I haven't gotten EVERYTHING I need in writing yet (just applied and got accepted for financing today...going back Monday morning for all the specific numbers in writing), but what he told me about the purchase option after the lease is, "We just consider what you have paid on the lease a payment toward the car, and you only owe the remainder of the price of the car." Notice that he did NOT say "You owe the residual value of the car." If that were the case, we would lose our shirts. But it's not. As a matter of fact, I DO have in writing the details of another national promotion on accords, and it says that the purchase price at the end of the lease will be $XXXX.XX. This is how my contract will be worded. --And when you add the purchase price owed after lease to the total amount paid ont he lease, it only ends up being about $1,000 more than the original price of the car. NOT BAD for a lease. Not bad at all, I think.

For those who do not understand
Usually, or at least back int he day, you essentially lost whatever you paid on your lease. You paid the lease for 3 years, then if you wanted to buy it, you had to pay the residual value of it. This price is the value that they estimate it will be worth after your lease runs out, and it's how they figure out how much your lease will be. Well, if a $20,000 Honda only depreciates $4,000 over the time of your lease, and you paid $10,000 over the the threee years of your lease, if you wanted to buy it when you were done, you still owed $16,000 (the residual) In the end, you paid $26,000 for a $20,000 car. NOT a good deal, by any means. Plus, since you lease for 3 and then financed for 5, you pay essentially 8 years of interest on that car. Makes it even worse.
The way THIS lease works, let's plug some fake numbers: The car is $20,000. The residual is 16,000. After 3 years, I will have paid $10,000. If I want to buy, I will only have to pay approximately the remaining 10,000. In teh end, I pay $20,000. MAYBE $21,000. But for that extra $1,000, I have bought the right to pay bills about half the normal size for the first 3 years. Pretty good trade-off. Also, If I want, I could choose to purchase, then SELL the car for more than the remaining $10,000 I still owe, (considering the residual -which is the wholesale value, not reatil- is a good $6,000 more) and make off pretty good on the car. If I had to pay the residual, selling it would do me no good. So, as IB said, my only real option would be to just give the car back.

Ricky
DesignDawg

 

[The Stigenator]

if I were you I wouldnt lease for the following reasons:
1. you dont get to keep the car and after making payments if you want to keep the car you got to put in another 7K+ or so.
2. Not cost efficent if you are not going to stick to 12K/yr
3. Doesnt help building equity
4. Requires you to get Full coverage insurance (liablity+comprehensive+collision)
5. Depending on the lease (open or closed) you have to pay for damages (body or else where).

personally DD I prefer buying on a long run its better.

 

[DesignDawg]

T_g_g,

Thanks for responding. I guess I should have gotten my last post in before you posted. Like my last post says, #1 isn't true, #3 isn't true, and well, the others aren't really factors to us. We will easily stick to the mile limitations, first of all. Also, we would definitely NOT get a new car and not insure it fully for collision and comprehensive. It's too costly a thing to not insure fully. We already got quotes, and it's not gonna be too much (about 800/yr for both of us). Also, This is a closed term lease, so we wouldn't have to pay damages. OTOH, there ARE more strings attatched with a lease, and I do recognize that. However, BUYING an ACCORD is not feasible for us right now. The note would be at least twice the lease (this particular one), and though we could get a cheaper car (some sub-compact American model) and possibly make the notes (which probably STILL wouldn't be as low as this lease), our top priority here is dependability. There are no American cars we trust enough to want to pay for and own. The premium you pay for an import pays off in the long run. I firmly believe that. So, while I see the points you make about the lease, at least right now, it doesn't look like they really apply in this particular situation. Also, as I haven't mentioned yet, we are both first-time car buyers. No established credit (besides acouple of credit cards), new jobs (both started in Jan.), and no real equity. I don't see us getting a better deal than no money down, no payments for a month, and such a low payment (WITH NO CO-SIGNER). BTW, yes, if it sounds to you like we can't qualify for this lease, we have applied, and been accepted. All we have left is to sign on the line and pick up the car. --If we end up doing it, that is.

Ricky
DesignDawg

 

[RossMAN]

The_good_guy raises some very good questions which I'm sure that you are already aware of.

It sounds like you like the option of buying the car at the end of your lease, can you list the potential reasons as to WHY you would NOT buy the Accord after the lease? I'm guessing the lease probably affords two conveniences:
1) Lower monthly payments?
2) The option to return the car after 3 years, no questions asked?

 

[IBhacknU]

I have had a few leases in my day. I do have some understanding of them (but by no means an expert). They are all about numbers, so you should be able to figure out if they make sense for you or not.

My understanding of a residual value is just that, it's a set purchase price of the automobile at the end of the lease. If the total of lease payments plus that set amount is only $1000 greater than the price of the car, then it could be a good deal. Is there any money being put down? A large security deposit?

Obviously you want everything in writing. I have encountered salespeople of various integrities. My gut feeling says not to beleive every word they tell you.

Back to the whole numbers thing. I know you said you're heading back down there Monday to get specific numbers. Do everything in your power to take those numbers home and look at them without someone hanging over your shoulder.

nevermind about the money down part above. I see that answered in another reply

 

[IBhacknU]

BTW... another benefit to a lease are the possible tax deductions if you use the car for business expenses.

 

[Rastus]

Leases suck. You will take it in the shorts on the back side. Especially if you go over the mileage. You will pay for any door dings that occur. The ONLY time it is worth it to lease a vehicle is if you own a business, and can deduct the lease payments on taxes.

 

[DesignDawg]

Ross,

Yes, the bigest benefits of the lease are the lower price (MUCH lower), and the option to just take this one back, and get a new one in 3 years. The only reason I can see not wanting to buy it in the end is because we would just want to take it back and do something else.

The options would be:

Take it back- No more car. No money for the car. No trade-in. Gotta get a new car.
Re-lease it (used lease) - continue to pay low notes, get the saem car for 3 more years
Buy it- eventually you own it, and can sell it. Also, you will have it for trade-in.

So, the deal is, like T_g_g said, the lease doesn't really build much equity. It certainly builds CREDIT, but no equity. After all, when your lease is up, you've got nothing. HOWEVER, that doesn't have to be a bad thing. During your lease years, you can save up for a down payment on a new car. When your lease is up, give it back, go somewhere else, and buy a new car with your big down payment. The money you save on the notes of the lease can be put into a savings account and collect interest to make a good down payment. That way, in 3 years, you don't have to worry about selling a car or getting ripped on your down payment.
The way some people do it, you lease for 3 years, take it back, start a new lease on a new car that day. Since leases don't really require down payments, you basically end up just getting a new car every 3 years and paying a continuous car note. You can get more car for less money, and always have a new one. It works great, until you stop. Then you have nothing. --And you have to get something. That's the drawback of a lease: You never own a car. It's never yours. And once you stop leasing, you have nothing.
However, here's our situation:
Right now, we get by. We live somewhat comfortably, but no extra. In almost exactly 3 years, though, we will be making about at least 4-5 times as much money as we are now. I'm in grad school, and when I get out in 3 years (60-hour degree), my starting job will pay about 3 or 4 times our combined income right now.
Right now, we can afford a lease. We will lease for 3 years, save a little money on the side, and PROBABLY at the end of the lease, we will just give the car back. By that time, we will have a substantial down-payment saved up, and then we will be able to afford to BUY a new car. --And knowing that, in the LONG RUN, it's a better deal, we probably will. Right now, though, I'm thinking it's lease. Some people lease all their lives. And why not? It has undeniable benefits, doesn't it? Who knows what will happen. AT any rate, I think this is the smartest plan for us right now.

Ricky
DesignDawg

 

[Ferocious]

Leases do suck. And I speak from experience. But often consumers don't have a choice if they want a new car. I can buy my vehicles now...and it's sooo much better.

Some of it definately has to do with the leasing company your dealing with. Make sure to read the fine print carefully, and then read it again. I'm very well educated, and I mis-interpreted a contract once and ended up paying a $400 return fee after a two year lease was finished.....and the salesman (lol) said there was no fee at all.

 

[DesignDawg]

IB,


<< My understanding of a residual value is just that, it's a set purchase price of the automobile at the end of the lease. >>


Not exactly. The residual is the estimated wholesale value of the car at the end of the lease. It is not necessarily the purchase price at the end of the lease. Usually it is, and has been in the past, but it doesn't have to be. If it were, it would be a bad deal to buy a honda after the lease, because of the high resale value. Basically, with a lease, you pay the depreciation of the car. That way, when they sell it at auction, they have lost no money. They get much less for it at auction, but they have also gotten your payment to cover the loss. Of course, your payment covers MORE than the depreciation of the car, so they make money. If they sell it to you for the residual, they make the same amount.

Ricky
DesignDawg

 

[IBhacknU]

and another thing... don't go getting any extended service contracts. Obviously you won't need them on a leased car (well, they're pretty useless altogether, but that's another thread).

For many of the reasons you're naming, a lease may be the option for you. I told myself that I never wanted to lease again. The idea of a new car every couple of years is great, but the idea of making a car payment for the rest of my life is not.

Want some other ideas?

Check out these thoughts (halfway down the page). The entire article is a good read, as is this article.

 

[arcain]

Edmunds.com also has an excellent Confessions of a Car Salesman article that is in some cases similar to the last article pointed to by IBhacknU.

 

[Finality]

Anone want to answer a question for me?

Suppose you want to buy a $30K car. Leases are over 2 years? Getting the average interest rate on lets say an Honda (Nissan Maxima prefered ) what kind of payments per month are we looking at? Secondly what kind of payments would it be if we just wanted to pay the car off in installments over the 2 years?

I've never done a lease or known anyone who has so any info would be good

 

[Doggiedog]

I leased my Honda Prelude SH in 97.

I knew I wasn't going to be driving that much and figured my priorities would change so I opted for the shortest available leasing options.

I got a 24 mo/12K per year lease. The car was selling for something like $26k ($23k was probably the negotiated amount). Since the resale value of the Prelude was pretty high, I think I got a pretty good deal on the lease. It was $350/mo and considering it was a 24 mo lease, I think it was pretty good.

I know that Honda does a major model change every 4 years while doing a cosmetic change every 2 years on their vehicles. That is another reason why I wanted to keep the lease short.

Like it was mentioned above, there are certain specifics to leasing which I am sure you are aware about. If you plan just to use the car occasionally you are likely to not exceed the mileage limit (I came in at 20K for 24/mo). However, if you do use it to commute regularly, I wouldn't suggest leasing. You mentioned a 39 mo lease. You should be aware of the warranties of the car. I believe Honda has a 36 mo warranty on their cars. That would likely be the reason why leases for 39 mos are better that 36 mos.

I did go through a hassle while leasing from Honda though. I went to get a Silver Prelude S manual at a local dealer. We worked out the details and signed an agreement and I put down $1500 as a deposit (not cap cost). The dealer told me he could get the car in 2 weeks. I waited 6 weeks and they told me to come over to pick up my car. They then showed me a Black Prelude S in automatic. I told them that wasn't what I ordered and they gave me a hard time about it. Upset, I went to another dealer and they had a Black Prelude SH in the showroom. I worked out a better deal with them and took it. I went back to the old dealer to get my deposit back and they refused. First the salesman started yelling at me then he got the pitboss and he started threatening me. I told them I gave them more than ample time to get the car I wanted and they screwed up not me. I left there without my deposit. I then made numerous phone calls to Honda of America and they wouldn't help me. I got one of my lawyer friends to draft me a threatening letter to the dealership and only when I did that did they relent and give me my money back. All in all, I was happy with my car but unhappy at the scummy ways dealers try to get you.

If I were you, I would be reluctant to give the dealership any money upfront just because of my experience.

 

[warcleric]

The question I have is, on a leased vehicle after say 2 years you have no equity in the car, if I decide to get another car at the end of the lease then I just turn in the lease car and dont get anything <except maybe my security deposit> towards the new car for it, correct?

 

[bigbootydaddy]

ok, i financed from honda, at least their support is very helpful....then again in car sales, almost everyone is your new best friend.