By Ruth Bayang
NORTHWEST ASIAN WEEKLY
Who doesn’t love that new car smell?
That shiny, unscathed, gleaming new toy in the garage…
There is more than one way to get into a new car. But which is better?
Some will say cash is the only way to go.
Most others need to decide between leasing or financing.
The correct answer, said Tim Miller, General Sales Manager of Honda of Seattle and Toyota of Seattle, is “it depends.”
“What’s your long-term plan?” Miller asked. “If you plan to keep your car forever, then pay cash for it or finance it.” But if you don’t know, Miller said leasing is a better option.
Think of leasing like a long-term car rental. The pluses are: you get a brand new car. You can even custom order it with all the features you want. And Honda and Toyota of Seattle took a page out of Amazon’s playbook — they offer home delivery for any vehicle purchased there, not just leased vehicles.
When leasing, you have a residual value which is the guaranteed price you can purchase the vehicle for after the lease. This way you know up front what it will cost to purchase your lease at the end of your lease term.
Miller told the Northwest Asian Weekly that 33 percent of his dealership’s customers choose to go with a lease.
There is little cash required up front on a lease. But you do have to pay what is known as “drive-offs” — this is your first monthly payment, licensing fee, and a negotiable dealer documentary fee of $150. At the end of a lease, you can choose to walk away, buy the car outright, or extend the lease.
Newer model cars come with new technology and safety upgrades, said Miller. So leasing is a good way to always stay in a newer car. At the end of each lease, you can enter into another lease, and another brand new car.
Miller said there is more paperwork involved with a lease. Another downside is, you’ll always have a car payment. But typically, leasing has a lower payment than financing.
Similar to a mortgage, you don’t own the car during the financing term. The bank does.
Honda and Toyota of Seattle have their own financing division, so it’s not necessary to get pre-approved by a bank. You have the option to finance a car for up to 96 months.
Like a lease, you can pick and choose the color and trim package you want, and extra features. Like a lease, you will get a brand new car.
In any kind of purchase — lease, finance, or cash — you will pay tax, title, licensing, and document fees.
The monthly payment when you finance, Miller said, is typically higher than a lease payment. That’s because interest is included.
Young vs old
Miller made an interesting observation about Asian customers. The older generation tends to finance a car, while the younger tends to lease. This seems to be because the younger generation wants more flexible options in their life and leasing provides that.
Ruth can be reached at email@example.com.