I'm planning on trading in my 2010 Fit Base for a Sport in the next couple of months. I picked up my base in Dec 10, I was originally looking at a 07-08 Civic sedan or GD Fit, I'm a vet who is going back to school. Wasn't really looking for something new, just something newer and more reliable for school. I was really hating my life with the 1st gen Scion Xb I had! The dealership that I went to, to check out a used civic didn't go to well. After countless amount of hours there, as a matter of fact they wouldn't give me back my keys after they had valued it. Back to the story, they were offering me a GD Fit but, it had too many miles as it was recently traded in a few hours before, plus it had more miles than my Xb, and had some exterior issues. Finally these guys gave me my keys and all I wanted to do was to leave, but I could tell that their sales manager was giving the salesman I was dealing with an earful! I could recognize the situation with the sales manager saying something like "Don't let this guy leave without buying something"!

I'm in my car ready to leave and then another salesman comes and tells me about leasing. He broke it down and got me interested. I had always been down on leases, but didn't really know the all the details that go with it. So I go back in and start the process all over again. I told the guy that I wanted a GE Sport auto! After 15 mins, he comes back and tells me that I didn't get approved for a Sport, but I did for a base. This dealership only had 4 Fits, 1 Sport and 3 Bases(2MT 1AT). At the time, Honda had a special on the Base model AT, I don't know if applied to me as I found this out after I got the car.

I leave the dealership with a CBP Base MT, traded in my 05 Scion Xb, less than 1K in the negative. My Xb was due for some major maintenance and I didn't feel like pouring any more $$$ into it! My first time leasing, did the normal haggling on the monthly. But was new to the other things that go along with leasing. My salesman tells me that I wouldn't have any problems trading in the car in a few months, but I should keep track of how much I owe compared to how much the car will be valued when I decide to trade it in. If and when I do get a sport or if i decide to keep this base, I won't keep longer than the 3yrs I am obligated to. I sure by the time my lease is up, I will have some equity in the car and the next generation Fits will hit the US?

Final questions, anybody have some tips on leasing and what to look for to get the best deal? Also don't really know if I got a good deal? Maybe some other members who leased a base can compare numbers?

Thanks

 

I'm not sure what you mean by "keeping equity.". In a lease, you are essentially renting the car for a set number of months. The payments are the difference in the value of the car when new vs 24-48 months later. This difference is divided into installments. You have no equity at the end, any more than you have equity in a rental house when the lease ends - often you have the option to purchase the car at the end, but at that point you are simply buying a used car you were renting for several years.

As far as trading goes, that will depend on the terms of the lease - you"ll likely have to pay a termination fee (think cell phone contract) or even the remainder of the lease.

Did you already sign the lease?

 

Here are some pros and cons of leasing:

Pro- you can get a more expensive car for lower monthly payments. This is the big selling point by dealers of leasing. The reason is that you never own the car, you're just renting it.

Con- See above. At the end of the lease you have nothing. If you bought and financed the car you would be able to sell the car or continue to drive it with no monthly payments.

Pro- At the end of the lease you just hand the keys over. No dealing with trade-in values, selling privately, etc.

Con- They can probably nickel-and-dime you for every nick, scratch, etc. If you do opt to lease, READ THE DOCUMENT. Some are more obnoxious than others. For example 15 years ago (when I bought my G-20) I read two leases. Acura's lease said normal wear and tear was okay. Infiniti's lease said the car had to be returned free of scratches, dents, mismatched paint, dings... good luck with that. You know how much they can ream you for repainting a car? And if you sell an old car that's missing hubcaps, for example, the buyer may not car. Return a leased car and they may charge you the new parts price.

Con- Anything you do to improve the car (new wheels, cargo cover, etc.) is theirs. If you own the car, in a private sale you might get more money for it.

Pro- It is a sort of lemon protection. If you get a bad particular car or the model becomes unpopular (remember the Audi 5000?) you can just hand 'em the keys when you're done.

BIG CON- You get only a set number of miles and you have to pay up if you drive the car more. So if they give you 12,000 miles a year and you drive 16,000 miles, on a five year lease you'll be stuck paying them for 20,000 extra miles. Even at 15 cents a mile that's $3000. AND if you drive FEWER miles than you're paying for, well, they're not giving you money back for turning in a more valuable car. They won't even say thank you. Very few people can accurately predict how many miles they'll be driving three or five years from now. THIS IS A BIG NEGATIVE.

Con- Termination fee. Let's say you suddenly have five kids and want a minivan. Or you get a job driving handicapped children and need a wheelchair lift. Or you get a new job and they give you a company car. Or you marry a woman with a collection of classic Ferraris. Or you move to California, start dating a movie starlet and want a convertible. You'll have a heck of a time getting rid of your leased car without it costing you.

Con- It's a lot harder to negotiate a lease, because there are more factors built in that you can't easily price, such as what the car will be worth at the end of the lease. In that regard, the leasing company is taking residual value risk- they can only guess what the car will be worth, and they get paid for taking that risk. Guess who pays? You. It's built into the leasing cost. Now if you buy a car you're also taking risk as to what it'll be worth when you sell it, but you don't have to wholesale it, you can sell it privately for more than wholesale book value. And you also have the option to drive it into the ground. You can do that with a lease, too, but you'll have to pay their end-of-lease purchase price which might be well above what the car turns out to be worth. (in that case you could buy someone else's equivalent car, but that brings a whole new set of risks)

Pro- Sometimes car companies don't want to offer a rebate so instead they'll subsidize the lease price.

Con- And sometimes they'll offer low APR financing (I got 0.9% in November) to move cars but not lower the (hidden) finance cost on leases.

Con- If you finance a car you can always pay down the loan faster and save on interest, or refinance at a lower rate if you get cheaper money elsewhere. Can't do that with a lease, can you?

In summary, unless you really need a fancier car than you can afford to buy, or if someone else is paying (company car lease, for example) it's rarely worth leasing, at least from an economic standpoint.

 

I'm a bit surprised. I didn't know they even did leases on cheap cars like the Fit. Usually it seems to be for vehicles like the MB C-class or BMW 3-series (you know, the official cars for the "Living Beyond One's Means" club.).

 

Yes, I got the vehicle in Dec 2010. My salesman told me I could trade in my leased base Fit earlier than the 3 yrs. Just have to realize if I do, I could expect to pay more if the amount that is due exceeds the value of the car at the time of trade in. Depending on when I do, I've calculated by the summer I should be even.

I've spoken to a couple of salesman from random Honda dealerships around me, also with Honda Lease Maturity Center and this is what was verified.

1.There is no termination fee if I end my lease sooner, as long as I use my leased vehicle as a trade in. There is a termination fee if you just return the vehicle. You restart another 3yr term.

2.Depending if you have equity, it can be used towards a new Honda vehicle purchase or lease. The dealership is going to consider your leased vehicle as a trade in and mileage will not matter if you are over or under the 12K per year. Mileage fee's will matter if you are only returning the vehicle with no intent of purchasing or leasing another Honda. I believe equity can be also used for a used Honda or whatever used vehicle is at the dealership. From all the info I have received this is what I can do:

Pro's:
1.I can drive my leased vehicle as if I owned, no worrying about mileage. As long as I used my vehicle for a trade in either sooner or at the end of lease term. And obviously keeping it in a good condition, I'm sure modifying wont be an issue either(ie. lowering a vehicle as long as you put it back to stock when trading it in).

2.Even though leases are not designed to create equity, I think the price range of the Fit falls perfectly to build equity. You could add an extra $10 on top of you monthly's? It won't be alot, but its something.

3.Cheaper payments, for a leased vehicle, you only need to get approved for half of the amount of the MSRP of selling price. You are only paying for the term of using the vehicle. So a 20K, you would only need to be approved for 10K and be financed for that amount.

4.You don't have to pay taxes up front. Depending on what your city taxes are where you live, you won't pay more than $30 a month, which is alot cheaper than adding and financing the $1,500 to $2,000 from a 5 yr term purchase. Even calculating for 3yrs, its still cheaper. But you do still pay for registration fee's upfront. In my case, my plates came from the dealership not directly from the DMV.

Con's: Can't think of any right now? Of course this scenario only applies if you plan of getting a new vehicle every 3 yrs.

You guys can look at the info I provided and debate this topic?

Here's the link to Honda's current specials: Current Offers and Leases on New Honda Cars - Official Website

Here's to the Fit Base special: Honda Cars Offers & Leases Detail - Official Website

 

so did i. the market seems hitting hard rocks..

 

one thing you have to watch for if you are leasing the car is the end of lease inspection.
when your lease is up, they expect you to have reasonable amount of thread left on the tires
if not, they will charge you and deduct from your deposit.
this is how it works here in Canada but in your area may be a different story.

Also, the end of lease buy out amount is the whole sales value of the car...
so you are buying at whole sale cost + taxes
again, this factor works in Canada

 

I read from an article that most of the time people purchase automobiles instead of leasing them, which could be a great thing.

 

You got it. I noticed a report recently that just over 2/3 of BMW new car transaction in the US are leased. So when you see one, remember: 1/3 of those people actually are probably quite wealthy. The other 2/3 have poor financial acumen; and a slight insecurity complex.

 

at least on the Fit there is no confusion. you are 100% poor regardless if you own, on a loan, or lease.