Carmakers are starting to realize that there are millions of buyers out there not buying new cars because new cars are too damn expensive. Honda’s solution? Leasing certified pre-owned used cars.
As a complex and labor-intensive good, automakers can’t just create a lot of new cars out of thin air. Ramping up production is risky and time-consuming. Used cars are even harder to produce, especially because millions of cars weren’t built because of pandemic-related shortages.
You know what’s also tricky? Keeping certain cars from getting stolen. Jaguar Land Rover has seen a huge drop in its used car values because of a ring of thefts, particularly in England, that’s seen insurance costs rise as high as $60,000 a year.
Do you own an old Nissan? Did your engine fail? You’re not alone as safety regulators are opening a probe in 450,000 vehicles over potential engine failure. And, finally, more Cruise layoffs to round out the year.
Honda Will Lease You A Used Car Or Sell You A 10-Year-Old CPO, But Not Both 
Contrary to reports, Honda is not going to lease you a 10-year-old car, but the fact that people believed that shows just how far the lack of affordable vehicles has changed perceptions of the car market.
Honda has, for a while, sold cars up to 10 years old as quasi-certified vehicles. This makes a sort of sense as Hondas are, generally, quite reliable and the actual warranty conditions fall under a specific category called “HondaTrue Used,” which only covers powertrain and non-powertrain issues up to 5,000 odometer miles or 100 days. This isn’t a bad deal, but it doesn’t compare to Honda’s actual Certified or Certified+ vehicle.
For newer used cars, buyers still can get HondaTrue Certified, which includes up to 100,000 odometer miles of powertrain coverage and 86,000 miles of non-powertrain coverage (or 48,000/12,000 for regular Honda Certified).
The “new” part here is the leasing of Certified pre-owned Hondas, which is something that luxury automakers like Mercedes-Benz and BMW have offered. Making it available for cars at lower price points is somewhat novel and reflects the reality that the price of used cars has increased dramatically in the last few years, as you can see in this chart from Manheim/Cox:
Why is Honda doing this now? Here’s what they had to say about it:
Honda CPO leasing enables customers to have flexibility with the amount of down payment needed for financing and lower their monthly payments, all while allowing them to “step-up” to a larger or more well-equipped Honda model than they otherwise might afford. Honda customers can lease current model year CPO vehicles or 2018-2023 Honda CPO vehicles. At the completion of the lease term, the vehicle can be purchased for a preset price or returned to a Honda dealer.
“Higher new-vehicle prices make the ability to lease Honda certified used vehicles an even more critical gateway to vehicle ownership for young and first-time buyers,” said Dan Rodriguez, Senior Manager of Auto Remarketing at American Honda. “We continue to expand our award-winning CPO offerings, to make it simple and easy to consider and purchase a high quality Honda CPO vehicle.”
I’m sold, and the general conditions of Honda’s CPO/CPO+ vehicles mean that you’ll likely stay covered if you buy something relatively new. Ok, let’s look at the first CPO leasable vehicle that comes up:
This is CPO+ and relatively new, but this Civic lists for basically what it costs new at a nearby dealership. The trick here, besides availability, is that the monthly payment is just $454, compared to financing the vehicle at $614. That comparable Civic new? That’s $663 a month, with $1,110 down for 72 months for someone with a 640 credit score.
People care, more than anything, about monthly payments, and this allows someone to have an almost new car with a much lower monthly payment and, in theory, access credit that might be harder to get on a new vehicle purchase.
There’s a catch, though, in the fine print:
So, yeah, that price comes with $6,104 due at signing, and if you buy it off at $18,974 after three years you’ll have paid roughly $34,000 for a used Civic when a new one could be had for theoretically less. Again, this isn’t a bad deal, but do mind the fine print. The better deals seem to be for slightly older, non-CPO+ vehicles like this 2020 Civic at $16,675.
While I don’t see myself doing this, there are definitely consumers for whom this could make sense, especially in this market.
The Used Range Rover Problem
What do my dad’s Kia Soul and a relatively new Land Rover Range Rover have in common? They’re both big theft targets, though for slightly different reasons. For my dad’s Soul, it’s because it’s easy to steal. For Range Rovers, it’s as much about their desirability as it is the ease of theft.
There’s a great Bloomberg piece about this and the eye-watering stat is that one guy in England wanted to sell his used Range Rover and, due to a rise in thefts, he was quoted a policy at $60,010 a year!
From that piece:
Jaguar Land Rover is now considering a bespoke insurance product for UK customers struggling to get an affordable quote on the wider market, the manufacturer said in a statement to Bloomberg News. Last year, it stopped providing insurance cover for customers and subsequently ended a partnership with insurance provider Verex.
The average cost to insure a Range Rover more than doubled to £3,270 in the year to October, according to comparison site Confused.com. In the same period, overall car insurance rose 57%. In north London, the average quote this year for a male aged between 36 and 50 driving a newer Range Rover model was £5,186. Some drivers, like Coen, are being quoted astronomical sums.
Some older Range Rovers are being hit with relay attacks where someone with a hand-held device extends the signal from the key inside someone’s house to start the car. From there the vehicle is often quickly taken to a port, stripped of plates, and shipped overseas. New Range Rovers don’t have this problem, but there are plenty of older cars on the market, so Range Rover is trying to address that as well.
It’s the price of fame I suppose.
A Giant Nissan Recall Could Be Coming
The U.S. Office of Defects Investigation is opening an investigation into about 455,000 Nissan Rogues, Altimas, and Infiniti QX50s over the prevalence of engine failures in those vehicles.
Vehicle owners reported engine failures, a loss of power, engine knocking noises, metal chunks and shavings found in the oil pan of certain vehicles equipped with the KR15DDT and KR20DDET engines, ODI said.
The Japanese automaker has looked to address main bearing and L-link damage or seizures on the engines by introducing multiple manufacturing process changes over time, the regulator said.
I’m not sure what the fix is going to be here, if any, but if regulators determine it’s a real and common hazard then we could be seeing another massive recall to repair or replace engines.
More Bad News At Cruise
The bloodletting at Cruise continues. First, it was the CEO. Then it was a bunch of the senior staff. Now it’s 900 workers or, approximately, 24% of the workforce.
Our pal Kirsten Korosec at TechCrunch got the scoop first, so she’s gonna get the link.
An email, penned by newly minted president and CTO Mo Elshenawy, was sent this morning to the entire 3,800-person workforce. The email, which TechCrunch has viewed, began with a resigned tone: “We knew this day was coming, but that does not make it any less difficult—especially for those whose jobs are affected,” Elshenawy wrote. Workers were expected to be informed within the hour of receiving the company wide email as to whether they would be losing their job.
[…]
Workers will remain on the payroll through February 12 and will be eligible for an additional eight weeks of pay, with long-term employees offered an additional two weeks’ pay per every year at Cruise over three years, according to the email to staff. Anyone laid off will also receive their 2023 bonus (eligible target payout) on January 5, 2024.
That’s not terrible as far as severance goes, though it’s a bummer all of these layoffs are happening around the holidays.
What I Listened To While Writing This
“Makeout King And Other Stories Of Love” by The Tontons, straight out of Houston.
The Big Question
Does the math on this CPO lease make sense to you? Could you see yourself doing it?
You can lease a f’ing new Model 3 for $100/mo less than a used Civic! Or a Solterra for $399/mo and $0 down. For the love of god protect people from themselves already!
One of those things involves giving money to Elon Musk and the other involves willingly subjecting yourself to one of the worst EVs on the market. I’d take a Civic over either of those options…although I certainly wouldn’t lease it
Perceptions aside, either one is going to be way better financially than leasing a used ICE. If you’re someone for whom a low monthly payment is important, that should matter.
It’s important to remember that the Tesla lease doesn’t allow for a buyout. I don’t know what percentage of people take advantage of the option, but I certainly wouldn’t enter a lease without the option to buy the car.
Yeah, that was a dealbreaker for me personally, but these Honda leases don’t really offer much incentive to buy at the end of the period, either, so I think the comparison is still valid for the target consumer.
That is fair. You are right that these Honda used leases would end up adding way too much to the price if you do want to buy it out.
As if we needed further evidence of the dire need for basic financial literacy in our educational system.
I learned something interesting about CPO recently. These programs raise the projected residual value of vehicles, thus making it easier to finance for buyers of new vehicles. Pretty clever actually, but I’m not sure how much it really moves the needle.
I’m one of the weirdos that likes CPO. I’m willing to pay a little more for the peace of mind of knowing a car has been inspected thoroughly and has some extra warranty and a maintenance plan. This also might be ridiculously naive of me but I also don’t think a reputable brand or dealership would slap certification on something that was a total disaster because of the negative press it would draw/how quickly it could spread on social media.
And you are correct, they usually offer in-house financing rates that are pretty appealing. They’re usually still not quite as good as rates for new cars but they’re almost always better than normal used car rates. I don’t necessarily know if I’d go out of my way to get a certified version of a commuter car or something from a brand with bulletproof reliability like Toyota or Lexus…but it’s a smart way to buy something that could potentially be fussy down the road like a BMW or Porsche.
Plus they’ve always got the CarFaxes ready to access in my experience. If you’re just buying used that can become a bit of a hassle.
I wasn’t implying that there was something nefarious about CPO. It’s a great way to keep cars from the crusher and give people some confidence in buying a vehicle that’s affordable. What I was getting at is manufacturers discovered that CPO programs make resale cars more desirable too and therefor the residual value when calculated on a new vehicle is higher, making payments for those customers more attractive too. Basically making stuff worth more in the end. Yeah sure, dealers and manufacturers will likely make more money, but they are businesses after all and if the value add like CPO or extended warranty gives the customer some comfort, that’s value too.
The unseen benefit of a cpo is that some manufacturers are more likely to offer assistance for an out of warranty repair for a cpo buyer over a normal pre-owned buyer, especially if serviced with a dealer.
Is that Honda used car lease “deal” being offered by a Nigerian prince?
With the Nissan / QX50 It is the hyped on paper but let down in real life variable compression engine. I wonder if it is a design issue or a manufacturing issue.
Someone want to go tell that Hornet owner not to listen to Thomas about buying a QX50 as a replacement?
Yeah, they should buy a toenail instead! /s
If this finance option were available at Cadillac, I would consider it.
At least JLR in UK is upgrading / patching their products https://www.telegraph.co.uk/business/2023/11/02/jaguar-land-rover-retrofit-thousands-cars-security-thefts/ instead of just giving away Clubs and call it a day.
I am curious on how they decide to harden the CAN bus. eg Making sure the ignition command is coming from a sane module not from the fog light or encryption?
That lease allows you to pay $311/month to drive under 10k miles each year. After a $1667.50 down payment, that’s $12,863.50 over three years…but wait, there’s more! A $600 acquisition fee, the first month’s payment, and the initial tax bring your “due at signing” number up to $2673. You’re paying $13558.55 over three years on a $16,675 car. And I don’t see how much the buyout is, but I doubt it’s low enough to make it worth it.
If it’s the payments or the down that scare people, the payments at 5% interest are $303 for the same down payment, and only $1667.50 down. That’s 19,847.50 over the course of 5 years, including tax. (And both the lease and the loan assume 740+ credit.)
I just can’t see any way this lease is a good deal for anyone.
That 2020 Civic lease does seem like an absolute rip off. I have been under the impression that when you lease a car you are paying for the depreciation of the vehicle plus a small profit for the dealer/leasing company. KBB values that 2020 around $17,300 and a comparable 2017 with 60,000 miles at around $14,700. I imagine that relatively low depreciation is influenced by the current used car market, but it is hard to see a Civic depreciating more than 30% over 3 years and 30k miles, which would be around $5,000. This lease seems like a generous profit for the dealer/leasing company and a waste of money for the lessee.
After seeing this, I am surprised used car leases haven’t been a thing in the past. Based on that Civic’s depreciation (and depreciation curves in general), it seems like you could make big profits while keeping monthly payments low enough for clueless lessees to think they are getting a good deal.
And I’m very afraid they’re going to become more of a thing in the near future, because it’s obvious there’s money to be made.
This Nissan VC engine thing is catching my eye. Like, this could be really bad. They dumped so much into this architecture when they should have been focusing on electric stuff instead. This could get mindbogglingly expensive. Easily into the billions.
Having given approximately ten seconds of consideration to it just now, my wild, shoot from the hip into the dark while blindfolded and dizzy from having just been spun around ninety-nine times immediately prior, is that the bottom end just has too many link points and that such introduces just enough wobble that it forces out lubrication at the sides of the bearings so that the edges go metal to metal. If I’m right, then I’m a genius, but probably not. Yeah, not.
Can I get in on one of those sweet time share vacation properties from the dealer too?
I’m fortunate enough to have bought my car and my condo at the right times and that they are both in good enough shape to last me another decade or two. But yikes, the idea of getting into either of those markets again (with interest rates waaay higher) is a nightmare I hope to delay as long as possible.
This sounds like all the worst things about leasing, but with the sweet benefit of… an older car?
Whos is this for exactly? Someone with 6k in cash to put down on a car, and 450/month to spend monthly? For 30k miles over 3 years? To at the end of that term, own nothing? FOR A COMPACT HATCHBACK?!
I know this is a rough example of a car that is demonstrating seemingly zero depreciation over a year with minimal mileage but let’s get real, this is basically a scam. It’s more or less Honda dealers trying to get in on the Buy Here Pay Here crowd. And I hate it.
The terms for that Civic make no sense to me. If I had $6,000 available for a down payment, I’d use it to buy a new Civic.
Exactly. This isn’t a mechanism to provide a more affordable option. This is just car dealership “look at the payment” buffoonery.
The website says it has built-in GAP and the non-powertrain warranty should be extended to cover it, but I think it would need some kind of full service protection thrown in to justify it. Thinking of tires alone, you might get to the end of the lease on the same set on new, but on a used car what’s the starting point?
Even comparing advertised new leases, these don’t seem to be a huge saving. A new Accord Sport (hybrid at that) is advertised at $389/mo, 10k/yr, $3899 down. I looked at a couple 2022 Accord Sport 1.5Ts with ~11k mi, a trim that usually has had an advertised lease rate new, and that gave a range of options for estimated monthly, with $3800 down. The cheaper one ranged from $391 for 10k mi to $412 for 15k, the other one was listed higher.
Honda leases haven’t been all that great and (while true of many premium brands) you can step up to an Acura for comparable money. At least that’s the case with the Integra – the current promo on an Integra A-Spec is $419/mo, 10k mi/yr, $3k down. The Civic from the example was top trim and may have a couple more gadgets than that Integra, but to that extent?
I suspect most dealers aren’t going to want to mess around with putting together unique deals on different used cars, unless Honda makes it very simple to pull the advertised numbers in to do the deal. So this will end up being an advertising tool at best.
I could see this being a play to handle a glut of cars being traded in or coming off-lease soon…but while they’re up this year, new Honda brand sales were down in 2022 vs. 2021, and 2021 was only up 9% over 2020.
I wish Nissan wouldn’t recall all of those cars. The more of those unhinged death traps that we get off of roads in the DC area the better. *Ivan Drago voice* If they (the cars) die, they die. Beat to shit Nissans are a menace to society and if I had a dollar for every time I was nearly killed by someone in a Nissan I’d be sitting on a beach right now.
I don’t see the point of leasing at all unless you’re shopping in the higher end of the luxury range or specifically want an EV. Since both segments are so tech dependent the cars become outdated fast and the massive depreciation is not something any financially savvy individual would want to take on. So if you want a RS E Tron or an X7 M60i or something then leasing is your best bet.
But for certified normie cars? This just feels like a trap/way to lure people who don’t make good financial choices into dealerships. Plus it’s Honda, who has some of the worst dealerships in the industry and a stupid ass allocation system while essentially being the Jordan era Bulls of markups. They are always scheming how to milk an extra couple cents out of their customers.
This is just a way for them to still get their customers to pay $37,000 for the certified $35,000 MSRP CRV that they sold initially for $42,000. It’s a scam, and it nullifies one of the real advantages to owning a Japanese car, which is the resale value. Their greasy dealerships are absolutely licking their chops right now.
Think of how much money they’ll make off one car. The first schlub will pay over sticker and finance it at 10% interest. It’ll then come back in a year because they needed something newer and shinier. They’ll then still be charging near or even over original MSRP on it certified but they’ll manage to lease it to Brad or Becky because all they see is WOWZA ONLY $400 A MONTH!
It’ll come back, the dealership will be like LOL YOU CAN KEEP IT IF YOU PAY US 120% OF KBB VALUE at which point it’ll be back and they’ll get to sell it a third time as a regular used car and rake in the dough off of the ridiculous interest rates the types of folks trying to buy 4-5 year old cars will usually have to deal with.
I actually really appreciate Honda from a mechanical standpoint (we own one!) but I have no idea how they don’t get more flak than they do. They have one of the worst dealership networks of anyone and consistently implement shady, cynical business practices that harm consumers. And yet the automotive media (I am not saying this site specifically, uncle NSane loves each and every one of you!) consistently trips over themselves to see who can fawn over them the most….
Huh, I’ve never had an issue with honda dealerships. I mean, no more so than any other dealership. They’re all scumbags, but I have actually found the honda scumbags to be slightly better than the other scumbags.
I will vouch for Honda dealers having a higher percentage of scumbags than most other brands I’ve visited.
Even more than Subaru? That’s the worst I’ve encountered. (Though I’ve admittedly never been to a Kia/Hyundai dealership)
I feel like this question greatly depends on *which* scumbag dealer practices bother you the most. Also, in full disclosure, the majority of my time in dealerships has been spent in domestics and Toyota stores.
The things I hated most about Honda dealers were:
-Non-optional dealer add-ons (pinstriping, nitrogen, VIN etching). Yes, many dealers do these things; I’ve never seen any brand where every dealer does them like Honda.
-General arrogance in negotiations. Very much an attitude of “This car is a Honda and sells itself, you should be grateful to have the chance to buy it”. As if it was 1990 and Honda really was hot shit, instead of a middling brand like it is now.
I have not had these experiences in Subaru or even Hyundai dealerships.
In my experience, Honda and Subaru are about the same level of scumbag, but Subaru salescritters like their product more. Which is a bit dangerous for the buyer who can be swayed by that.
I’ve seen people get absolutely screwed buying a used Subaru because they got excited and the dealer egged them on. The price, interest rate, etc. screw them. And the dealers offer things like insurance that’s supposed to be a better rate (it isn’t) and all the overpriced lifestyle equipment.
Honda buyers get screwed (usually on a new one) because they decide they are a decent appliance and trust the brand, generally. Then they pay for all the add-ons. Key replacement program, nitrogen in the tires, etc. If you want to fight them on those things, they might remove one or two, but they know people will relent and pay for some.
Hyundai and Kia are worse than either, and they seem to have the highest percentage who actively hate the product and refuse to learn much about it beyond the marketing bullet points.
I went with my sister to look at Foresters in 2020 and the sales dude was a total jackass. After we drove it he basically put down paperwork and was like “want to buy it right now or are you here to waste my time?”. When we said we weren’t ready to buy he said something snide and literally walked away and we never saw him again. What an absolute douche nozzle. It completely killed my sister’s interest in the car.
I have a unique disdain for Honda due to their cynical approach to enthusiast cars, rampant ADMs, stupid allocation system, and how terribly they treat my wife when she brings her CRV in for service. They seemingly pull services out of a hat and tell her she needs them done or the car will explode. I always cross reference them with our records and crack up. They consistently recommend 4 figures worth of stuff that we’ve already done. They take her for an absolute fool and it infuriates me but she insists on going alone/doesn’t like the optics of bringing her husband in to read them the riot act, so I usually just sit at the ready with the maintenance records at home. I guess it’s a small win for her in the end because she gets to tell them how wrong they are lol.
Hyundai varies a lot. The place I bought my Kona N from was responsive, professional, didn’t try hardball BS, and gave me the $500 off/2.75% interest offer that Hyundai corporate listed online with no hassle at all. It was honestly my best dealership experience I’ve ever had and they have thousands of five star reviews on assorted platforms so it seems like they’re just a genuinely good dealership.
However another one that I test drove an Elantra N at was so slimy and unprofessional that it was almost comical. They had the car listed for MSRP online and I loved it so much post test drive I said I’d buy it that day at MSRP. The sales manager then walked me out to the car and pointed to what was essentially a post it note tacked next to the Monroney that said +$3,000.
I said that wouldn’t fly and that I was a buyer that day at MSRP. The sales manager proceeded to have a conniption fit. He started rambling like some unhinged lunatic and told me I didn’t know anything about cars/the usual THIS IS JUST HOW IT IS NOWWWWW bullshit they sling to try to charge over sticker. I said “well I’m heading out and have your card, I’m a buyer at MSRP”. At this point he got even more unhinged and screamed YOU MIGHT NOT BUY IT AT OUR PRICE BUT SOMEONE ELSE WILL!
I almost filed a formal complaint with their dealership network about him but ultimately decided not to because they’re so close to my house and I knew if I found my N I’d want to use their service department for convenience. Anyway, that nightmare of a Sunday afternoon definitely lived up to the Hyundai dealership reputation I’d heard about…
My Kia came from the one decent Kia dealership I’ve found. I went to a closer one for service and I think that formal complaint might not have been a bad move, since the service department is often just as shitty as the sales.
The Subaru story sounds about right. The dealerships around here basically want to sell before you even drive one, and I think they often do.
And the Honda service story is pretty much exactly what I experienced with Honda. And I think some of it is that they don’t have techs who know the cars, just techs who can look at the books and make them their money.
For Hyundai, my nearest dealer just takes the attitude that you’ll buy or you won’t and their job is to tell you it’s worthwhile without any details and then fill out paperwork. The dealer I tried to order a PHEV from (since my state doesn’t get those) quoted me MSRP, then asked if I’d be interested in another car and told me they were going to add markups, so I should buy the less desirable vehicle.
The nearest Kia dealer, when I test drove a Soul, quoted me the Soul! price for an unpriced Soul+. When I said he may have made a mistake, he said “if you want an alien green Soul, that’s the price.” When I test drove a Niro PHEV, they didn’t charge it and said it drove the same regardless (not really true). And when I asked about the warranty, they said the hybrid system was covered under electrical, not powertrain (also not true). Getting warranty work done took a half dozen visits over a couple months and they only gave me a loaner after they had made it worse twice in a row.
Six grand down and “only” $454 a month, for a used car I don’t even own? I don’t think so, Tim.
“I just went in there! Hector is going to be leasing 3 slightly used Honda Civics, and he won’t be able to afford Spoon engines after being required to pay 12 grand per two year rental. And on top of that he just came into Harry’s, asking for a job application. His wife is leaving him for leasing multiple used Honda Civics. He then was trying to sell me a Motec exhaust system. But I was like, Dude, I drive a Mach-E now!”
Brian O’Conner, Fast and the Furious 2024
This is pretty funny. Those movies are mindless (in a good way) and for some reason both myself and the wife find them entertaining.
I’m pretty sure neither Dom nor Brian would approve of either of our DD choices though. My Vibe doesn’t even have the 2zz but maybe Hector can hook me up?
The real motivation for the lease- “allowing them to “step-up” to a larger or more well-equipped Honda model than they otherwise might afford”, ie, promoting having people live beyond their means.
I’m shocked, shocked that this practice is being promulgated in a capitalist society!
/s
https://www.youtube.com/watch?v=hsHzhcrYsTw
The hilarious thing about this example is that “living beyond one’s means” is “buying a used Civic Hatchback”.
That’s what your reward is for spending 22k in this example.
Edit: Sorry, that should have said “renting a used Civic Hatchback”.
As the last remnants of middle class die out, a loaded Civic is becoming an aspirational car to a lot more people.
Ah, so reading between the lines it is “you could have afforded this exact car 5 years ago, but now instead of relegating you further down market to a market that no longer exists, we are doing you a favor and upgrading you back to status quo for the low, low rental price of $xx,xxx*”
*don’t do the math, and ignore the numbers in the x’s
“ The U.S. Office of Defects Investigation is opening an investigation into about 455,000 Nissan Rouges,”
So only the red ones, then?
As for leasing a used car, it could be a benefit for someone who wants the comfort of a reliable vehicle, and the knowledge that if anything goes wrong, the manufacturer/dealer will take care of it. Having that advantage available at a lower price point would be attractive to some folks.
lol
There’s a customer at my favorite coffee shop who has re-lettered her Rogue into a Rouge. Classes it up a lot. (It’s not red. )
Based on how most owners and just about everyone in the forums spell the name, I think they should just change it already and call it a day.
The leasing thing maybe isn’t a bad idea if you get something a little further down the depreciation curve. But in this specific example, doesn’t seem to make a lot of sense over something new.
Wow, I thought Harley Davidson would lease used vehicles before Honda.
Unless a warranty covers the entire leasing period, run away!
My preferred method of acquiring vehicles is via sketchy Craigslist ads. If one of those sellers offered me a leasing option I’d say that’s a bit too sketchy.
Perhaps this is my biases at work, but I basically see people who lease vehicles as being in one of two camps:
-People who like to be seen in the newest vehicles all the time, and who change often in order to do so
-People/businesses who can write off a lease on their taxes somehow (don’t know the mechanism for doing so precisely)
Leasing a used car would seem to completely defeat the purpose behind leasing for Person #1. Doubly so because this is Honda, not a luxury brand. I’m not as sure about Person #2 because I don’t know the tax rules, but generally corporate/business buyers buy everything new anyways.
I guess my point is I don’t know who this is for.
This is for people who can only wrap their mind around a monthly payment number, which there are a surprising amount of.
Not all business actually lease the cars themselves. In a lot of circumstances there is a driver allowance of something like $500.00 a month the employee receives to then lease a new acceptable car.
Leasing was also for people who needed lower car payments and reliable transportation. Even if many do not think that is a good idea. It is like saying if you cannot afford to pay cash for a house you should not lease an apartment. Sometimes people need to make short-term decisions even if it costs them more in the long run.
“The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money.
Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.
But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.
This was the Captain Samuel Vimes ‘Boots’ theory of socioeconomic unfairness.”― Terry Pratchett, Men at Arms: The Play
Every lease I’ve encountered requires multiple thousands of dollars down to get those lower monthly payments. I’ve never considered it to be a viable option for someone less affluent.
If someone has a trade in that the dealer is willing to overvalue (like one of those push/pull/drag trade events), they can get out of something they see as a money pit and into something with a warranty. It’s not a good move, and then it often keeps them with the same manufacturer, as they can generally bring their lease back and get reasonable terms on the next lease. Over and over.
Leasing is great for Honda, and this allows them to lease a vehicle a couple times before they sell it. It’s not great for buyers–it’s likely to reduce the stock and increase the price of newer CPOs.
Leasing a low-price Kia does not take thousands in start fees and is much less than a reliable used car. People who need a decent car do not always have the skill time and space to fix up a used car but can do a cheap lease. At least before COVID-19 messed with everything.
Every Kia lease special I can see advertised currently requires at least $2800 down.
https://www.carfax.com/blog/best-kia-deals
Yes, that’s less than a good used car, but can still be tough to come up with, especially when the lease is still $300+ a month on top of that.
It’s not a sure fire way to save money, short or long term is all I mean.
For someone with an apartment, not a mortgage, who lives in a mass transit unfriendly town and who necessarily looks at transportation by car as a monthly expense, like utilities.
The conceit of ‘buying’ a car, is that it’s a capital expense, so people finance. Except for jobbers buying trucks and vans, or realtors who need to schlep clients around the metropolis, this is rarely actually true.
Unless the amount of financial benefit you derive from the vehicle exceeds the expense of owning and operating it over its lifetime, then it’s a waste.
People are starting to rethink the ‘buy a new car every year’ marketing that used to typify post-WW2 consumerism.
Frankly, I was hoping that the transition to electric, would mean manufacturers going toward a design that was used for a generation, with battery and motor replacement as the feature, not just porting Baby Boom ICE philosophies to a new technology.
As usual, the lack of imagination of leaders in manufacturing leaves me cold. No one is even trying to speak to this opportunity. The silence is deafening.
And #2 only works if you drive very, very little, since the higher mileage lease options (which are also, usually, still not higher mileage enough to accommodate business use, eg traveling sales) typically work out to be more expensive then just buying the thing and trading it in after whatever the replacement interval is
Depending on the money factor, leasing could be a bet that interest rates will be lower at the end of the lease. Of course, refinancing exists, so the money factor has to be better than current interest rates. I don’t feel confident in it as a bet, but some people might. But this would be an especially bad bet leasing a used car, since the lowest interest rates are on cars new enough to be just off lease, generally.
Yeah, the only thing I’d really consider leasing right now is a new EV that isn’t otherwise eligible for the tax credit.
Leasing an EV makes a hell of a lot of sense right now – you can get the immediate benefit of a tax credit, plus the lower cost per driven mile over the next 3 years. And, it essentially acts as an option for you to keep it if depreciation is less than expected (eg. gas prices go way up again), or to sell if it’s more than expected due to battery tech improvements, changing charging standards, lower gas prices etc.
I think you’re conflating who SHOULD lease a car with who actually does.
While I agree with your categories, the sad fact is that many people lease cars that are well above their means because they’re either bad at running the numbers or they don’t think they have any other cheaper (per month) options.
I would never lease a car to begin with, this sounds like the dumbest thing to me.