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Honda is an international vehicle manufacturer that started off making motorcycles in Japan and, 14 years later, manufactured its first car. It’s not about to challenge the top three car manufacturers in U.S. sales, but it is in the top 10, and it has a robust domestic market in Japan.
In this article, we’ll cover Honda financing options, rebates, incentives, and leasing.
As an overall company, Honda doesn’t specialize in automobiles, rather, it specializes in engines. Honda aircraft, power equipment, boat engines, cars and motorcycles are sold all over the world and the company had $174 billion in assets at the end of March 2017.
Honda uses its financial arms as a tool to help customers buy its products, from automated lawn mowers to private jets.
America Honda Finance Corp. offers financing and leasing on new Honda and Acura vehicles, as well as Honda certified pre-owned vehicles. To qualify for Honda finance, you generally need at least a 610 credit score. To qualify for the best Honda financing deals, you usually need at 710 credit score, though America Honda Finance Corp. does take other factors into account such as the loan-to-value ratio on your new car and how much debt you have compared with your income. The more “financially healthy” you are, the more likely you are to get a great loan offer.
If you’re unsure what your credit score is, you can check your credit score for free here, try our auto payment calculator to see how a new car might fit into your budget and, if your credit isn’t so hot, read about how to get an auto loan with poor credit.
To apply to Honda financing through America Honda Finance Corp., you’ll need your Social Security number, savings and checking account numbers, employment information, the down payment you’ll give (if any) and the model of car you want. If you’re not sure which car you want, you could apply for a preapproval with Honda finance. In a preapproval, Honda lets you know based on your information if you qualify to finance with them and what your APR and loan term will likely be. You could get a firm loan offer once you tell them exactly which car you’d like.
The loan terms with Honda finance usually range from 24 to 72 months and can go up to 84 months, although such a long auto loan isn’t recommended.
Honda finance also offers the Leadership Purchase Plan, which is like a balloon loan, whereby you make small payments for a set term (24 to 48 months) and at the end of the contract, purchase, return or trade in the vehicle.
Honda financing offers a few rebates on its vehicles and you can’t always combine them. The time periods when these Honda rebates and incentives are available and the vehicle models they apply for may change often, so be sure to look up whether they apply to the car you want. Here are the main types of rebates and incentives Honda offers, and their general requirements.
This is not an exhaustive list of requirements for Honda rebates and incentives. Visit the Honda website or a Honda dealer for more information.
Honda’s lease program is called Honda Leadership Leasing. Its terms range from 24 to 60 months, with mileage limits from 12,000 to 15,000 annually. Like with most auto leasing, you do have options to purchase more miles at lease signing, but if you don’t use them, you won’t be refunded for them. If you’re unsure on whether leasing is right for you, check out this guide on leasing versus buying.
Honda also offers One-Pay Lease, in which you make a single payment for the entire lease term. This is usually a very large payment. When you lease, you’re not really renting a car; you’re buying a large chunk of its life at once and then financing it, or, in this case, paying for it in cash. The benefit of paying cash is that you’re not paying interest to finance, but you can only get that benefit if you can afford the large cash payment required in a one-pay lease.
The exact amount you pay depends on the residual and the agreed-upon price of the car. The residual is the percentage of what the car will be worth at the end of the lease. For example, if the car you want to lease is priced at $20,000 and it will be worth $10,000 at the end of the lease, that means it will only be worth half of the current price, so the residual is 50%. To one-pay lease the car, you will pay 50% of the price, plus taxes and fees all upfront.
When the lease term ends, whether you did a one-pay lease or a regular lease, you can trade it in, return it or purchase it. If you trade it in, make sure you pay attention to any special offers going on at the time, which may involve multiple fee waivers.
If you’re looking for a new vehicle, don’t just apply to one lender. Consider a few lenders and compare offers to see which is the best for you, whether it’s the one with the lowest monthly payment or the one with the lowest APR.
You could get preapproved for an auto loan without knowing exactly which car you want. Being preapproved may give you an idea of the price range you should be shopping in for a vehicle, and it gives you greater strength to negotiate. For example, if the dealership salesperson tells you they can only get you a loan with a 5% APR and you have a 3% APR loan preapproval in your pocket, your decision becomes easier. Having a preapproved auto loan could save you money and help you walk into the dealership with more confidence.
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