Lease vs. Finance: Which Makes Sense for You?
Lease vs. Finance: Which Makes Sense for You?
Short answer: leasing usually means a lower monthly payment and a new Honda every few years, while financing means a higher payment now but full ownership once it’s paid off. In Illinois, leasing has an added advantage most shoppers don’t know about — here’s how the two compare.
Quick Comparison
| Leasing | Financing | |
|---|---|---|
| Monthly payment | Typically lower | Typically higher |
| Ownership | You never own the vehicle | You own it once paid off |
| Mileage | Limited, usually 10,000–12,000 mi/yr | Unlimited |
| Wear & tear | Charges may apply at lease end | No charges, it’s yours |
| Illinois sales tax | Only on your payments | On the full purchase price |
| Best for | Wanting a new Honda every few years | Driving long-term and building equity |
How Leasing Works
Leasing is essentially a long-term rental. You make monthly payments to drive a new Honda for a set term, typically 24 to 36 months, then return it, trade up to a new lease, or buy it out at a predetermined price. Because you’re only paying for the vehicle’s depreciation during the lease term rather than its full value, monthly payments are usually lower than financing the same vehicle.
How Financing Works
Financing means taking out a loan to buy the vehicle outright. You make monthly payments toward the full purchase price, plus interest, until the loan is paid off — typically over 36 to 72 months. Once it’s paid off, the vehicle is yours free and clear, with no mileage limits and no wear-and-tear charges to worry about.
Illinois Gives Leasing a Real Tax Advantage
This is the part most shoppers outside Illinois don’t expect. Since 2015, Illinois has taxed vehicle leases only on the payments you actually make — your down payment and monthly payments — instead of the vehicle’s full selling price. Finance a car, and Illinois sales tax applies to the entire purchase price upfront.
What this means in practice: leasing in Illinois avoids paying sales tax on the portion of the vehicle’s value you’re not actually using. It’s a major reason leasing tends to be more attractive here than in states that tax the full price regardless of how the vehicle is paid for.
Source: Illinois Department of Revenue, Lease Tax FAQs; LegalClarity, Illinois Car Lease Tax Rate.
Either way you decide to pay, you’ll need the right paperwork in hand before you drive off the lot — see our guide to what documents you need to buy a car in Illinois.
Which Makes Sense for You?
Choose Leasing If…
- You like driving a new Honda every few years
- You want the lowest possible monthly payment
- You drive a predictable, moderate number of miles per year
- You’d rather not deal with resale or trade-in later
Choose Financing If…
- You plan to keep your Honda for many years — Honda’s long-term reliability record makes this a safe bet
- You drive high annual mileage
- You want to build equity and eventually own it outright
- You’d rather customize or modify your vehicle freely
Current Lease & Finance Specials
Whichever route you choose, it’s worth checking what’s currently available before you decide. Our lease and finance specials page is updated regularly with the latest offers on new Honda models, so the numbers you see there reflect what’s actually available right now, not last month’s pricing.
Not sure which option is right for you? Our team at Napleton Honda of Morton Grove can walk through the numbers with you, no pressure.
Frequently Asked Questions
Is it better to lease or finance a Honda in Illinois?
It depends on your driving habits and priorities. Leasing typically means a lower monthly payment and Illinois only taxes your lease payments, not the full vehicle price. Financing costs more upfront but builds equity toward ownership with no mileage limits.
How does Illinois tax car leases?
Illinois taxes vehicle leases based on your actual payments — your down payment and monthly payments — rather than the vehicle’s full selling price. This has been the law since 2015 and applies specifically to titled and registered motor vehicles.
What happens if I go over my mileage limit on a lease?
Most leases charge a per-mile fee, often 15–25 cents per mile, for miles driven beyond your contracted limit. If you expect to drive more than the standard 10,000–12,000 miles a year, ask about higher-mileage lease terms upfront.
Can I buy my Honda at the end of a lease?
Yes. Most Honda leases include a predetermined buyout price you can pay to purchase the vehicle at lease end, instead of returning it or starting a new lease.
Do I need good credit to lease a car?
Leasing generally has similar credit requirements to financing. Stronger credit typically qualifies you for better lease terms and lower money factors, similar to how it affects financing interest rates.
Where can I see current lease and finance specials at Napleton Honda?
Our lease and finance specials page is updated regularly with current offers on new Honda models.
This page is provided for general information only and is not legal, tax, or financial advice. Terms, tax treatment, and available specials can change — confirm current details with our finance team or a tax professional before deciding.