Note if you are looking to buy a car and the 3 year old used car isn't much cheaper than the new ones, this makes it much easier to purchase a new car too. In fact, brown cars depreciate about four times faster than cars of the color that best holds its value, yellow, with those vehicles only depreciating at. So, the best advice I can think of, is if you think the residual is set too low, all other things being equal, buy the car instead of leasing it. Therefore, you need to lower the purchase price of the car!" You'd get laughed right out of the dealership. This car is going to be worth way more than that. The problem is, your argument will sound kind of funny if you say, "The residual is too low. If you feel it's off, you're pretty much left negotiating a lower money factor, or a lower purchase price (and/or possible higher trade value if you have one- but really that's similar to just a lower purchase cost.) Sometimes the money factor is also set by the manufacturer (though it may be in credit tiers), and in that case you are left to negotiate the purchase price of the vehicle. Usually the residual is non-negotiable because it's set by the manufacturer. So how can you negotiate a lease given this? It depends on what you can negotiate. If you did that you would be paying double the interest you needed to pay. This is equivalent to taking out a term loan for $20K, paying interest on it, using half of it and putting the other $10K into a checking account, and never touching it. Power’s Best Resale Value Awards Given to 25 Models in 2020 Study. Top 10 cars in India with High Resale Value Maruti Suzuki Swift Toyota Innova Ford EcoSport Maruti Suzuki Wagon R Hyundai Grand i10 Honda City Mahindra. But, to get into that situation you were paying interest on that extra "purchased" residual that you didn't need. Methodology: In order to find the 15 cars with the highest resale value, GOBankingRates looked at Kelley Blue Book’s 2021 Best Resale Value Awards: Top Cars, Trucks and SUVs and J.D. If you drive less miles than predicted, and the car is worth much more than the residual, you can buy out the lease and either flip it or keep it, which is great. It's mostly due to the way they bake their profit into the lease payments in the form of interest and other fees, along with a usage estimate. That being said, the reason leasing is usually a bad deal is not just due to a bad guess at the residual value. Of course, this assumes that the current increase in used car prices will persist 3 years from now when your lease is up. If the residual ended up being calculated too low (as you suspect could happen right now), then you can simply buy the car for the cheaper price and either keep it or immediately sell it at the higher market value. When you lease, if the residual was calculated too high and at the end of the lease term the car is worth much less, then you turn it in and you got a good deal. It might not matter (as much as it would seem) if the residual amount is off.
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