ELI5: When leasing a car, why is the residual value so much

- Many local dealers are offering $0 down lease deals on 2021 models with payments anywhere from $209/month to $249/month with a residual value around $13,600. So, on the one hand, you can right now buy a three-year-old former lease with 30k miles for $18,000.

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ELI5: When Leasing A Car, Why Is The Residual Value So Much

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ELI5: How Does Leasing A Car Work? : R/explainlikeimfive - Reddit

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What the dealer does is compute the residual value of the car at the end of the lease. Say you lease a $50k BMW. At the end of 3 years, the car is estimated to be worth $26k. You pay the …

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ELI5-How Do Car Leases Work? : R/explainlikeimfive - Reddit

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So you're basically renting a brand new car. If the car costs $10k and after your lease the car has a buyout value of $6k then $6k is your residual - i.e. the residual value left of the car when …

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Dealer Is Asking For More Than The Residual Value - Car Talk …

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Feb 13, 2022 · So my lease for the 2020 GX 460 is ending at the end of this year. The original price tag on the car was around $57000. My monthly payments have been $600/mo. So at the …

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ELI5: What Should I Do At The End Of My Lease If The Value Of My …

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The residual value for my car per the contract is only $11K. It seems to make sense to me to turn in my car at the end of the lease via purchasing then selling the car to the dealership and …

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FAQs about ELI5: When leasing a car, why is the residual value so much Coupon?

How does residual value affect a car lease?

Raising the residual value makes lease payments lower and as a result, more consumers choose to lease their new car. The manufacturer gets the opportunity to lease another vehicle in three years time and gets the lease return to resell as a CPO. What does this mean for your current lease? ...

What is a residual value of a car?

A vehicle's residual value is its total value at the end of the lease or the amount you'll pay to purchase it at the conclusion of its lease term. Leasing a car differs from renting one in that your monthly payments go toward the cost of vehicle depreciation and the lease term is typically longer than a rental. ...

Is it cheaper to lease a car with a higher residual value?

Vehicles with higher residual values are typically cheaper to lease, because the residual value directly correlates to how much you pay for the leased vehicle. Say you get an auto lease for three years, and the vehicle was originally worth $20,000 at the start of the term. ...

What does a low residual value mean for a car lease?

The higher the residual value – meaning less of a difference between the car’s price now and its predicted value at the end of your lease term – the lower the monthly payments. A low residual value means more of a difference that you will have to cover as the lease holder. ...

What happens if a car is less than residual value?

If the value of the car is less than the residual value when the lease period ends, you can turn the car in without paying additional fees. In an open-end lease, if the value of the car is less than the salvageable value, the lessee might need to pay for the difference between the salvageable value and the car's fair market value. ...

What is a residual lease value percentage?

The residual lease value percentage is somewhat subjective. It is what the car is expected to depreciate over the life of the lease. If you have a leased car with a capitalized cost of $30,000, and the car is expected to decrease in value by 50% over your three year lease, then the residual value of your car is $15,000. ...