Residual Value after lease?
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Driver
Joined: Apr 2006
Posts: 185
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From: Sarasota, FL
Residual Value after lease?
So I am trying to figure out whether I should buy or lease. I have excellent credit to get a pretty good rate for the lease.
If I buy I would pay cash up front (to avoid any financing charges) then trade in after 3 or 4 yrs.
So my question is what is the typical residual value percentage that dealers have been giving?
Also if I buy the car and trade it in for a new car, will the trade in value be the residual or do they knock that down?
Thanks and any thoughts are appreciated.
If I buy I would pay cash up front (to avoid any financing charges) then trade in after 3 or 4 yrs.
So my question is what is the typical residual value percentage that dealers have been giving?
Also if I buy the car and trade it in for a new car, will the trade in value be the residual or do they knock that down?
Thanks and any thoughts are appreciated.
Rookie
Joined: Apr 2006
Posts: 57
Likes: 0
From: ON
Hey,
If you are getting a good lease rate, and you are not going to put on excessive milage on your car, I say do a lease. Paying cash first of all is not the best move since your money can yield higher returns elsewhere (I know we discussed this to death before but even after taxes and everything else, i still think it is better to invest it). Once you are done your four year lease, just get a new one. Even better is if you drive less than what your lease is for; that way, you will have a car that is worth more than the residual which means you can actually sell it for more than it was estimated to be worth and you will be coming out far on top. I don't know what the tax laws are like in the US but in Canada, you can ride off lease payments but you can only ride off the depreciation of a car that you bought which may be significant in years 1 and maybe 2, but after that will be fairly irrelative. Bottom line, if you are self-employed, will drive at most, what the standard lease milage is, and will be getting a new car anyways in a few years, then lease it. I think a wiser thing would be to lease it, and then the money you had to pay cash for your car, invest it and it will pay for part of the car itself.
If you are getting a good lease rate, and you are not going to put on excessive milage on your car, I say do a lease. Paying cash first of all is not the best move since your money can yield higher returns elsewhere (I know we discussed this to death before but even after taxes and everything else, i still think it is better to invest it). Once you are done your four year lease, just get a new one. Even better is if you drive less than what your lease is for; that way, you will have a car that is worth more than the residual which means you can actually sell it for more than it was estimated to be worth and you will be coming out far on top. I don't know what the tax laws are like in the US but in Canada, you can ride off lease payments but you can only ride off the depreciation of a car that you bought which may be significant in years 1 and maybe 2, but after that will be fairly irrelative. Bottom line, if you are self-employed, will drive at most, what the standard lease milage is, and will be getting a new car anyways in a few years, then lease it. I think a wiser thing would be to lease it, and then the money you had to pay cash for your car, invest it and it will pay for part of the car itself.
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