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My Car Is Worth Nothing After My Lease is Up

Reader Question

I was leasing a new Ford Mustang for 2 years, but now they say the price of the Mustang is soo low that I lost value, or something like that….I think he said its residual value was lower than market value? Help…I think I am getting screwed on this car lease “deal”.

Anne,

Houston, TX

Example 1 Residual Value: What the vehicle will be worth at the end of the lease. It may or may not match true estimates of the used car value at that point. Residuals are determined by lenders. You are unlikely to be able to negotiate residual value, but you can comparison shop for the highest available.

Example 2 Residual Value: The value of the means of transportation at the finish of the lease. Now, let us work out a sample rent imbursement based on a vehicle with an MSRP (sticky label price) worth of $25,000 and a currency factor of 0.0034 (this is usually quoted as 3.4%). So this is how it will look to you

The scheduled lease is over three years and the predictable outstanding proportion is fifty-five.

The first step is to compute the left over value of the car. You reproduce the MSRP by the outstanding proportion:

That is $20,000 X .55 = $11,000.

The vehicle will be significance $13,750 at the closing stages of the lease, so you will be by means of:

That is $20,000 – $11,000 = $9,000

This quantity of $9,000 will be use over a 36 month lease epoch giving us aMonthly payment of:

That is $9,000 / 36 = $250.

best of luck to you, you really can not negociate the lease AFTER the lease is up…..but you might be able to find a sucker to buy the vehicle from you for more than the residual price…..maybe post it on Craigslist.com?

July 31st, 2008

Should I Lease My Car From The Car Dealership Or A Bank?

Reader Question

I want to lease a new Toyota Prius…..damn gas prices are out of sight! The dealership wants to charge me a bunch of smaller “Fees” in addition to the lease fee, what should I do….go to a bank for a lease?

Tom,

Detroit, MI

Dealerships value your business and are ready to negotiate. Mention important options before you seal the deal. Dealers know that some people like to swap cars often and want the flexibility to get out of a particular car when they choose.

What the dealer doesn’t tell you is that leasing is designed in a way that makes it both difficult and expensive to terminate before the normal end date. Dealers also try to sell you on leases by doing a comparison between the payments for a lease and the payments for the same car on a conventional loan. Invariably, the comparisons show the lease payment to be the winner. Most banks will not offer a car lease, but there are a few aftermarket companies that will…so shop around.

July 31st, 2008