RESIDUAL VALUE OF A CAR UPGRADE
RESIDUAL VALUE OF A CAR FULL

Only lease cars that hold their value well, or you'll be paying a lot more than you should. Hopefully, this opens your eyes and shows you why you need to pay attention to the residual value of the car you're thinking about leasing. The depreciation cost on the Saab is $489 per month compared to $387 per month on the G37. The Saab 9-3 on the other hand, has a residual value of only 39%. A key feature of lease finance is the residual value risk: As lease payments are based on the depreciation of the vehicle over time, the residual value at the. The Infiniti has a high residual value and is expected to retain 62% of it's MSRP value after 36 months. The reason it works out this way is due to the residual values of these particular vehicles. When you account for the MSRP price difference, leasing an Infiniti G37 versus a Saab 9-3 will save you over $2,000 and allow you to drive a car worth $8,000 more - unbelievable! That comes out to a savings of over $2,000 after 36 months. You would actually save $58 per month if you were to lese the Infiniti. These figures are based on a 6% finance charge and a 7% sales tax rate. To show you how important residual values are, let's take look at a real life example of how you can lease a $36,650 Infiniti G37 Coupe and pay a lower lease payment than if you leased a Saab 9-3, which is a vehicle that costs almost $8,000 less. If cars didn't depreciate, a typical lease payment on a $20,000 car would only be about $100 per month. In fact, depreciation cost makes up the bulk of your monthly lease payment. Unlike renting a house or apartment, cars lose their value while you drive them, and so you need to pay the cost of this depreciation as part of your lease. Leasing a car is similar to renting a car on a long-term basis. (Residual value refers to the value of the vehicle at the end of the lease). The depreciation is what is 'taken away' from the vehicle's value, and the residual is the value that is left. Essentially, it's an estimate of the wholesale value of the vehicle at the end of the lease term. What most people don't realize is how residual values affect the price of your monthly lease payments. The residual value is also known as the lease-end value or lease-end purchase price. Interested in learning more about a novated leasing? Visit our novated lease page or get in touch today.It's amazing how many people lease cars without having a clue as to how it works.Įveryone focuses on low monthly payments and assume they're getting a good deal. Look at all the options – Not everyone needs a Porsche 911 (although we all probably want one) look at a range of different vehicle prices and length of lease options, these will also affect the residual.

RESIDUAL VALUE OF A CAR UPGRADE

Maybe you already know that you will sell the car at the end of the lease and upgrade to a nice new vehicle! Have a strategy and if you have any questions, let your Maxxia customer care consultant know.

Perhaps you would like to put a little bit of money aside each pay so you’re ready at the end of the lease. Have a plan – Think about how you would like to approach the balloon payment. The residual payment is not something to be afraid of.

RESIDUAL VALUE OF A CAR FULL

Selling the car and using the money to pay the residual.īalloon hints and tips that aren’t full of hot airĮducate yourself – Knowledge is power – do your research, seek financial advice and call us for a chat.

Paying out your residual value and owning the car outright.Refinancing your residual value for another term (by leasing the same car your residual will continue to reduce).Leasing a new car and continuing to enjoy the benefits of novated leasing.What happens at the end of your novated lease?Īt the end of your novated lease we’ll be in touch before your lease ends to discuss your residual payment options, which include: So if you have a five-year lease, you have five years to work out the option that best suits you and how you want to deal with the residual. When it comes to novated leasing Maxxia hates surprises, so we calculate the residual amount for you upfront. Also, like a balloon, the residual is nothing to be afraid of. Like a balloon, the longer you re-lease the same vehicle the smaller the residual payment will get. Residual amounts also need to be paid with post-tax dollars – meaning funds within your novated lease account cannot be put towards the residual. The amount of the balloon payment depends on the lease duration and the value of the car at lease end. The residual – or balloon payment – is the payment required by the ATO at the end of a novated lease and is calculated as a percentage of the finance amount required to purchase the car. After a day or so it starts reducing in size to something smaller or less formidable – and it’s the same concept for the residual payment on a novated lease. When you first blow up a balloon it’s at its most glorious bulbous and proud.

Residual value of a car