My brother in law said to me you should never pay more than 40% of a car’s value during a 3 year lease. I think he’s implying any car company that gives you a residual value under 60% is ripping you off. Personally I think his perception is skewed as he has a QX60 and Infiniti inflates RVs but I’m curious what people think. I don’t think he appreciates every company is different. This came up because I am shopping a Pacifica Limited (non-hybrid) and most dealers seem to be using a RV of 48-51%.
Banks set the RVs and some cars just don’t hold their value well. That’s why we lease them though! Who wants to worry about depreciation.
Take this F Pace. 51% RV. But the interest is so close to 0 and the discounts are good. Of course it doesn’t hold its value well because…it’s a Jag. If you lease it, not your problem in 3 years.
It’s all dependent on what you want. If you want a car that doesn’t hold its value well, like a Jag, get one that’s heavily discounted with a solid MF, like what’s out there today, and you’ll have a great payment.
Factory incentives are just important as RV and manufacturers manipulate both to maximize sales. A $50K car with $5K in incentives is the same as increasing the RV by 10 points (outside of tax).
It’s as simple as trying to have the smallest gap between selling price and RV taking into account RV, incentives, and dealer discounts, then overlay MF as the interest you will be paying. You can get to a great deal with different combinations of the 3.
This is why the 1% rule is a good baseline. Any Lease hacker score over 8.33 is below the 1% rule (100 months divided by 12 = 8.33 years.)
Using your brother in laws reasoning, paying 40% of the value in a 3 year lease equates to a 7.5 score (3 years/40%). But as said before, the discount, incentives, and mf play just as important a role as the RV.
