Can someone confirm my logic regarding payments and residuals?

Ask the Hackrs
,
1

Let’s say we have a car with trim A at 25000 and a higher trim B at 27000. Is it ever the case where the residuals have an equal difference from original value in 3 years? So in this example, A will be 15000 and B will be 17000.

And if this situation does happen, am I correct in assuming that the lease will cost the same for both? Or is it more complicated than just looking at the difference between residual and purchase price?

2

That can be the case, but payments aren’t based only on the depreciation. IF the MF is the same, you’d be paying more in rent charge.

3

Sometimes, the more expensive trim is cheaper to lease.

1 Like
4

Can you explain that? Does MF apply on purchase price or the leased value?

5

Rent charge = MF*(cap cost+residual value)

6

Read the Leasing 101 and How to calculate leasing payment articles.

2 Likes