Lease Depreciation Curve Trade-in Estimate?

Ask the Hackrs
1

Hey Everyone,

Long time reader first time poster.

So I actually have a balloon payment structure of 48 months, not a lease. I’m wondering two things:

  1. Will the depreciation curve be about the same as a typical 48m lease structure?

and 2. Is there an easy way to calculate when the depreciation will start to level out so that I’m not upside down, or would nearly break even in the trade for a new vehicle?

Thanks in advance,

-Watson

2

It’s not that simple, too many variables and not enough info

2 Likes
3

What type of information would you need?

4

I don’t even understand what you want to do with the curve…

5

Probably never breakeven

6

You would calculate the financial reasonability of getting out of the payments early, in order to move into a new vehicle.

7

Find out your current buyout price, goto Carmax to get an appraisal, then calculate the difference.

2 Likes
8

than why you need to lease curve ? Just do what @Jon mentioned

9

I think that would result in a one-time calculation of depreciation, but not a curve of depreciation. Correct me if I’m wrong. There must be an equation somewhere so understand the general depreciation in vehicles over time and compare that to the full payoff that you have which is a linear depreciation.

10

I understand what you are trying to do and any attempt at modeling the “correct” answer would be an intelligent WAG based upon trying to predict the future market. Residual Values on new car leases do not necessarily mirror real world depreciation, with the manufacturer RV potentially either inflated (Infiniti/Volvo) to encourage lease or deflated (Honda/Ford SUVs) to encourage purchase.

11

I’d assume you could use historical data to try and estimate the curve. Not that it would be an exact indication.

https://usedfirst.com/cars/audi/a4/

12

There is no “general depreciation” curve that would be very useful unless you only want to make very broad generalizations.

Every manufacturer and even the models within a lineup will have different depreciation curves.

The depreciation curves for a Porsche 911, Maserati Ghibli, Toyota Tacoma, BMW 3-series don’t look anything alike.

1 Like
13

True, but just because they are not alike doesn’t mean there couldn’t be an equation applied. Here’s another example of a more specific depreciation chart.

14

Depreciation curves being vastly different doesn’t mean that an equation CAN’T be applied, it just means a general equation is of little use.

I work for Porsche and I can tell you that even if you’re talking about Porsche and a 911, the depreciation curves for all the sub models are even different.

You didn’t ask about any specific brand, model, sub model.
My point is that you’re being much too general which makes it a much less useful exercise.

You linked a depreciation curve for a A4 and a equation derived from that would be useful if you’re applying it to a A4 in that year range.

2 Likes
15

2017 A4 P+ Sport Package

I could probably pull more specifics but you’re right. A general idea is about as close as I can get. It looks like the 2017 curve is doing better than the 2018 and 2016 so maybe that’s a nice indication but it’s really about trying to get a ballpark figure on the monthly payoff amount vs the actual moving RV.