Residuals impact - Discount vs Rebates

Ask the Hackrs
1

Hi everyone,

I am getting conflicting residual dollar amounts from different dealers. They are giving me the same % but the dollar amounts vary greatly. Some are incorporation the % after all rebates are applied, some are not including the rebates at all and some are including a few of the rebates. Which is the proper and common approach ?

2

Residual is based on the MSRP of the vehicle, so I’m not sure why they are calculating it that way.

3

Residual is based off MSRP, has nothing to do with selling price. The only thing that would change it would be a different MSRP or different mileage allowance. Also, are they all using the same bank to do the lease, more info would be helpful, like term, vehicle etc

4

Lets say for example a car is MSRP of $50,000 with a RV of 50%. That should make it about $25k at end of lease.

Now lets say they offer incentives rebates and discounts to bring that down to $40,000. Should that RV stay at $25k or be at $20k.

Or should it only be afected by the dealers discounts and not the Rebates.

I’ve never got such conflicting info. The last 2 deals I’ve signed the residual was adjusted to reflected the new selling price after substantial dealer discounts…

5

That is completely wrong. As everyone else has said, RV is based on MSRP, not selling price.

6

Guess I lucked out then. Someone messed up and wrote it up wrong?

Thanks for the information.

7

What do you mean by lucked out? You want RV to be based on MSRP, not selling price.

8

Because I am looking to purchase one of these leases outright and my “pre-negotiated” buy out is significantly lower

9

If someone messed up, the bank will kick the contract and you’ll have to resign. Again actual info like model, deal structure etc would be helpful. It doesn’t help to post generic info like this.

10

Uhh, so you paid more depreciation during the lease?

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11

The lease is approaching its end but either way this question was directed towards general leasing questions going forward. The deals on the table don’t interest me but I was curious when I was seeing same residual % but different actual RV dollar amount.

Thanks for the information guys.

1 Like
12

Were you looking at different MSRP cars? If the MSRP is different, of course the RV would be different as a result.

13

Are you talking about new cars or demo/loaners?