Residual Values
#21
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Originally posted by ZeeYas
I would think that if you are even thinking about getting rid of the car before 3 yrs you wouldn't want to lease it, right? Some people are unsure whether they even want to keep the car more than 1 year.
I would think that if you are even thinking about getting rid of the car before 3 yrs you wouldn't want to lease it, right? Some people are unsure whether they even want to keep the car more than 1 year.
If you keep the Z for one year, as you ask, then you are going to be upside-down regardless of lease, or purchase.
The difference will be that with a lease, you will pay the interest for the entire term, where the purchase will be the remaining principle.
In the one year lease case, you are 12/nth paid off, where n is the number of months in your term. (36/48/60). In the purchase case, you have paid mostly interest, and you have not paid much in the way of principle. The end result is you are typically more upside-down in the purchase case than the lease case for this scenario.
I typically come close to the end of a lease, and trade in the car (as I will do here again). In this case, I simply buy out the car, which is remaining payments + residual.
Hope this is helpful,
Todd
#22
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At the end of the lease, you can always take a look at the residual value and what the market value is on the car and make a decision based on that as well. There is always the option of buying out the residual value and selling hte car if you do not want to have it anymore.
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