BigsViper
Enthusiast
BEWARE! Some performance upgrades can create problems for the lease, unless you return it to stock.
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Leasing.
- Thread starter BigsViper
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Mopar Steve
Enthusiast
Can someone explain "residual value"? Does that mean, that's what the car is worth at the end of the lease? 2001 now $70,000 and in 2005 after a 48 month lease it's worth half? (residual being 50%) $35,000 for a 2001 in 2005 I can't wait!
I know that can't be right but I don't get it.
Thanks
I know that can't be right but I don't get it.
Thanks
John Johns
Enthusiast
You're right, residual value is the lease end value. $35k for a 4 year old Viper sounds like quite a deal huh?
I expect if you were ending a 4 year Viper lease right now on a 97 with a residual of $35k, you'd have $20k or so equity in the car as it would be worth $55k or so.
That $20k would just about pay the lease charge in my above example. So-- you would have driven the car for 4 years paying almost no lease charge!
Free lunch? Not really. The lower the residual, the higher the payment as there is more depreciation to pay. A higher residual would give you a lower payment but less or no equity at the lease end. Lenders are inclined to set the residual lower to protect their exposure at lease term and would typically not negotiate residual values. You would typically have an option to purchase your car at lease term at a fixed price. This price should be at or near residual value, but read the fine print. Some leases allow purchase price at lease term to be "market value" which on a Viper may well be much higher than residual.
I expect if you were ending a 4 year Viper lease right now on a 97 with a residual of $35k, you'd have $20k or so equity in the car as it would be worth $55k or so.
That $20k would just about pay the lease charge in my above example. So-- you would have driven the car for 4 years paying almost no lease charge!
Free lunch? Not really. The lower the residual, the higher the payment as there is more depreciation to pay. A higher residual would give you a lower payment but less or no equity at the lease end. Lenders are inclined to set the residual lower to protect their exposure at lease term and would typically not negotiate residual values. You would typically have an option to purchase your car at lease term at a fixed price. This price should be at or near residual value, but read the fine print. Some leases allow purchase price at lease term to be "market value" which on a Viper may well be much higher than residual.
John Johns
Enthusiast
The resisdual is in line with others posted here. The unknown is your lease charge (the equivalent of finance charge on a purchase).
To determine lease charge: subtract resisdual value from cap cost (the price of your car minus down payment)your result is the depreciation, subtract depreciation from the total of payments, the result is your lease charge.
Example: Cap cost is $70,000, minus resisdual value (which is a percentage of MSRP, not cap cost). Let's say MSRP is $74,000, so at a 52% resisdual we have $38,480. The result is: $70,000 cap cost - $38,480 resisdual value = $31,520 depreciation.
Payments are $1150 x 48 mos = $55,200 total of payments.
Total of payments $55,200
Minus depreciation - $31,520
Equals lease charge of $23,680 in this example.
Federal laws do not require the disclosure of an A.P.R. on leases, so the rate of interest is not apparent. There may also be monthly rental taxes included in the payment.
I hope this isn't too complicated.
Buyer beware and deal with a reputable dealer like Bill Pemberton at Woodhouse.
To determine lease charge: subtract resisdual value from cap cost (the price of your car minus down payment)your result is the depreciation, subtract depreciation from the total of payments, the result is your lease charge.
Example: Cap cost is $70,000, minus resisdual value (which is a percentage of MSRP, not cap cost). Let's say MSRP is $74,000, so at a 52% resisdual we have $38,480. The result is: $70,000 cap cost - $38,480 resisdual value = $31,520 depreciation.
Payments are $1150 x 48 mos = $55,200 total of payments.
Total of payments $55,200
Minus depreciation - $31,520
Equals lease charge of $23,680 in this example.
Federal laws do not require the disclosure of an A.P.R. on leases, so the rate of interest is not apparent. There may also be monthly rental taxes included in the payment.
I hope this isn't too complicated.
Buyer beware and deal with a reputable dealer like Bill Pemberton at Woodhouse.
John gave you a very accurate idea of a lease structure, but part of the situation is that Chrysler ( as well as Ford,GM, and most large banking companies ) have totally changed their leasing residuals effective in January. Residuals dropped over 2 basis points with Chrysler and some of the more competitive companies have left the lease market completely. The buy out price on a Viper is so low now after the lease ends, that it is inconceivable that there wouldn't be alot of equity at term end. Not knowing what company your dealer is going through,or your tax structure, I would have to say that it sounds pretty fair on face value. You may find that a purchase program looks more attractive now, though I would recommend a larger down payment ( if possible ) for a decent payment. Best of luck and feel free to call me if I can answer any other concerns,questions,etc.
Bill Pemberton
1-800-889-1893
Bill Pemberton
1-800-889-1893
Brad04Mamba
Viper Owner
I analyze leases for my clients all the time, based on your numbers I come up with a lease factor (or interest rate) of about 10%. This seems high, but there are alot of factors in leasing that I don't know from your post, ie was sales tax included in dealers payment, MSRP (which affects residual), etc. If you would like me to run an analyse of the lease email me with all the details and I can fax you a report.
jcochran
Enthusiast
I leased my Viper through Bill P. at Woodhouse before I traded it off for a house (a sad, sad, but happy day). I put down a considerable amount at the time of purchase (14K?), but my payments were very reasonable ($800 a month). Remember: taxes (lux, gas, sales) can put a hell of a toll on your monthly payments. Insurance for the Viper as a primary driver and tires can be pricey in the long run as well.
When I sold the snake, I got what I was asking for (more than the lease buyout). I put 13.2K miles on it in 8 months, and regardless of how much it cost me per mile, IT WAS WORTH IT! If your finances can handle it, call Bill P. straightaway for a zero BS deal - there is no better than Woodhouse.
Now I just got to get over this whole torque withdrawl thing...and save up for my next "Peeg O' Doom".
James
"From a V-10 to a 4 cylinder turbo...ugh. I need a beer
When I sold the snake, I got what I was asking for (more than the lease buyout). I put 13.2K miles on it in 8 months, and regardless of how much it cost me per mile, IT WAS WORTH IT! If your finances can handle it, call Bill P. straightaway for a zero BS deal - there is no better than Woodhouse.
Now I just got to get over this whole torque withdrawl thing...and save up for my next "Peeg O' Doom".
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James
"From a V-10 to a 4 cylinder turbo...ugh. I need a beer
