| Here are the definitions to help evaluate vehicle | | | | lease payment but differing in price by several |
| residual values | | | | thousand dollars.How to exploit this anomaly in vehicle |
| Vehicle residual value | | | | residual values in a Lease calculationThe easy way |
| This is the value that the manufacturer, not the | | | | On the Internet, search for any manufacturer's web |
| dealer, says the car will be worth at the end of the | | | | site and simply find a lease payment by focusing on |
| lease. Sometimes it is a percent, such as 60% of the | | | | any higher quality car costing a few thousand collars |
| MSRP, the price of the car. A $20,000 car with a | | | | more than your initial choice. Ignore the fact that the |
| 60% vehicle residual value would have a residual | | | | residual value is not given. What you're really after is |
| value of $12,000.The lease contract says you can | | | | a monthly lease payment on a Vehicle B that is the |
| rent this $12,000 for x years by simply paying a | | | | same, or almost the same, as the lease payment on |
| percent, such as 4% of the $12,000, or .04 times | | | | the initial vehicle A that you chose.The hard way |
| $12,000 divided by 12 months or $480/12 equals $40 | | | | To narrow your search for a secondary choice, be |
| month Amortization | | | | sure to limit it to a vehicle that has a higher residual |
| The $8,000 left (the $20,000 car price minus the | | | | value percentage. Because few car manufacturers will |
| $12,000 residual value) is a standard loan, just like a | | | | provide the residual value on the Internet, go to |
| house mortgage, which requires a monthly payment | | | | other sites that do offer this information. To get the |
| for not only the interest but also a little of the | | | | percentage residual value, divide the vehicle residual |
| $8,000. This will always be a much larger payment | | | | value by the MSRP and you have the percent. |
| than the interest paid on the residual value. | | | | Example: 12,000/20,000 equals 60%.After initially |
| | | | deciding on what car to lease, get a lease proposal |
| Here is where the magic is | | | | on a different make that costs as much as $5,000 |
| Higher quality cars, such as a BMW or Mercedes or | | | | more. You can do a lot of this secondary searching |
| Lexus, will always have a higher relative vehicle | | | | on the Internet. Make sure each choice has similar |
| residual value than a Chevy or Pontiac or Dodge. | | | | features and that neither one is loaded with a lot of |
| That means that although the interest paid on the | | | | optional accessories. |
| higher quality vehicle residual value is more than that | | | | |
| paid on the lower quality car, the monthly payment | | | | The next step is to actually visit the second choice |
| paid on the depreciation is a lot less, so that the sum | | | | dealer showroom and see if Car B meets your |
| of the two on a BMW can be the same as the sum | | | | needs, such as comfort, room, and any other |
| (the lease payment) on a lesser quality car.Use the | | | | requirements that led you to pick vehicle A in the |
| resource box at the end of the article to see an | | | | first place. Ignore its price, because you're only |
| actual example of two vehicles having the same | | | | concerned about its monthly lease payment. |