Lease and resale value

[freddieB7]

All right, I think I can convince the wife to lease a Pilot. They are running a promo now of lease at $260/mo with $2k upfront. Seems feasible to me. My question is, how close am I going to be to having a little equity in the lease at the end of the 3 years? I am working with the assumptions that the vehicle will be in very good shape at the end of the lease and we won't exceed mileage of 12k/year.

The one I'm looking at is a 2008 Pilot VP 2wd. OPtion to buy at end of term is a little over $15k.

Thanks.

[shovelhd]

It's tough to compare because the 2WD Pilot came out in 2006, hence you don't have a three year old used value to compare it to. A 2006 Pilot LX, 36K, good condition, standard options is worth about $15K at KBB.

[csimo]

Keep in mind that the 2008 Pilot is the last year of the current design. They are just finishing (finished?) up production on the 2008 models and will soon be building the new design 2009 models.

The last year of a design usually has lower resale value.

[Just Ask]

Also keep in mind that a lease means that HMFC takes the risk if the resale is lower than what the residual value is. In other words, if the Pilot is worth more than the $15k, you win. If it worth less than $15k, then you just turn it in and get something else - ie, Honda loses, not you. This is one of the nice aspects about leases - although leases are not a good choice for many, they are for some.

[wrenrj1]

Mr. calculator says that the value of the vehicle based on your real expenses and estimated cost at the end of the lease is $26,360. Assuming you would have to finance the $15K for perhaps 24-36 months you would also have interest etc. to consider as well.

Have you considered what payments would be to buy the vehicle? They may be more monthly, but refinancing the vehicle at the end of the lease may cost you as well. Bottom line is how long do you plan on keeping it? If you plan on keeping it for longer than three years and run it for miles and miles, you're probably better buying it.

[913]

Resale value is difficult to predict, the way they structure leases is based on the residual value of the vehicle, usually stated in percentages. Which is basically the estimated value at your lease maturity date.

Residual values can change almost daily, and will vary depending on the term of the lease. Some vehicles have better residuals in short terms and others in long term. The higher the residual value, the lower your lease payment will be. Fortunately most imports have better resale values than domestics. Although the new Avalanche has a good residual right now.

You can usually get the current residual from the dealership, most sales guys claim to not know what it might be, but the finance guys do.

[UOVB]

[QUOTE=913;269149]Resale value is difficult to predict, the way they structure leases is based on the residual value of the vehicle, usually stated in percentages. Which is basically the estimated value at your lease maturity date.

Residual values can change almost daily, and will vary depending on the term of the lease. Some vehicles have better residuals in short terms and others in long term. The higher the residual value, the lower your lease payment will be. Fortunately most imports have better resale values than domestics. Although the new Avalanche has a good residual right now.
QUOTE]

True, True, and other things can flip the whole market for re-sale...
Like the Canadian Dollar going north of US dollar causing Canadian used car pricing to drop country wide
recession?
changes in technology?
competition?
a string of bad press?
fuel prices?
or maybe the limited supply of flux capacitors?
Just remember there are very few sure things out there and a lot can change in 3 years.