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Low residual is a good thing... Posted by Mike Lynch [Email] (#81) [Profile/Gallery] (more from Mike Lynch) on Wed, 17 Oct 2007 18:47:34 In Reply to: Current 27mo lease offer, hcrystal, Tue, 16 Oct 2007 19:47:04 Members do not see ads below this line. - Help Keep This Site Online - Signup |
With a competitive payment a lower residual or lower end of term buyout is an advantage for the consumer. True a higher residual results in a lower payment all things being equal, but that's why I started with "With a competitive payment"....
10k leases can be 3 or 4 points higher in residual than 15k leases. Working forward a standard lease residual is 15k, 1 or 2 points higher for 12k called a low mileage lease and another 1 or 2 points higher for 10k or ultra low mileage lease. Straight dollar in dollar out calculation pretty much. If the residual difference is 3% then say 3% times MSRP of $30k = $900 divided by the term of 27 mos = $33.33 a month more plus or minus a negligible amount of rate, a dollar or two, but mostly all the residual difference. That's why it's called a level yield lease. I dunno' the actual percentage difference between the 10-12 and 15k leases, but there's no reason for a dealer (I used to one of those! Sorta' still am..) not to disclose residual info, it's fixed.
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