FutureStarr

Car Residual Calculator

# Car Residual Calculator

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This is a new subscription service where car dealerships can offer an ongoing value to current car owners. It's also a great way for car dealerships to start getting into new car sales. Plus, car dealerships get a continued revenue stream. You can also see your other vehicles value in a single glance.

### Year

A lease is a contract allowing a party to convey property to another party for a specified time, usually in return for a periodic payment. A car lease allows a person to drive a car for a fixed period of time as they make a down payment as well as monthly lease payments until the lease ends. It can help to think of a car lease as a long-term car rental; while car rentals generally last for as little as a day or even just a few hours, car leases average between two and four years. Many leases allow the purchase of the leased vehicles through a purchase option agreement at a specified price once the lease ends. It is important to note that choosing to add such an option at the beginning of a lease will add a small amount to the monthly lease payment. Most car leases can be found at dealerships or private car dealers.

Take a car leasable for 3 years and has an agreed-upon value of \$25,000 after negotiations on the auto price (capitalized cost) as an example. The lending financial institution for the lease has placed a residual value of \$12,500 on the car after the 3 years and has given the lessee an APR of 6% after a down payment of \$5,000. Assume that the down payment is solely to reduce the capitalized cost, not as payment for any upfront fees. For simplicity's sake, assume that all fees are rolled into the auto price. The lessee is also willing to trade in a used car with a value of \$2,000, and the transaction occurs in a state with a 6% tax rate. (Source: www.calculator.net)

Lessees can potentially avoid excessive wear and tear charges by taking good care of their leased vehicles. This can include adding protection such as car door guards, or assuring that small children are properly attended to. In the days prior to the return of the vehicle to the lessor, it can work in the lessee's favor to ensure that the car has as much curb appeal as possible. Giving it a wash, buffing out any scratches, replacing small broken parts, and removing stains from upholstery can help. Wear and tear insurance is available for lessees who feel that they might need it to cover excessive wear and tear. Lessees with too much excessive wear and tear have the option to avoid penalties if they buy the vehicle at the end of the lease.

These are just some examples. However, that's not to say that there aren't any cons associated with leases. Firstly, similar to renting a house instead of buying, when the lease ends, there is no equity built. Also, because there is never actual ownership of the car as it is still legal property of the lessor, the lessee may not do as they please to it; there are certain restrictions in place regarding what modifications may be done. Secondly, there are distance limits in place, so lessees probably need to think twice before going on lengthy cross-country road trips in their leased cars. (Source: www.calculator.net)

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