Is there a way to determine off lease residual ?

[PhillyJoe]

Lots of info out there regarding new car pricing. Cargurus is a guide for relative used car pricing. When you are looking at a car someone else leased, there was an upfront, written purchase option for the end.
Most off-lease cars seem to come from dealer auctions; some the dealers keep their own. Carfax shows if they were leased and serviced at original dealer.

Case in point that caught my eye:
2014 Lincoln MKS v6 (Taurus twin) loaded, dealer shows original sticker on website, $49,600.
Car was leased for 2 years and has 21,000 miles. Lessee turned car in but had option to buy for $x.
Dealer asking $26,500.
These cars have notorious depreciation, but the certified ones come with a long, comprehensive warranty.
The dealer kept it instead of turning it in for auction.
Is there a standard residual % ? Since they already know the value of the car 2 years down the road, there must be a formula they use.
If the residual/auction price is $20,000 there is some decent wiggle room. If the dealer got it for $24,000 I can guess he will only offer $500 off price and free oil changes.
Tomorrow could also be the best day to make a stupid offer to a dealer one or two cars away from a year-end sales plateau.

 

[NormanBuntz]

As far as I know, lease residuals are determined by the financial institutions that write the leases, not by the car dealers or manufacturers. The residual set by Chase Bank would be different than that set by Ford Motor Credit. Unless the dealer is too secretive, it should show you in writing what the residual was for that car at the time the lease was written. On a two year lease it could have been in the 60 to 65% range.

 

[JayhawkRoy]

nadaguides.com shows this vehicle to be clean trade 20K and clean retail 23K. I would consider it over-priced at the 26K asking price. This pricing assumes power sun roof and the upgraded stereo system.

To me, residual is not so relevant, especially in this case where their asking price is 3K above a used car sale price, per nadaguides. When's the last time any car dealer has shown you exactly what they have in any used car on their lot? I would negotiate as always and be prepared to walk away if needed.

The one that is available in the KC area that exactly matches the year and mileage is also overpriced by 4K or so.

 

[69GTX]

My current Lincoln stickered at $39K. I bought it with 22K miles as well, though 7 years old at the time (for $9K). Figure in 4 more years the depreciation will take yours down to around $10K or less. I wouldn't figure it at anything over $20,000 right now. Do cars coming out lease also experience an immediate "driving it off the lot" depreciation? That could be $4K-$6K in this situation. It's 3 model years old now...even if it might have only 2 owner years on it.

offering ebay

sold on Ebay

 

[eljefino]

Try and snoop around to find the former owner and ask them directly!

You could ask to see the title but it would be in the name of the bank, but you never know what else you'd find.

But as you said, make a stupid offer. Armed with info or not it would still be the same odds.

 

[gofast182]

Originally Posted By: eljefino
Try and snoop around to find the former owner and ask them directly!

You could ask to see the title but it would be in the name of the bank, but you never know what else you'd find.

But as you said, make a stupid offer. Armed with info or not it would still be the same odds.

Yes, the downside risk is much higher on something that depreciates more rapidly. They may think they've got a peach to sell you but peaches only stay ripe for so long.

 

[JTK]

Like said, the residual is going to vary case by case, based on what the original 'owner' signed for. Dealers will set the lease terms up how ever you want it. How many months, how many miles, how much they put down, etc..

 

[CKN]

The market value of the vehicle is what it is. Meaning it's the market value. It just happens to be a used vehicle that was leased. It has no bearing on other factors.

If you low ball the dealer-and they think they can sell it for more to somebody else-you won't get the vehicle.

If they think that they will "sit" on the vehicle-and they are making a small amount of money on the sale-you may drive it home-with a low-ball offer.

 

[gofast182]

Originally Posted By: CKN
The market value of the vehicle is what it is. Meaning it's the market value. It just happens to be a used vehicle that was leased. It has no bearing on other factors.

If you low ball the dealer-and they think they can sell it for more to somebody else-you won't get the vehicle.

If they think that they will "sit" on the vehicle-and they are making a small amount of money on the sale-you may drive it home-with a low-ball offer.

This is a great point. A couple examples: My 2015 TLX, while the residual is contractually set on day 1, the car will not hit that value in the marketplace on day 1095 because issues with the 9AT have already brought it below that point before the lease is up despite the car being in excellent condition. I've had other cars, like a 2012 TSX that, with a favorable market and being in very good condition, was worth slightly more than the residual at lease end. Now the new BMW, they tend to use residual as a buying aid to offset high MSRP (it is set at 62% which is the highest of any lease I've had by a significant margin). Will it be worth that in the marketplace in 3 years? Doubtful, but to BMW it will be and that's what matters for the lessee, not the follow-on buyer of that vehicle.

 

[eljefino]

The residual is negotiable *at new car leasing signing* b/c they don't know with 100% surety what fuel prices will be in 2 years, or if the car is a mechanical turkey, etc. Most people don't bother as they see the monthly payment and figure, hey, whatever.

The house *usually* wins, but when gas jumped last decade there were a bunch of consumers happily handing in Durangos and the banks were taking baths on the resale.

 

[gofast182]

This is not necessarily true. With Honda/Acura it can be. With BMW it is not (provided the dealer is already giving you the max. from the factory).