Are you thinking about leasing a car? This is a decision that many people make and it is also one that has plenty of benefits. You need to be familiar with all the parts of this process though before you take it on. The following are two keys to a successful leasing plan. If you know what residual value is as well as capital cost then you are putting yourself in a great position. Take a few minutes and become more familiar with things you might not have understood before.
What is Residual Value?
Residual value is something people do not understand when they enter into a leasing plan. This is important to realize though. During a lease what you are actually paying for is the difference that there will be between the value of the car when it is brand new and on the dealership floor and when you bring it back after your lease is up. This is the residual value and it is determined by the dealer themselves. This is something you must know and have a solid idea of how the dealer judges what this amount will be. Give them a call to find out. Generally for a 36 month lease you can expect a residual value of at least 50 percent.
What is Capital Cost?
The capital cost of the vehicle involves the MSRP (manufacture’s suggested retail price) that the dealer sets. This is a number that you can actually try to bring down during the lease. You do not have to accept the number right off of the bat. Capital costs are also brought down by trade ins, down payments, and any rebates you might have. One thing you must watch out for is if the dealers sets the capital costs higher then the MSRP. Then it will look like you are getting a deal when you actually are not. Find out why this happened and you might have to change your mind on this car. This is also a great way that you can go about comparing cars that you are thinking about leasing. You always need to think about getting the best deal possible during a lease. Just because you may be saving money now doesn’t mean that will happen in the end. They might try to make their money up somewhere along the line.
Now that you know what these two factors are you must look to use them to the best of your ability. Do not let a poor lease hold you down. You need to be aware of the costs and values of the cars you have, and make sure they do not work against you. A lease is something that you will be responsible for a few years. You need to make sure that those years go as smoothly as possible. Put yourself in the best position to get a lease you will be happy with now that you understand what residual value and capital costs are and how they work.
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