I have never leased a vehicle but while talking to a friend he was telling me that every vehicle leased has a predetermined buy out price. This is what the vehicle will be “worth” at the end of the lease. I’m curious on what the Telly is estimated to be worth in 3 years with 36,000 miles on it. Obviously the trim level plays a big roll but I was wondering if anyone that has leased knows what the buy out price is (assuming everything I just stated is actually how it works). I have a “S”. MSRP $37,245. I’m guessing it’ll be somewhere around the $27,000 mark...
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Estimates vehicle value in 3 years
- Thread author KennyC
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Tellmeride
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It’s called residual. The number is posted by the stealerships.
starra
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Around $19,000
This only applies if you lease. But, it is a gauge of depreciation. For a 3 year lease, a 61% residual is reasonable. Could be higher or lower - just depends on many factors. Many manufacturers (especially Luxury) set artificially high residual values at the beginning of a lease because they don't want customers knowing true depreciation (it's often much higher). They make money on the financing aspect. It will be worth what someone is willing to pay in 3 years... but we don't actually know yet of course.
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Thanks. And I know it’s only worth what someone is willing to pay. My friend just got me thinking... thanks again for the input. Drive safe
Yeah, residual values are just used for finance companies to anchor an estimate so the customer only pays expected depreciation and finance charges on a lease. Leasing a Kia, Honda or Toyota is usually a bad value proposition (there are circumstances when it could be better) because they can last forever and the maintenance cost is low (relative to a luxury vehicle). Most consumers get hosed on leases because they see the lower monthly payment and fall for it. I admit I got hosed on a BMW lease once... won't let that happen again!
Those "leasing specials" aren't really a great deal unless the money factor is very low AND the net capitalized cost has been reduced a few thousand (equivalent to negotiating the price down). But, lease acquisition fees and disposition fees are also against consumer. Also, in some states like Texas, consumers really get screwed because a new lessee pays tax on the full value of the vehicle (less trade in). I suppose down the road if another vehicle is leased or bought from same manufacturer, the residual value can be used to reduce taxes on that purchase/lease... but it's just another tool to try to lock in a customer and keep them leasing for life! Works out great for manufacturers, dealers and finance companies!
One thing though that does hurt Kia resale is that the 10-year powertrain warranty is not transferrable to subsequent owners - it only stays with the original owner. A bit frustrating... but I think the original warranty is still better than other manufacturers.
BTW, if you want to sell in 3 years - let me know! I love our SX-P, but my wife claimed it, and I'm thinking about picking up an S as a second vehicle in a few! With 36,000 miles or less in 3 years, I'd say you're looking at a $23,000+ private party resale value... but as you said, time will tell!
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