I waited 8 years for the EVO to arrive in the US, and really have no care on how much it is worth after 36 months. It is unlikely I will sell the EVO in 3 years. I will just get another if a newer, significantly better EVO comes out.

 

Well I'm from Northern California so we get reamed on just about any kind of desirable car. Even if you think it's a bad comparo my point was just because a car is desirable to enthusiasts and produced in limited numbers that doesn't mean it's resale is going to hold, the lease numbers back this up.

Regardless, most cars we average people will own are terrible "investments", the best we can do is make sure we get good lease or loan rates to lessen the hit of depreciation. Black_Evo_VIII has the right idea, just enjoy your car to the fullest!

 

Well I had a poor choice of words...I don't think of ANY car that a normal joe can buy as an investment. I wont be selling my car ever I dont think...its too fun, and I am looking for a second hobby.

nuff said on that point

 

These leases always mystify me. Can somebody help me out?

LEASE: $596/month x 36 months = $21456 out of your pocket. During this time your are limited to 12,000 miles a year and penalized like crazy for exceeding it. Also, you can't terminate the lease without stiff penalties. And then you return the car back to the dealership for say, a realistic (optimistic?) 50% residual, $15,000 (which is the amount the dealership thinks they can re-sell the car for, right)? But you, as the leasing customer, get NO money or equity back at the end of the lease. Is this correct?

PURCHASE: $30,000 loan over 60 months at 4.9% is only $564.76/month. Over 36 months, this comes to $20331.36, a savings of $1,125 doing the "purchase" instead of the "lease". Further, you will only owe $12,286 on the Evo at the end of 36 months, and assuming you could still sell it for AT LEAST the residual value (i.e. $15,000), that's another $2,714 back in your pocket, making the "buy" choice at the end of 36 months $3,839 cheaper than the lease by my calculations.

I have got to be missing something here. Can some experienced leasing owners please help me out?

Regardless, it shows you why dealerships LOVE to do leases so much. They make $21,456 for letting you use the car for 3 years, and then turn around and sell it again for AT LEAST Residual value ($15,000), for a total of $36, 456. Nice.

 

First, the residual: this is the number that the BANK (not the dealer) thinks the car will be worth after you use it for 36 months and put 36,000 miles on it. It's the "residue" of value. For sake of argument for now, let's call the residual $15,000.

So, if you bought the car for $30,000, the car depreciated $15,000 due to your use over those 36 months. ($30,000 purchase price minus $15,000 residual imputes $15,000 of depreciation).

If you understand those two facts, understanding your lease payment is very simple.

When you lease a car, you are simply paying for the depreciation. They throw in other fees, and charge you interest for borrowing the money for that period, but in the most basic sense, you are paying the DEPRECIATION of the car, plus tax, distributed over 36 months.

You might get your security deposit back at the end, but you haven't paid in any equity (remember that you only paid the depreciation), so you don't get anything back.

You CAN purchase the car for the residual value if you like. Remember that you need to pay the remaining tax on the residual value. With a lease, you actually pay the tax month by month (another advantage of leasing), so you've only paid part of the tax by the end of the lease, leaving the tax to be paid on the residual value if you choose to purchase.

What you are missing is that the residual on a lease will actually be $12,300 (41% of purchase price), so you can buy the car for that amount at the end of the lease, not $15K. Also, did you consider the taxes you pay all at once, up front, on a purchase?

You also need to look at your money factor (imputed from interest rate in order to confuse consumers as much as possible!) on your lease and compare it to the interest rate on the loan. Get the lowest interest rate you can get on the lease! Because leases seem so confusing, many people don't get around to negotiating their money factor (lease interest rate). It should be VERY low these days. Get the lowest money factor you can get!

First, the $15,000 assumption is wrong.

But you are making a more fundamental mistake. The dealer doesn't make out any better and could probably care less, unless the bank is giving them kickbacks for doing one form of financing over another.

The dealer sells the car to the bank for the purchase price whether it's a lease or a purchase. After the lease or loan is set up, your relationship is with the BANK not the dealer.

I hope that makes it clearer, not more confusing.

 

Hrmm, OK. So I guess that the lease scenario I was using from M3lachsliber was a little off (that's where I got my figures, plus i can blame him, the American way, woot! :P). Also, I always thought that lease payments were significantly cheaper than purchase payments, so those were also of concern in my comparison.
OK, is there ANY relationship between the residual value and the car's actual resale value at the end of 36 months? Am I to understand that the Evo will only be worth $12,300 in 3 years!?!?! Surely not. I would think it would probably sell for at least $15K to $18K.

Also, if the Mitsu dealer (or bank, whoever) projects a LOW residual value, then that generally means HIGHER lease payments, right? Which would further increase the gap of purchase benefits over a lease, right?

I guess what would really help me out is to see the purchase and lease payment schedules side-by-side sometime, taking into account monthly payment differences, equity at the end of 36 months, and re-sale/residual values.

Thanks for your help on this kurichan.

 

Lease payments will be significantly less relative to loan payments on cars with high residual values like a BMW (but BMW Finance has been fiddling with its residuals recently to increase turnover, which pissed me off and made me walk out on my M3 purchase and get a WRX! Because of the big decline in the used car market, I suspect their shrewd little games blew up in their face!).

I think a better comparison might also be a 36 month lease vs a 36 or 48 month loan.

Sometimes there is a tight relationship. I think it remains to be seen with the Evo. Mitsubishi quality (or lack thereof) is a real wildcard. Also, if the Evo IX is out in 3 years, that will hurt the value of the car.

I will say that the first year to market is sometimes a good chance to get a great deal on a lease because the banks screw up setting the residual. I personally think that the Evo should be worth more than $12,300 in 3 years, so as long as you don't mind the trouble of selling it, and can front the $12,300, or sell it before you buy it back from the bank at the end of the lease (not literally of course!), the '03 Evo might be a good chance to lower your total cost of ownership if you can sell it for $15K or $18K since you make some money back on the flip.

Yup.

I'm not convinced that buying an Evo is better than leasing one (plus, I have to lease for tax advantages), but lower residuals do make your lease payment higher because your lease payment is essentially depreciation. A lower residual setting is like saying high depreciation is expected (I know I am repeating something you know and understand, but it never hurts to be too clear, right?)

There is a good Internet site that will do this for you. I have it bookmarked in my office computer and will post it tomorrow morning.

Sorry if my explanations are too ****. Just trying to be complete because it can be so confusing. I remember how bewildering my first lease was (fortunately, I was stubborn and didn't get screwed too badly), so I am glad to help!

Another point to consider is that new cars have gotten much cheaper these days due to all the incentives manufacturers are offering. Think of all the cars that were bought over the last year on 0% loans... People will be dumping those on the used car market in 3 - 4 years. There's going to be a glut of used cars which is going to kill resale values.

I'd say if you plan to keep, buy. If you want a different car in 3 or 4 years, lease. Remember that it's a performance car and you'll probably drive it that way. If it starts falling apart, with a lease you can just give it back and walk away...

 

WOW!

What a great exchange of lease info..!!
Since I am in the equipment and auto leasing BUSINESS, I should have participated a little more here but..

I have been really busy and haven't checked this thread until now, and all of the information looks pretty right on as far as what leasing is about, and how one can benefit from doing so..

Sorry if I didn't post my .02 like I usually do.(and intended too).

Great stuff.. Kurichan!!

 

Here's the link, one day late (sorry).

Leaseguide

It's not quite as good as I remembered, but seems a decent place to start...

HTH

 

OK fellow EVO owners, how good is the resale value of our EVOs ? {I mean the stock ones with out mods!}

I am being forced to sell my flawless Silver EVO 8- stock with moonroof and big CFwing, and 35% tints all around) ONLY 950 miles on it!

(broken in properly, never raced, completely stock, non-smoker)

...so how much is the car worth? (I guess location is a major factor!)

[i paid about $32k]
Cant begin to express how hard its going to be to sell this car!
....If I do sell it, I will probably go into spool EVO withdrawl!

[I am selling cause an upcoming marriage will mean 4 cars total --one would be a new company car and in this poor economy we are forced to sell 2 of them, the Acura CLS is going too!]

I would appreciate your help!
Thanks, A.C.
Cincinnati, OH

 

I think you should sell it to me for $25000.



Actually, I would guess you'd have to take at least $1000 off what you paid; otherwise, the buyer would probably just buy a new one for peace of mind. Just ask yourself what you would do if you were the buyer.

Why do you have to get rid of 2 cars because you're getting married? You can both afford two cars when single, but not when married? Is one of you quitting a job? I suggest you keep the Evo. You'll save on car insurance after you get married.

 

1) Just out of curiousity what 2 cars are you keeping. I mean isn't the practicality of a 4-door car reason enough to keep it?

2) Being a new car with low-mileage you would expect to get alot right? WRONG you lost a whole bunch just driving the thing off the lot. You'd be better off selling 2 of the 3 other cars rather than get rammed up the @$$ for depriciation.

3) Are you CRAZY? where's your ***** man....no girl could make me sell a car.

4) ARE YOU CRAZY? You just dropped $32,000 on a car and 950 miles down the road your selling it? Thats one expensive rental.

Honestly if you get $26800 privately you'd be lucky.....a dealer would probably offer you $24,000.

If you want to make even close to the amount you paid for it offer to sell it to a dealer in Canada and place it on autotrader.ca......theres no Evo's up here so people would probably be willing to pay $30k USD for one.

Good luck with that dude.

p.s. ARE YOU CRAZY?!?!?!?!

 

you can probably sell it for 25K but if selling it to the dealer or trade they will ask for less than that. might as well advertise it and start at 27k.

 

I think you should be able to get 27 for it. That is still a 5k loss for driving it 950 miles. Ask 28 or so. If you are trading it in, take 1000 less then you would get for private party MAX. youd be surprised at how much dealers can adjust your trade in value.

Jeff

 

Factor in the depreciation that every car has when you leave the lot, the 950mi already on the car and that you never get back MSRP pricing on a car or its dealer options. Oh and don't expect to get back any tax that you paid. You can ask $27K for it but expect to get around $26K for it. Most of us want our car to be brand new when we buy.