YACT: quick question about depreciation

[chambersc]

what would you say if this happened.

2005 Honda Civic sedan value package (auto)

would depreciate ONLY $1486.50 (roughly 10%) in 3 years. this is guarnteed -- no more or no less. sounds very good right?

 

[Stupid N00b]

Not even. 30% after you drive it off the lot, and another 10-15% annually after that.

 

[KLin]

It depreciates that much driving it off the lot.

 

[chambersc]

well i ask because the lease options on the honda website offer this. i felt i had to get an opinion since it's my understanding that common depreciation is 30%.

here, ill quote.

"Total monthly payments $5,724.00. Option to purchase at lease end $8,464.50. Lessee responsible for maintenance, excessive wear/tear and 15¢/mile over 12,000 miles/year. "

5724 + 8464.5 = 14188.5
MSRP: 15675 - 14188.5 = 1486.5

the lease term is 36 months thus 1486.5 depreciation over 36months. fuzzy math?

 

[TriStar]

Do not lease a motor vehicle.

 

[vi edit]

No.

The $5724 total payments is some combination of depreciation and interest (money factor).

The $14188.50 is what's called a capitalized cost. Capitalized cost is the amount that the vehicle is "sold" for.

The "depreciation" is impossible to get a real number on without know what the money factor is.

The bottom line is that you are paying $5724 over 3 years. That's more along the lines of 40% which is still good(60% residual value). Many domestics have residual amounts around 40%-45%.

In those lease payments you also have to factor in sales tax and possibly gap insurance.

 

[vi edit]

Originally posted by: TriStar
Do not lease a motor vehicle.

Wrong.

Don't get into a sh!tty lease.

Good leases can save you a lot of money if you are a particular type of buyer.

 

[fbrdphreak]

Originally posted by: Stupid N00b
Not even. 30% after you drive it off the lot, and another 10-15% annually after that.

Um, k. Honda's don't depreciate that much....

 

[dquan97]

Originally posted by: vi_edit

Originally posted by: TriStar
Do not lease a motor vehicle.

Wrong.

Don't get into a sh!tty lease.

Good leases can save you a lot of money if you are a particular type of buyer.

True, but that's a very expensive habit to maintain!