Getting a Nissan lease on a new vehicle provides several benefits over buying. Regardless of your reasons for leasing, it’s beneficial to know the terms involved. For example, it’s important to know the car’s residual value when deciding on which vehicle to lease. The following information explains what residual value is and how it’s determined. Contact Bedford Nissan if you have questions.
What is Residual Value?
The residual value of a vehicle signifies its overall value when a lease concludes, or the amount required for ownership at the end of the lease term. In contrast to traditional renting, where payments primarily cover usage, lease payments cover the vehicle’s depreciation over an extended period.
How is Residual Value Determined?
Several factors play a role in determining a car’s residual value. A higher residual value indicates that the vehicle is anticipated to maintain its value effectively. This leads to reduced monthly lease payments.
Key influential elements include:
- Reliability – The reliability of a car significantly contributes to the calculation of its residual value. Vehicles with higher reliability ratings are associated with reduced repair risks.
- Resale Value – The resale value of a car is a pivotal factor influencing its residual value. Cars with superior resale values generally experience less depreciation over time.
- Economic Conditions – Residual values are influenced by fluctuations in economic conditions. During periods of economic change, a car’s residual value may increase or decrease according to conditions.
Calculating Residual Value
To determine the residual value, multiply the car’s Manufacturer’s Suggested Retail Price (MSRP) by the residual value percentage rate. For example, if a vehicle has an MSRP of $30,000 and a 50% rate, the residual value would be $15,000.
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Don’t worry, when you lease a vehicle at Bedford Nissan, you’re not in it alone. Our Bedford, OH, Nissan dealership is here to help. Give us a call today!
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