Is it determined by the dealer as part of the negotiations or does GM tell
the dealer what to use? For anyone who leased an '04 for 2-3 years, what residual was used after that period and what was your milage limit? Thanks for your input.
The residual value is determined by the leasing company. 2 months ago, an 04 automatic 3 year residual value was $19.8. This was with the $3,500 rebate. So if the rebates go up, the residual has got to go back down unless they are running some promo
Residuals are set by the financial institution who funds the lease. It's their best guess at what the vehicle will be worth at the end of the lease. Usually residuals go down (which makes the average monthly depreciation component of the payment go up) as the model year progresses. All things being equal, based on residual value and excluding rebates or special leasing programs or other incentives, leasing a car a the beginning of a model year results in a lower payment than leasing the same car at the end of the model year.
On a car like the GTO, which unfortunately has not caught on with the buying public, leasing or balloon financing (Smartbuy) is probably the best way to prevent yourself from eating huge amounts of depreciation when it comes to trade for your next car. I've seen a 3 year residual of $17K+ for a GTO. That's GMAC's guess (hedged by insurance) at what the car will be worth 3 years from now. Actually, since the cars aren't selling, it'll probably be much less. If GMAC's wrong and the car IS worth less, you walk away from the car at the end of the lease and buy someone else's 3 year old Goat for eg. $12,000 (although I've heard you may be able to negotiate the buyout down at lease end). If GMAC's right or miracle of miracles, the car's worth more than $17K+, if you like the car, buy it (generally refinance the residual or balloon) and keep it.
Rebates and residuals are, strictly speaking, independent of each other. But ultimately they come out of similar pockets (GM) and are set so that they sell cars, make money or minimize losses.
Baron=That is an excellent post. Are there any sites on the net that would predict approximate residual values for different makes and models? I am considering leasing an 05 GTO in the spring and that info would be helpfull. Thanks.
Thanks Dave. That helps a lot. I've requested quotes from all of the
local dealers around here so we'll see what happens. If anyone else can post the specific details of their 2 or 3 year lease, that would be great. Thanks.
I did a smartbuy because you cannot lease in new york state.
I got a silver/black manual for tissue 31,400 less the 5500 rebate, less one 500 coupon, less 2000 in gm card funny money. My sales tax rate is a low 8.75% so add the price of the car less discounts plus 2747 tax to get my out the door price if I paid cash.
residual is 18586, interest rate is 3.5%. Payments with nothing but the GM card funny money down is 285 a month for a 36 month smartbuy.
I could have gotten a black car for 1150 less from a dealer in maryland but i prefer silver, and the cost to get there and back is probably 200 after tolls and lunch for my co driver. The car was on eBay if interested. I was the high bidder but didnt meet reserve. They were very helpful on the phone.
I bought the car from Arnold Pontiac in Bayshore LI NY. So far no games, very smooth. pick it up saturday. they have a red manual too.
The residual should really be about 5000 less but if it was I would not be selling my Z28 with 42k miles.
Maybe GMAC decided that with the inventory of '04 GTOs dwindling down and the $5,500 rebate, they didn't need to artificially boost the residual value anymore. Makes those who locked in their deal yesterday or the day before very savvy indeed!