Shocked by declining values

schlitzie · #1 01-14-2009, 07:03 PM

Wow -- I just returned from the dealership after looking at an X6 and seeing if trading in my 2005 4.8is with 41K in awesome shape made sense...
After they evaluated my car and came back I am dumbfounded at what they offered on my ride.... They will give me $23K - A big ways away from where I thought it would be. A quick look at recent completed sales on Ebay and Autotrader also had some disappointing news, as sellers there did not do dramatically better.

Of course I know all about the economy and the gas crisis from the summer, but crap I got smacked hard.

mrbmwx5 · #2 01-14-2009, 07:21 PM

Quote:

Originally Posted by schlitzie

Wow -- I just returned from the dealership after looking at an X6 and seeing if trading in my 2005 4.8is with 41K in awesome shape made sense...
After they evaluated my car and came back I am dumbfounded at what they offered on my ride.... They will give me $23K - A big ways away from where I thought it would be. A quick look at recent completed sales on Ebay and Autotrader also had some disappointing news, as sellers there did not do dramatically better.

Of course I know all about the economy and the gas crisis from the summer, but crap I got smacked hard.

that was happed to me 3 years ago when i was lookng for the 4.6is and mine at the time had about 52-54k miles and they want to take mine for about $11k

primetime · #3 01-14-2009, 07:28 PM

Its also trade in value. They're not going to give you much....Sold privately you'd probably be lookin at 27 or 28k at most, or somewhere in that range..

E61Silver · #4 01-14-2009, 07:34 PM

If you plan on keeping a car for three years or less you be better of leasing.

That way you know what you will sell the car for (the residual/buyout value on the lease.

TwinsPoppa · #5 01-14-2009, 11:03 PM

Quote:

Originally Posted by x54.4blue

If you plan on keeping a car for three years or less you be better of leasing.

That way you know what you will sell the car for (the residual/buyout value on the lease.

I'm not familiar with leasing ins and outs but I thought leasing is mostly for people who like to have newer rides and don't want to worry about ownership.

I thought the purpose was to only pay for the depreciated part of the car during the lease - hence cars that hold their value are the best for leasing. So, if it's a 50K car and it depreciated only 10K during the 3yr lease then that's basically what you pay.

My question is:

The residual/buyout at the end of lease is based on the current market value at the end of the lease or is that agreed upon ahead of time at the time of leasing the vehicle? I always thought it was the first instance.

Can somebody school me on this, please.

EDIT: Hhmm after more thought I guess it would have to be the second scenario. Otherwise you could not figure the lease payment which is based on the depreciation, right? So would the residual value then be based on retail value or wholesale value?

Quicksilver · #6 01-15-2009, 12:59 AM

Leasing or buying isn't that the reason why people buy new BMW's.....

Quote:

Originally Posted by TwinsPoppa

I'm not familiar with leasing ins and outs but I thought leasing is mostly for people who like to have newer rides and don't want to worry about ownership.

TwinsPoppa · #7 01-15-2009, 03:44 AM

Quote:

Originally Posted by Quicksilver

Leasing or buying isn't that the reason why people buy new BMW's.....

Uhh .. sorry, but I don't quite follow you.

If someone is buying they are buying and if they're leasing ... well, they're leasing - not buying as you seem to indicate.

Regardless, I guess the auto industry is losing out when it comes to leases. If they say the residual is high (in this market), then they may be stuck with an overvalued vehicle.

If they say the residual is low, then the customers are not gonna sign up because their payments will be higher.

butundo · #8 01-15-2009, 04:54 AM

Quote:

Originally Posted by TwinsPoppa

Regardless, I guess the auto industry is losing out when it comes to leases. If they say the residual is high (in this market), then they may be stuck with an overvalued vehicle.

If they say the residual is low, then the customers are not gonna sign up because their payments will be higher.

Right, but why isn't the payments lower on these vehicles? The way leases were designed, you are making monthly payments on the difference of the selling price, minus the residual. If a car has a high residual percentage, the car should be cheaper to lease, but with high end cars, that is not the case. I used to sell cars back in 1993. Leases were the highest money maker for the dealers. Usually $2-2.5k profit per lease. What most people don't realize is that you can negotiate a lease payment. Always ask what is the selling price of the vehicle that determined the lease payment. They do have to tell you, but most will try to give you some bs story. Since the residual value is already determined, if you negotiate a lower selling price, it will lower the lease payment. Plus, most dealers require $2-4K down, which also needs to be deducted from the selling price.

Quicksilver · #9 01-15-2009, 07:12 PM

I suppose i should have included your entire comment which was

"I'm not familiar with leasing ins and outs but I thought leasing is mostly for people who like to have newer rides and don't want to worry about ownership"..

Having said that; IMO lease or buy (within the 4 year time period that one owns or leases a new vehicle) there is no worry about ownership because of the warranty.

Quote:

Originally Posted by TwinsPoppa

Uhh .. sorry, but I don't quite follow you.

If someone is buying they are buying and if they're leasing ... well, they're leasing - not buying as you seem to indicate.

Regardless, I guess the auto industry is losing out when it comes to leases. If they say the residual is high (in this market), then they may be stuck with an overvalued vehicle.

If they say the residual is low, then the customers are not gonna sign up because their payments will be higher.

E61Silver · #10 01-15-2009, 10:35 AM

Quote:

Originally Posted by TwinsPoppa

I'm not familiar with leasing ins and outs but I thought leasing is mostly for people who like to have newer rides and don't want to worry about ownership.

I thought the purpose was to only pay for the depreciated part of the car during the lease - hence cars that hold their value are the best for leasing. So, if it's a 50K car and it depreciated only 10K during the 3yr lease then that's basically what you pay.

My question is:

The residual/buyout at the end of lease is based on the current market value at the end of the lease or is that agreed upon ahead of time at the time of leasing the vehicle? I always thought it was the first instance.

Can somebody school me on this, please.

EDIT: Hhmm after more thought I guess it would have to be the second scenario. Otherwise you could not figure the lease payment which is based on the depreciation, right? So would the residual value then be based on retail value or wholesale value?

At the end of the lease you give it back, my lease residual was much more than market value. I looked at buying it and they offered a reduced price.
Thanks to the lease I had many options .