Edwin Pawlowski

I keep car until they have no value so I'm not affected as much (if at all)
as the frequent trader.


http://autos.yahoo.com/articles/auto...erforming-cars

Residual Value
Another factor that can or should be an indicator of a turkey is residual
value. John Blair, CEO of Automotive Leasing Guide, which provides
depreciation estimates for use in the automotive financing industry, says
that residual value is commonly associated with leases--as a higher residual
value typically translates to a lower monthly payment--but it's actually
more important to those who buy.



That's because leases are for a set term at a monthly payment that's set by
the bank, "but buy the car and you're stuck with it," says Blair. "It can be
quite different when you're comparing a Honda to a Hyundai."



For instance, Blair says that ALG's three-year residual on a Honda Accord is
about 55%--meaning that it is estimated to be worth about 55% of its
original value after three years--while for a Hyundai Sonata, it's only 40%,
which translates to a difference in value of $3,750 over those three years
on a sticker price of $25,000. Although Blair added that, generally
speaking, vehicles with lower residuals have lower appeal and often have
automaker incentives that apply to the purchase price, making up for some of
that difference.



What's more, the difference between vehicles can be even more pronounced
than this example. On ALG's five-star ratings system, with five-star
vehicles having the best depreciation ratings, the Accord has a four-star
rating, while the Sonata has two stars.

Vic Garcia

Edwin Pawlowski wrote:
> I keep car until they have no value so I'm not affected as much (if at all)
> as the frequent trader.
>
> http://autos.yahoo.com/articles/auto...erforming-cars
>
> Residual Value
> Another factor that can or should be an indicator of a turkey is residual
> value. John Blair, CEO of Automotive Leasing Guide, which provides
> depreciation estimates for use in the automotive financing industry, says
> that residual value is commonly associated with leases--as a higher residual
> value typically translates to a lower monthly payment--but it's actually
> more important to those who buy.
>
> That's because leases are for a set term at a monthly payment that's set by
> the bank, "but buy the car and you're stuck with it," says Blair. "It can be
> quite different when you're comparing a Honda to a Hyundai."
>
> For instance, Blair says that ALG's three-year residual on a Honda Accord is
> about 55%--meaning that it is estimated to be worth about 55% of its
> original value after three years--while for a Hyundai Sonata, it's only 40%,
> which translates to a difference in value of $3,750 over those three years
> on a sticker price of $25,000. Although Blair added that, generally
> speaking, vehicles with lower residuals have lower appeal and often have
> automaker incentives that apply to the purchase price, making up for some of
> that difference.
>
> What's more, the difference between vehicles can be even more pronounced
> than this example. On ALG's five-star ratings system, with five-star
> vehicles having the best depreciation ratings, the Accord has a four-star
> rating, while the Sonata has two stars.
>
>
Or this guy Blair, doesn't know what he's talking about, or is giving us
same old BS.

I cannot speak about the Sonata, but here is the story about my Santa Fe:

Same equipment, out of dealer shop:
Santy 3.5L LX = $21,700
Passport 3.2L EX = $28,300
Difference = 28,300 - 21,700 = 6,600 less for Hyundai

Santy residual = 21,700 x 40%= 8,680 > My cost = 21,700 - 8,680 =
$13,020
Passport residual = 28,300 x 55% = 15,565 > My cost = 28,300 -
15,565 = $12,735

Difference in cost = 13,020 - 12,735 = $285 ..... that's it $285 less
for the Honda .... now
$6,600 at 8% flat interest in my BANK (savings on price of the Santa Fe)
= $528 x 3 years = $1584
Plus $200 a year saving in insurance (nobody will steal a Hyundai, said
the agent) = 200 x 3 = $600

So at the 3 years mark the Santy will be: 285 - 1584 - 600 = -$1,899
near $1900 LESS than Honda.

So much for 'residual' .... Mr. Blair, go back to school, you flunked math.

James

Vic Garcia wrote:
> Edwin Pawlowski wrote:
>> I keep car until they have no value so I'm not affected as much (if at all)
>> as the frequent trader.
>>
>> http://autos.yahoo.com/articles/auto...erforming-cars
>>
>> Residual Value
>> Another factor that can or should be an indicator of a turkey is residual
>> value. John Blair, CEO of Automotive Leasing Guide, which provides
>> depreciation estimates for use in the automotive financing industry, says
>> that residual value is commonly associated with leases--as a higher residual
>> value typically translates to a lower monthly payment--but it's actually
>> more important to those who buy.
>>
>> That's because leases are for a set term at a monthly payment that's set by
>> the bank, "but buy the car and you're stuck with it," says Blair. "It can be
>> quite different when you're comparing a Honda to a Hyundai."
>>
>> For instance, Blair says that ALG's three-year residual on a Honda Accord is
>> about 55%--meaning that it is estimated to be worth about 55% of its
>> original value after three years--while for a Hyundai Sonata, it's only 40%,
>> which translates to a difference in value of $3,750 over those three years
>> on a sticker price of $25,000. Although Blair added that, generally
>> speaking, vehicles with lower residuals have lower appeal and often have
>> automaker incentives that apply to the purchase price, making up for some of
>> that difference.
>>
>> What's more, the difference between vehicles can be even more pronounced
>> than this example. On ALG's five-star ratings system, with five-star
>> vehicles having the best depreciation ratings, the Accord has a four-star
>> rating, while the Sonata has two stars.
>>
>>
> Or this guy Blair, doesn't know what he's talking about, or is giving us
> same old BS.
>
> I cannot speak about the Sonata, but here is the story about my Santa Fe:
>
> Same equipment, out of dealer shop:
> Santy 3.5L LX = $21,700
> Passport 3.2L EX = $28,300
> Difference = 28,300 - 21,700 = 6,600 less for Hyundai
>
> Santy residual = 21,700 x 40%= 8,680 > My cost = 21,700 - 8,680 =
> $13,020
> Passport residual = 28,300 x 55% = 15,565 > My cost = 28,300 -
> 15,565 = $12,735
>
> Difference in cost = 13,020 - 12,735 = $285 ..... that's it $285 less
> for the Honda .... now
> $6,600 at 8% flat interest in my BANK (savings on price of the Santa Fe)
> = $528 x 3 years = $1584
> Plus $200 a year saving in insurance (nobody will steal a Hyundai, said
> the agent) = 200 x 3 = $600
>
> So at the 3 years mark the Santy will be: 285 - 1584 - 600 = -$1,899
> near $1900 LESS than Honda.
>
> So much for 'residual' .... Mr. Blair, go back to school, you flunked math.
>
>
>
>
>
Nicely done