What are the current residual value %'s on new RAM leases?

[BowDown]

i've NEVER heard of anyone entering into a 60 month lease! WHY?????????? There could not have been more rebates in a lease than there would have been in a buy with rebates. This scenario is highly unusual.

Lord, I ran those #'s thru a lease calculator, and even it was confused! LOL. Your lease payment must be at least $1,000 a month.

Lease payment is $940, purchase is $107X something for 60 months. I bought in July of 20 when all the lease rebates for Limited's were pretty much gone. I believe my rebate was $1000 if that, plus the dealer gave me $3000 Ram bucks and 14% off MSRP.
65k
-1000 rebate
-3000 ram bucks
-3000 lease incentive
=51500 plus TTL

My intention was to buy over 60 months so the $1000 payment was inconsequential. You spend 50k, you're having a $800+ payment unless you put a large amount of cash down. Im not paying $5-10K down to save $50 a month

Like the others said, why didn't you just buy and finance the truck from the beginning? I have never leased a car or truck, so maybe I am missing something, but buying and financing sounds like it would have been the better option for you, imo.

Because I got an additional $3K off for some lease incentive going on at the time. In the end, its a $3000 difference

 

[User_3336]

You can set the lease term as long as you want and set whatever residual you want above the min lease end value. In my case, the lease gave me a additional 3K off the purchase price and my payments are about $75 less than a 60 month purchase for the same purchase price vs buying plus the additional $3K savings. In the end, the lease will have saved me $3000 over buying which I was going to do anyway, I keep vehicles long past payoff, 10 years. I plan on keeping this truck about 3-4 years past payoff so the savings was a win for me

And there weren't any manufacturer rebates on this vehicle at the time (on a purchase)? a 19% residual would have sent your monthly payment sky high.
I bet your dealer looked at your scratching their heads when you presented that lease scenario! LOL

 

[BowDown]

And there weren't any manufacturer rebates on this vehicle at the time (on a purchase)? a 19% residual would have sent your monthly payment sky high.
I bet your dealer looked at your scratching their heads when you presented that lease scenario! LOL

This was July 20, covid was in full swing and Ram had pulled all rebates. I bought through a broker friend of mine and double checked with my business CPA. I set the residual low because I knew I wanted to keep the truck and didn't want a high lease buy out. I could have set the normal residual but then Id have a 5-600 payment but a 30K buy out. Fast-forward to now and a lot of lease companies are not accepting the buy out amount because of the used car market. Friend went through this with his acura when he tried to buy out the lease at the end. They tried to use current fair market value on him.

To your question, there's been no (good) rebates on Limited's or Longhorns since Truck Month in March 2020 and actually, IIRC the ram rebate was only $500 on limiteds/longhorns. Look at the MSRP thread around March through July 2020, only Laramie's and bighorns had good rebates. I believe bighorns were still getting 4K and Laramie's 2K

 

[Trippi]

This was July 20, covid was in full swing and Ram had pulled all rebates. I bought through a broker friend of mine and double checked with my business CPA. I set the residual low because I knew I wanted to keep the truck and didn't want a high lease buy out. I could have set the normal residual but then Id have a 5-600 payment but a 30K buy out. Fast-forward to now and a lot of lease companies are not accepting the buy out amount because of the used car market. Friend went through this with his acura when he tried to buy out the lease at the end. They tried to use current fair market value on him.

To your question, there's been no (good) rebates on Limited's or Longhorns since Truck Month in March 2020 and actually, IIRC the ram rebate was only $500 on limiteds/longhorns. Look at the MSRP thread around March through July 2020, only Laramie's and bighorns had good rebates. I believe bighorns were still getting 4K and Laramie's 2K

I find this whole scenario interesting.

 

[User_3336]

This was July 20, covid was in full swing and Ram had pulled all rebates. I bought through a broker friend of mine and double checked with my business CPA. I set the residual low because I knew I wanted to keep the truck and didn't want a high lease buy out. I could have set the normal residual but then Id have a 5-600 payment but a 30K buy out. Fast-forward to now and a lot of lease companies are not accepting the buy out amount because of the used car market. Friend went through this with his acura when he tried to buy out the lease at the end. They tried to use current fair market value on him.

To your question, there's been no (good) rebates on Limited's or Longhorns since Truck Month in March 2020 and actually, IIRC the ram rebate was only $500 on limiteds/longhorns. Look at the MSRP thread around March through July 2020, only Laramie's and bighorns had good rebates. I believe bighorns were still getting 4K and Laramie's 2K

Unusual scenario, but appeared to work for you.

 

[RAMBO X]

This was July 20, covid was in full swing and Ram had pulled all rebates. I bought through a broker friend of mine and double checked with my business CPA. I set the residual low because I knew I wanted to keep the truck and didn't want a high lease buy out. I could have set the normal residual but then Id have a 5-600 payment but a 30K buy out. Fast-forward to now and a lot of lease companies are not accepting the buy out amount because of the used car market. Friend went through this with his acura when he tried to buy out the lease at the end. They tried to use current fair market value on him.

To your question, there's been no (good) rebates on Limited's or Longhorns since Truck Month in March 2020 and actually, IIRC the ram rebate was only $500 on limiteds/longhorns. Look at the MSRP thread around March through July 2020, only Laramie's and bighorns had good rebates. I believe bighorns were still getting 4K and Laramie's 2K

I just did a cost analysis. If I finance, I would qualify for the best rate at my credit union which is currently 6.47%. I took that amortization schedule and compared it to the lease. If I finance the truck, then I will have paid $31,021 at the 3 year mark. If I lease the truck for 36 months, add up all those payments, at the 3 year mark I'll have paid $23,436. So at the 3 year mark there's a $7.5k differential in favor of the lease.

Now, if I opt to buyout my lease at 50% residual, I now have to finance $38,817 (MSRP $77k). Assuming rates will have settled back down in the next 3 years... I can do 60 month loan at 3.5%, and by the time that's paid off, I'll have paid an additional $44,911. So, the grand total cost for leasing THEN buying (23436 + 44911) equals $68,347. Whereas the grand total cost for financing right away would be $70,701. So, lower monthly payments, and less money spent overall in this specific scenario.

Pros to leasing first. No sales tax (until you buyout the lease, but then the taxed amount is only half), incentives, and good alternative to borrowing against high interest rates, which they are right now.

It doesn't always work out this way, but this is exactly why I'm looking into it. I still need to find out if there's any hidden fees, like a purchase option fee.

 

[RAMBO X]

And there weren't any manufacturer rebates on this vehicle at the time (on a purchase)? a 19% residual would have sent your monthly payment sky high.
I bet your dealer looked at your scratching their heads when you presented that lease scenario! LOL

I'm taking delivery of my truck in a few weeks. I'm going to double-check, but last time I talked to my salesman there were no incentives on 2023 Rebels. There is however currently $1300 bonus cash on leases. Checkout my response to BowDown, it's definitely food for thought.

 

[User_3336]

This could vary from state to state, but as a consensus, sales tax is levied on the monthly payment in a lease, and you would be responsible for the remaining sales tax if you chose to do a buyout.

It doesn't make sense that a sales tax would be waived on the monthly payment, then collected at the end of a lease.

Curious, what state do you live in?

Pros to leasing first. No sales tax (until you buyout the lease, but then the taxed amount is only half), incentives, and good alternative to borrowing against high interest rates, which they are right now.

 

[RAMBO X]

This could vary from state to state, but as a consensus, sales tax is levied on the monthly payment in a lease, and you would be responsible for the remaining sales tax if you chose to do a buyout.

It doesn't make sense that a sales tax would be waived on the monthly payment, then collected at the end of a lease.

Curious, what state do you live in?

I'm in Michigan.

 

[HEMIJAKE]

I just did a cost analysis. If I finance, I would qualify for the best rate at my credit union which is currently 6.47%. I took that amortization schedule and compared it to the lease. If I finance the truck, then I will have paid $31,021 at the 3 year mark. If I lease the truck for 36 months, add up all those payments, at the 3 year mark I'll have paid $23,436. So at the 3 year mark there's a $7.5k differential in favor of the lease.

Now, if I opt to buyout my lease at 50% residual, I now have to finance $38,817 (MSRP $77k). Assuming rates will have settled back down in the next 3 years... I can do 60 month loan at 3.5%, and by the time that's paid off, I'll have paid an additional $44,911. So, the grand total cost for leasing THEN buying (23436 + 44911) equals $68,347. Whereas the grand total cost for financing right away would be $70,701. So, lower monthly payments, and less money spent overall in this specific scenario.

Pros to leasing first. No sales tax (until you buyout the lease, but then the taxed amount is only half), incentives, and good alternative to borrowing against high interest rates, which they are right now.

It doesn't always work out this way, but this is exactly why I'm looking into it. I still need to find out if there's any hidden fees, like a purchase option fee.

This is basically how I justified my lease. I don't have the numbers with me, but I can probably find them at home. My dealer (friend of mine) was surprised how low the lease rate was when I got it. It just made more sense to lease vs buy at the time during covid. I'll probably buy this one out when I'm done though as I like it and want to keep it a while, and I should have some positive equity built up. I will say, I do pay sales tax on my lease payments if that helps. Pennsylvania.

 

[WXman]

In summer 2022 my Laramie was 59% residual on 60 months. Now that inventories are building back up again I would expect better deals than that this spring and summer. Should be able to get some fantastic rebates also.

My wife is about to "buy" a new car that has been ordered and now we're just waiting. Nearly 800 credit score and the best interest rates we could find were around 6.5 to 7.0%. So in my opinion leasing is still a better option right now, but she's just anti-lease for some reason. Likely because she doesn't fully understand that it's NOT renting.

 

[BowDown]

I just did a cost analysis. If I finance, I would qualify for the best rate at my credit union which is currently 6.47%. I took that amortization schedule and compared it to the lease. If I finance the truck, then I will have paid $31,021 at the 3 year mark. If I lease the truck for 36 months, add up all those payments, at the 3 year mark I'll have paid $23,436. So at the 3 year mark there's a $7.5k differential in favor of the lease.

Now, if I opt to buyout my lease at 50% residual, I now have to finance $38,817 (MSRP $77k). Assuming rates will have settled back down in the next 3 years... I can do 60 month loan at 3.5%, and by the time that's paid off, I'll have paid an additional $44,911. So, the grand total cost for leasing THEN buying (23436 + 44911) equals $68,347. Whereas the grand total cost for financing right away would be $70,701. So, lower monthly payments, and less money spent overall in this specific scenario.

Pros to leasing first. No sales tax (until you buyout the lease, but then the taxed amount is only half), incentives, and good alternative to borrowing against high interest rates, which they are right now.

It doesn't always work out this way, but this is exactly why I'm looking into it. I still need to find out if there's any hidden fees, like a purchase option fee.

This is basically how I justified my lease. I don't have the numbers with me, but I can probably find them at home. My dealer (friend of mine) was surprised how low the lease rate was when I got it. It just made more sense to lease vs buy at the time during covid. I'll probably buy this one out when I'm done though as I like it and want to keep it a while, and I should have some positive equity built up. I will say, I do pay sales tax on my lease payments if that helps. Pennsylvania.

Leasing then buying can definitely work with the right deal, the only real "negative" is dealing with the residual now or later. I opted to deal with it upfront as I expected a $1000 payment of I bought it vs lease. Rather than have a 5-600 payment and a 35k+ residual, I opted to for a lower residual which makes your monthly payment higher than a regular lease.

Like both of you found, lease rates are a little better than finance and sometimes there's lease incentives that make it even more favorable

 

[HEMIJAKE]

Leasing then buying can definitely work with the right deal, the only real "negative" is dealing with the residual now or later. I opted to deal with it upfront as I expected a $1000 payment of I bought it vs lease. Rather than have a 5-600 payment and a 35k+ residual, I opted to for a lower residual which makes your monthly payment higher than a regular lease.

Like both of you found, lease rates are a little better than finance and sometimes there's lease incentives that make it even more favorable

Absolutely. Pay it now or pay it later.

 

[User_3336]

After questioning this, I did some checking. Your statement is wrong. In Michigan, you pay 6% sales tax on base monthly payment. I am not sure what you are referring to when you say "you only pay 1/2 the sales tax @ lease buyout).
You will pay the same 6% at lease buyout (what ever the amount is).
It doesn't matter who/where you financed it from, its the state tax law in Michigan.

A CCAP statement will plainly show the tax rate and amount on it.

There are only like 5 states that have different tax laws on leases. where I live, in TN, its the same, you pay sales tax on the monthly payment.

Pros to leasing first. No sales tax (until you buyout the lease, but then the taxed amount is only half), incentives, and good alternative to borrowing against high interest rates, which they are right now.

 

[User_3336]

This is basically how I justified my lease. I don't have the numbers with me, but I can probably find them at home. My dealer (friend of mine) was surprised how low the lease rate was when I got it. It just made more sense to lease vs buy at the time during covid. I'll probably buy this one out when I'm done though as I like it and want to keep it a while, and I should have some positive equity built up. I will say, I do pay sales tax on my lease payments if that helps. Pennsylvania.

As most states do. There are only a small handful of states that have different tax laws regarding leases.

 

[RAMBO X]

After questioning this, I did some checking. Your statement is wrong. In Michigan, you pay 6% sales tax on base monthly payment. I am not sure what you are referring to when you say "you only pay 1/2 the sales tax @ lease buyout).
You will pay the same 6% at lease buyout (what ever the amount is).
It doesn't matter who/where you financed it from, its the state tax law in Michigan.

A CCAP statement will plainly show the tax rate and amount on it.

There are only like 5 states that have different tax laws on leases. where I live, in TN, its the same, you pay sales tax on the monthly payment.

Makes sense. Well, like you said, the lease payment itself is what's taxed - as opposed to paying sales tax on full purchase price up front. As far as the "only pay 1/2 at least buyout" comment, that was based on the premise that sales tax was only paid on what's leftover - the residual value, which is give or take about 50%. Thanks for the clarification on the sales tax part.

 

[User_3336]

Makes sense. Well, like you said, the lease payment itself is what's taxed - as opposed to paying sales tax on full purchase price up front. As far as the "only pay 1/2 at least buyout" comment, that was based on the premise that sales tax was only paid on what's leftover - the residual value, which is give or take about 50%. Thanks for the clarification on the sales tax part.

Likewise, there are also a few states that make you pay the state sales tax up front on the entire term of the lease, instead of monthly.

But for the tax purposes of Michigan, you know what to expect.

 

[Jasquick]

Advice…

Long story short, looking at buying a used truck, settled on Ram, but can’t really afford the market for what I am looking at (looking to find something in its powertrain window that I can extend…buying a truck and then having to invest 3-4 grand more due to mechanical issues scares the **** out of me), anyways, I opened my research to leasing and here I am reading this thread and just want to bounce my logic off some of you.

I went through a broker for an estimate and with the 51% residual on 36 months gets me 1. A more comfortable payment (monthly) and 2. At the end of the lease the residual ~30K is something that I could then finance and stay in comfort zone.

The 51% residual seems ridiculous by my estimates. Finding 2021s with ~36K miles they are selling on the market for like 70% of their original window sticker.

Things I also was hoping I could confirm…
-I am not going to be close to under 12K annually by my estimates. This is a non-issue if I plan on buying out the lease at the end (which I do). Or am I missing something?
-As I said, 51% seems artificially low… seems to me this would only really affect those who stay leasing as they are taking hits to their trade in? Or what am I missing?

Lease deal: here

 

[millerbjm]

Advice…

Long story short, looking at buying a used truck, settled on Ram, but can’t really afford the market for what I am looking at (looking to find something in its powertrain window that I can extend…buying a truck and then having to invest 3-4 grand more due to mechanical issues scares the **** out of me), anyways, I opened my research to leasing and here I am reading this thread and just want to bounce my logic off some of you.

I went through a broker for an estimate and with the 51% residual on 36 months gets me 1. A more comfortable payment (monthly) and 2. At the end of the lease the residual ~30K is something that I could then finance and stay in comfort zone.

The 51% residual seems ridiculous by my estimates. Finding 2021s with ~36K miles they are selling on the market for like 70% of their original window sticker.

Things I also was hoping I could confirm…
-I am not going to be close to under 12K annually by my estimates. This is a non-issue if I plan on buying out the lease at the end (which I do). Or am I missing something?
-As I said, 51% seems artificially low… seems to me this would only really affect those who stay leasing as they are taking hits to their trade in? Or what am I missing?

Lease deal: here

To the 1st question you are correct, if you are 100% going to buy out the lease being over mileage doesn't matter at all because you're buying it. If you turned it in at lease end or wanted to trade it (i.e. sell to the dealer) you would take the hit for the lower than planned value.

If the residual turns out to be lower than the actual value at lease end - i.e. the truck is worth more market rate than the buyout this is great if you decide to buy and trade (This is why I'm on my 3rd lease because I've always had equity at lease end) If you were going to buy and keep the truck the impact of low residual would be you made more in lease payments but pay less to buyout. If you just walked and lease end a low residual means you paid more to drive the truck during the lease than you should have and the lessor won the bet. If I ever found myself at lease end with a higher value than the buyout like that I would always buyout the vehicle and then sell to get my equity.

I've leases 3 rams and each time at the 2.5 year mark of a 3 year lease have upgraded to a new truck with more options for a lower payment because of positive equity in the lease and good incentives on the new truck. In every case when I ran the numbers each time it was the same or cheaper to lease and buyout than to finance a purchase because of the combo of incentives and rates etc.

 

[Jasquick]

To the 1st question you are correct, if you are 100% going to buy out the lease being over mileage doesn't matter at all because you're buying it. If you turned it in at lease end or wanted to trade it (i.e. sell to the dealer) you would take the hit for the lower than planned value.

If the residual turns out to be lower than the actual value at lease end - i.e. the truck is worth more market rate than the buyout this is great if you decide to buy and trade (This is why I'm on my 3rd lease because I've always had equity at lease end) If you were going to buy and keep the truck the impact of low residual would be you made more in lease payments but pay less to buyout. If you just walked and lease end a low residual means you paid more to drive the truck during the lease than you should have and the lessor won the bet. If I ever found myself at lease end with a higher value than the buyout like that I would always buyout the vehicle and then sell to get my equity.

I've leases 3 rams and each time at the 2.5 year mark of a 3 year lease have upgraded to a new truck with more options for a lower payment because of positive equity in the lease and good incentives on the new truck. In every case when I ran the numbers each time it was the same or cheaper to lease and buyout than to finance a purchase because of the combo of incentives and rates etc.

Thanks man. It just seems almost too good to be true. Like I said I am looking at what Rams (theoretically ending a 36/12K lease) are selling for used and it seems like they are maintaining about 70% of their value. So in my mind if the lease terms are predicting that the residual value is going to be 51%, it seems that it is very likely to create equity. Down side being maybe you will have paid more to account for higher depreciation than would have actually happened, but with the offers (13% discount) from RAM, I still think that this ends up being a pretty sweet deal.

Question from your experience though… if you are ending the lease at 2.5 are they ‘breaking’ the lease to get yourself into a new lease… i.e. do they care about if the miles are over or how do they compute mileage at that point? I think I will be well over the mileage but like I said I plan on buying out so I am not worried; however, if they ignore the miles and give me equity, at the point I might just turn it into a down payment, upgrade, and finance to buy.


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