Are you in the market to lease a car? If you are, it’s important to research the residual value of any vehicles you’re considering before you sign on the dotted line.
So, just what is residual value? If you don’t know, keep on reading. We’ll explain in detail the concept of residual value and how it directly impacts your lease term, and we’ll also take a look at how a popular subcompact car like the 2016 Honda Fit compares with competing vehicles when it comes to residual value.
What Is Residual Value?
So, just what does “residual value” mean, and how does it affect your automotive lease?
Residual value, put simply, is how much value remains at the conclusion of a lease term. When you’re leasing a car, the vehicle’s residual value is how much value the car will retain by the time your lease is over.
If, for example, you lease a car that has a sticker price of $24,000, and it is anticipated that the car will lose 75% of that value, or $16,000, by the end of a 60-month lease, then the $8,000 of value that will be left over at the end of your lease is the car’s residual value.
Residual value directly impacts how much your monthly lease payment will be.
When you lease a vehicle, you are essentially paying for the value the car will lose during the time you’re driving it. For a car with low residual value, as in our example, the monthly lease payment will be higher because the car is expected to lose more of its value over the course of the lease.
Residual value also impacts the purchase price of a leased vehicle. Typically, a lessee can opt to purchase a vehicle at the end of the lease term for the residual value amount, plus associated taxes, fees, etc. So, a vehicle with $8,000 of residual value after 60 months, as in our example, could typically be purchased for that residual value amount plus taxes, fees, etc.
How the Honda Fit Compares
Now that you have a basic understanding of residual value, let’s take a look at the Honda Fit and how it compares to some of its top rivals.
According to ALG estimates, the 2016 Fit is expected to retain 57% of its original value by the end of a 36-month lease, and the Fit will offer 43% residual value at the end of a 60-month lease.
By contrast, various competitors measure up this way when it comes to residual value:
- 2016 Hyundai Accent GS hatchback: Offers 43% residual value after 36 months and 28% after 60 months
- 2016 Ford Fiesta S Hatchback: Offers 43% residual value after 36 months and 30% after 60 months
- 2016 Kia Rio LX hatchback: Offers 43% residual value after 36 months and 30% after 60 months
- 2016 Nissan Versa Note S: Offers 46% residual value after 36 months and 30% after 60 months
- 2016 Volkswagen Golf TSI: Offers 46% residual value after 36 months and 31% after 60 months
- Toyota Yaris L 5-door: Offers 49% residual value after 36 months and 36% after 60 months
- 2016 Kia Soul: Offers 49% residual value after 36 months and 37% after 60 months
- 2016 Mazda3 i Sport hatchback: Offers 52% residual value after 36 months and 36% after 60 months
Experience the Fit
Consumers can check out the 2016 Honda Fit, get behind the wheel for a test drive, and learn more about leasing or buying one at any West Michigan Honda Dealers location.
Stop in and see us or contact us today to learn more about the Honda Fit and to take it for a test drive!