What is Residual Value? What Makes Honda’s Residual Value Appealing?
Whether buying or leasing, there’s no shortage of factors to consider when you’re seeking a new car, and yet people often fail to take one of the most important into account: residual value. Honda makes vehicles with particularly resilient residual values.
The Importance of Residual Value When Buying
You’ll hear a lot of Brandon drivers talking about how buying, as opposed to leasing, is an investment; after all, you’re putting in money to make the car yours. So, it should come as no surprise that residual value is important.
All new cars depreciate in value, so the car you’re investing in is going to be worthless as the years go by. However, a car with high residual value isn’t going to depreciate as dramatically. That helps when the time comes for you to sell your vehicle and move on to a new one.
Does Residual Value Matter When Leasing?
Residual value is just as important when leasing a vehicle, if not slightly more. Residual value is a crucial factor in determining your monthly payments. When you lease, you’re essentially paying for the value the car loses while it’s in your possession. If the car loses a smaller portion of value – in other words, if it boasts high residual value – the monthly payments will be lower.
Let’s take a hypothetical look:
- You lease a $25,000 vehicle. It’s worth $20,000 at the end of the lease, so you’ve used $5,000 worth of value or 20%.
- If you lease a $25,000 model that ends up being worth $15,000 at the end of the lease, you’ve used $10,000 worth of value or 40%.
The dealership would clearly need to charge higher monthly payments for the second model, and it highlights how important residual value can be in a new car. A hybrid might offer greater residual value, too.
Why Choose a Honda?
Okay, so residual value is important, but what does that have to do with Honda? Well, Honda vehicles have consistently retained a higher residual value than other brands. Several models have earned a Best Retained Value Award, and the following have all claimed the top-spot in their respective classes for resale value in 2018:
While many drivers stick with their Honda sedans, crossovers, and minivans until it’s time to buy a new car, knowing that you can rely on historically low depreciation makes that eventual new car buy all the easier.
Residual Value is One of the Most Important Things to Research When Buying or Leasing
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