Tuesday, March 21, 2023

Resale Value – Does It Matter?

Main Resale Value – Does It Matter?

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    Does resale value really matter? Yes and no. Clearly it’s important to folks that keep their car between 4 years and 7 years, but for many folks out there it’s less …

    Buzz Pedrotti

    Matters to me.

    FAautobahn A

    Please also consider doing an episode on vehicle insurance. There are many wise and unwise scenarios for owners on that. Specially if an owner is not experienced or from minorities, many insurance cos will simply eat him/her up alive. I have seen people with similar cars with similar backgrounds and neighborhoods etc. pay hugely different rates. By the way, on insurance rate sometimes you can negotiate a LOT if you have the knack or get simply lucky.

    FAautobahn A

    Very important refresh. Good points to be reminded of. Thanks.

    Matt Speer

    Lease payments are directly affected by the residual value of a vehicle, so it does matter. The lower the end-of-lease residual value is, the higher the lease payment is going to be. Lease payments are basically the total depreciation of the vehicle over the term of the lease (MSRP – residual) + fees/taxes divided by the total lease term in months (to put it very simplistically). So the lower the residual value of a vehicle, the higher the lease payment due to the higher depreciation. This is why certain vehicles, like American cars, tend to lease poorly. Their residuals are so low, the lease payment sky rockets. Manufacturers can help offset a low residual with a low money factor (basically the interest rate on the lease), but it doesn't always cut it. Volvos have terrible residual values, but they tend to also offer very low money factors, which makes the leases halfway decent. The best leases are normally BMW or Mercedes because of high residuals and mid-level money factors.

    Lucas Burk

    Love your videos! Super excited that you did one on the financial obligations of vehicle owning, and the true cost of ownership of a vehicle. It's also important to keep a monthly budget in mind. It doesn't really matter what your vehicle is worth at the end if it's outside your budget from the start because it has "traditionally high resale value".

    I just purchased a 2020 MINI Countryman S All4 last week, which I didn't really even consider until I watched your review of the '17 or '18, whichever one it was. Something that I think is important to keep in mind is that no matter what the vehicle ends up costing over the length of ownership, it still needs to meet your monthly budget. I realize that my Countryman isn't going to have the resale value percentage of its sisters, X1 and X2 (I cross-shopped the X2 with the MINI), but it gives 99% of the BMW's experience at 80% the cost. In my particular area, Wichita, KS, the BMW X2 was going to be about $50/month more expensive to finance than the Countryman, and wasn't $50/month more vehicle, not to mention, more expensive to insure. That's why I decided on the Countryman instead, and I love it!

    John Gagne DDS

    THE SMARTEST WAY TO DRIVE A LUXURY CAR is to get the best deal and keep it. Pay it off, own it, no payments….drive it. Pseudos lease cars, sorry but truth because few can legally write vehicle off to their business. Buy high, sell high v buy low, sell low. Better still, buy low and not care about reale later bevause of the great deal on the front end that rarely leaves you trapped later


    Thank you! Very useful!

    UWO Grad

    I very much disagree. Resale value is very important for most people as it matters most if you are keeping the car for the average 3-5 years. I leased a high resale value vehicle (RAV4) in 2016, and when I wanted to flip it 1 year before lease end I actually got a positive equity (ie the car was worth more than what I owed for the remainder of the lease plus the buyout). Instead of paying penalty for early return like most leases, I got an extra incentive for a new popular SUV.
    Most car reviewers unfortunately have a conflict of interest and they won’t mention these issues for new car reviews because they don’t want to upset car manufacturers as they will stop getting invited to new launches etc..


    Thank you for covering this topic Alex, I've spent many hours trying to explain this too people over the years.


    As someone who has previously worked in the the automotive industry, this video is perfection. Everything is explained so well and is completely factual. Just an absolutely outstanding job, Alex!

    Steve Printy

    I bought a new ‘84 Ford Ranger (regular cab, 4 cylinder, 5 speed). It depreciated all the way down to $500 when I sold it (after 19 years). I still have the ‘96 GMC Suburban (2 wheel drive) that I bought new 24 years ago. Now I am getting worried about its resale value. 🤔🤨☺️

    guy proulx

    I can tell which people care about resale value vs the ones who don't just by looking at what vehicle they are driving


    Next car I get, I hope i cm drive it until the wheels fall off

    Stephen Hillard

    In Australia new car sales are plummeting due to GM , Ford and Toyota withdrawling manufacturing. This combined this tightening of consumer credit thanks to a recent Royal commission is strangling the market. traditionally Toyota and in my experience Mazda hold values better than most but because of their common place availabilty it can work against you. At purchase I drive a very hard stance as I have sold cars previously . I work towards the dealers hold back profit margin and always choose the perceived sweet spot in the range for future desirability . I then mother my car with as much care and attention humanly possible for the second most expensive purchase most people can make. I have always placed a high regard for safety so if that means a few thousand dollars in depriciation Im in

    Harold Payne

    All theses numbers get me dizzy.

    Smiley McCabe

    100% this. my wife's 2013 camry has been paid off for several years, it has no issues and current goal is run it to around 2028 unless somethign major happens to it. by then we have extracted basically all of the value out of it and use.

    Blake Swan

    Your Rogue vs Rav4 examples is flawed. Toyota has to discount the Rav4 hard, especially towards the end of its life. No one paid msrp. This was not as well received as the current Rav4. Also using trade in is ridiculous. If you trade in your cars you deserve to take a bath on resale. Private party sellers see much different values. They call them stealerships for a reeason

    Bill H

    Honestly, who is ever going to know what you paid for a car?

    Best deal: never trade your car in to a dealer. Sell it to another dealer, or sell it yourself.

    Get yourself your own financing, then, the only thing to negotiate is the price of the car you want to buy.

    Only in ‘America’

    For the first time in my life I can afford to spend about 60k on a new vehicle. I plan on keeping it for five years or longer so leasing is not of interest.
    I am going to pay cash.
    My question to you is as follows:
    With technology being on the cusp of electric vs gas, and by looking at savings in fuel costs over the next 5+ years, should I be considering a hybrid, full electric or gas vehicle? My fear with hybrid and electrics is that I spent all that money now and five years from the cost replacing batteries and/or other related components eat up my fuel savings!!!!!
    What would you do?

    Ulises Hill

    I love your videos and this one is one of my favorite. Thank you so much to make this YouTube channel Alex


    All these calculations are total BS. Your car worth as much as someone is willing to pay for it. You might have a car. You go to KBB and learn that your car worth $N. But if no one wants to buy it for this $, it not worth it.

    Vikas Reddy

    Very informative, indeed. Thanks for taking time to make a great video like this.


    buy my car with cash. i pay no salex tax.

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