For drivers who are looking to lease a minivan, a key factor in the process is residual value.
Residual value affects both a driver’s monthly lease payment and the final purchase amount if the consumer opts to keep a vehicle once the lease has ended.
In today’s minivan market, the outstanding 2016 Honda Odyssey residual value defeats many of its competitors. Keep reading, and we’ll count the ways in which the Odyssey wins over the competition, explore what residual value means, and discuss what drivers can do to maintain the value of their vehicles.
So What Is ‘Residual Value’?
Simply put, residual value is the amount of value left over after a vehicle’s lease term has ended. So, for example, if you lease a minivan with a $30,000 sticker price, and the van is projected to lose $10,000 of its value over the course of your lease, then the $20,000 in value remaining at the end of the lease is the van’s residual value, or the value that is left over.
So, how does residual value factor into your vehicle lease? First, there’s your monthly payment.
The monthly payment for a leased vehicle is arrived at by dividing the anticipated lost value of the vehicle by the number of months it will be leased. So, continuing the above example, if you lease a $30,000 minivan for 36 months, and the bank determines the van will retain approximately $20,000 of residual value—thereby losing $10,000 of its value by the end of the lease—then the monthly payment is calculated this way: $10,000 of lost value divided by 36 lease months equals a monthly lease payment of about $278. (Remember that taxes, fees, interest, and other factors will also come into play and affect the final lease payment.)
Residual value additionally affects the final purchase price of a leased vehicle if you decide to buy it when your lease ends.
Continuing the example, in driving the minivan for those 36 leased months, you have essentially paid for the $10,000 of value the vehicle lost while you drove it. The remaining $20,000 of residual value (plus taxes, fees, etc.) will typically become the end-of-lease purchase price. So, if you fall in love with your minivan during the lease period and decide you don’t want to part with it, you can generally buy it for that $20,000 residual value amount.
Weighing in Against the Competition
Compared with some of its top rivals, the Honda Odyssey wins the day in terms of residual value.
According to data from ALG, a brand-new 2016 Odyssey is anticipated to retain 35% of its value at the conclusion of a 60-month lease. Here is how that residual value figure compares with the competition:
- 2016 Dodge Grand Caravan offers only 29% residual value after 60 months.
- 2016 Chrysler Town & Country offers just 27% residual value after 60 months.
- 2016 Kia Sedona offers only 32% residual value after 60 months.
Keeping the Car in Shape
Drivers can do their part to help retain maximum value on a leased vehicle by following these tips:
- Keep the vehicle clean and in good condition inside and out.
- Invest in seat covers to protect the upholstery.
- Avoid smoking or eating in the vehicle.
- Be conscientious about where you park; park away from other vehicles whenever possible to avoid door dings, and park out of the sun (or use window shades) to avoid prolonged exposure for vinyl and other surfaces that are prone to sun damage.
- Be attentive to the vehicle’s maintenance needs and have it serviced regularly—and keep receipts and thorough service records to show you have taken good care of the car.
Ready to Experience the Odyssey?
Drivers can hit the road in a 2016 Honda Odyssey by visiting any Capital Region Honda Dealers location. Stop by and discover the many winning qualities of this outstanding minivan!