We all talk about trying to get a deal or that we did get a deal. In fact most buyers think they received an excellent deal. Later on in the ownership we can wonder about the car or how well it has held up but we don’t equate that to the deal. That brings me to the point of this tidbit.
Besides the vehicle’s size and features, what makes a deal, a great deal? Price, of course. But there are other factors that are just as important. Buying from a reputable dealer, a geographically close dealer, a dealer who gives great customer service after the deal, A great trade in value. A great interest rate on our loan, and a long and credible warranty. These are all very important points and we will pick each of these apart in the weeks ahead but what about the factors you don’t see.
I think one of the single most important features of a great deal is the residual value of your choice (resale value) A good example of this is Harley Davidson Motorcycles. A comparable motorcycle from another manufacturer can cost 3 to 5 thousand less but when you decide to sell that bike it can be worth 8 to 10 thousand less then the Harley Davidson. The bike that seemed 5 thousand less ended up costing you 3000 more, because of it’s resale value.
The same thing can happen with cars and trucks. Maybe not quite as big a difference but still big enough to change the whole deal equation. One way to protect yourself with resale value is to do the research and check lease residual values from an independent source. Residual value is what the banks think the resale of a particular unit is going to be, sometime in the future. They are usually very accurate. ALG is one of those companies but I don’t think their information is free to the public. Cars.com will give you residual information for free. Another way to check resale value is consumer report. Their automobile issue is wonderful.
Resale values are usually consistent over the years so if you track a model in the past, it is a good bet that it will have good resale in the future. Some consumer sources claim that residual values are getting closer. Some manufacturers guarantee their resale values for financial institutions as a way of making themselves more competitive but no matter what they do they can’t change how well a particular auto appeals to the public. I remember in the past Saturn’s resale percentage was within a couple of points of where Honda was. The truth be known in terms of public appeal, Honda was ions over the Saturn.
Residual value can be a gamble with a new or almost new company as well. When a company has quality or safety related product issues the bad press can hang with their units in the future. Audi was haunted for a while because of information circulated about one of its models. Audi finally proved that it wasn’t true but the damage was done and the company suffered resale problems for a long time. Now Audi is a different story. They are back in good standing.
Resale Value is paramount in determining a good deal. Whether you sell your car out right or trade it in, the residual value will make all the difference in the world