2021 Bronco Lease Residuals (including Heritage Edition!)

[RobBroncowski Jr]

Unfortunately, the used car market blows. People are selling trucks, that are a few years old, for virtually what the paid originally.

This is the other way you get boned on a lease; they undervalue the residuals. The fact remains that leases are the most expensive way to roll. Dealers love them because they make more money and lessees like the lower payments, the convenience of not having to sell a vehicle, and they get new cars potentially sooner. You pay a premium for those benefits. IMO, there is a spectrum of how good or bad a lease deal is, but you are guaranteed to be on the losing side of the equation. Full disclosure: I have never chosen to lease. If the manufacturer is offering subsidized lease terms, they are generally subsidizing loan rates and every time I crunch numbers, leases never make financial sense.

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[timhood]

Explain why.
The correct answer to Lease v. Buy is "It depends".

The $399/month lease (39 months, $0 down, 12K miles per year) for a Base Bronco with nothing on it is a fantastic deal if your goal is to have the latest and greatest and upgrade when there are more Broncos to choose from.

Also, arguably you could say "your an idiot anyway" for getting ANY new car.

If you lease a car and get a new lease every 3 years or so, that's effectively the same as buying a new car every 3 years. Buying a new car every 3 years is the most expensive way to own a vehicle, as you are absorbing maximum depreciation all of the time. Typically, the money factor for a lease will exceed the equivalent interest rate you would get on a loan, increasing costs further. Add to that that most people only pay attention to the monthly payment and they don't even realize the other ways that a lease may cost them more than they know.

If you are going to get a new car, the best way to minimize the cost is to own it as long as is practical. That spreads the depreciation over a longer period of time. Depreciation is the single greatest cost of ownership in a new vehicle.

 

[Pancho Kornwallace]

I know I'm not going to lease as I think it is a terrible idea financially but if it works for you I get it, basically I just posted for general information to do with as you please.

It is important to actually do the math.

A lease absolutely can be better than a buy deal. It depends on the residual and the incentives and the interest rate.

The correct answer to lease v. buy is "it depends".

Getting a 2020 Ford Fusion for $205/month for nothing down is likely a much better deal than buying that same car at $25K.

Also...
The fact that a we are getting a NEW Bronco is a much bigger financial hit than choosing between lease and buy.

 

[Falcon01]

You are probably right there in that it depends and everybody has a different situation. I guess I should look in the future and see which way seems better. Thanks for the sound advice.

This is definitely the case. Whether or not a lease makes financial sense depends on the car and the deal. From my personal experience, Ford's typically do not lease well, and don't make too much sense to lease IMO. The Money factor is too high without any good lease cash to offset it.

I reverse calculated the Bronco's MF to .0031 or 7.44%.

I've been planning to buy the Bronco because I know that Ford doesn't lease their cars cheap, my Mustang would've leased like $50/mo less than a finance payment on it.

Now - that being said, I've leased a handful of vehicles for extremely cheap. A few of them are below (all numbers include NJ Taxes and Fees)

• 2020 Chevy Bolt - $39k Sticker - $1543 One Pay Lease (36 Months, 10k/yr) Effective $43/mo
• 2020 Toyota Tundra - $48k Sticker - 285/mo, $620 DAS (24 Months, 12k/yr) Effective $299/mo
• 2019 BMW 540 - $75k Sticker - $499/mo, $3650k DAS + $3500 MSD (Get back at end of lease) (36 Months, 12k/yr) Effective $586/mo
• 2018 BMW X2 - 47k Sticker - $179/mo, $2k DAS + $1450 MSD (Get back at end of lease) (24 Months, 10k/yr) Effective $255/mo
• 2018 Kia Optima - $25k Sticker$159/mo, $580 DAS (24 Months, 12k/yr) Effective $177/mo

All of these would've cost much more to buy compared to leasing, to the point where I think the break even of effective lease payments compare to negotiated price is typically around 12 years for my deals and is something like 40 years for the Bolt. All the while, my family and I get to drive brand new cars all the time that typically have maintenance included and we don't have to deal with break downs, repairs, etc. that come with owning a 6+ year old car.


That being said, I happen to purchase my fun vehicles (currently have a GTR in the stable along with my Bolt), which the Bronco kinda is (it will be my daily as well).

I sold my Mustang a bit over a year ago and miss it, so I can't wait to get back into another stickshift Ford!

 

[Pancho Kornwallace]

For the price you showed..you added quite a few options..no ??

I put zero down and 12K miles per year.

 

[Pancho Kornwallace]

You can write off the same payments if it was a loan. Get a loan for the same term as a lease if you want. Or sell it at the end of the lease period you would have gotten. Don't let the write-off dictate how you purchase your vehicle.

Taxes should be a factor. You can write off a lease payment, but you may have to go through an amortization schedule for depreciation on a buy payment. It could literally dictate how you finance a vehicle.

Another tax example:
I got a $7500 down payment on my Volt (electric car) in lieu of getting a $7500 tax credit on the following year's taxes. This allowed me to reduce the payment to dirt cheap levels as a lease, on top of saving another $150/month in fuel v. an ICE car. The only drawback was that the leasing company got the $7500, not me... I just got a lower payment.

 

[PaBronco]

You can write off the same payments if it was a loan.

I do not believe this is accurate. You can depreciate, but not write off loan payments. Check with your accountant

 

[jaruss01]

I thought my loaded OBX sas was bad. The top of the stack has me dying laughing.

Ford wants $1,000/mo for a lease on a 4 door FE w/ no accessories (36 months and 12k miles with nothing down), EXCLUDING tax and fees. HAHAHA. Oh my lord. I kid you not. $1,000/mo for a low $60k sticker.

 

[Rivdog07]

The residuals are actually right on par with comparable wrangler trims (equal or within a percentage point). That's the good news. Bad news is the further you get away from base models, the more the residual values plummet. The FE residual is laughable and shows what the banks think of the resale value on an FE.

However, the main reason these numbers look ridiculous for some is the calculator is pricing (cap cost) the vehicle at MSRP. If you were able to secure a price at invoice, or even below, the payment will reduce significantly.

That's why these look inflated compared to wrangler leases. You can get thousands below invoice on some wranglers right now. Thus, they are leasing much better despite similar MSRP and residuals.

All that said, I haven't made up my mind to purchase or lease a loaded OBX...

 

[timhood]

I do not believe this is accurate. You can depreciate, but not write off loan payments. Check with your accountant

I was trying to be fast and simple and ended up being technically incorrect though essentially correct. Yes, you depreciate, not actually write-off the exact payment, but the depreciation allowances more than cover the payments for "normally-priced" vehicles such as the Bronco. So, in the same time frame as a 3-year lease, the depreciation write-offs will typically exceed the lease payments while accruing equity at a lower cost of money. But if one's goal is to drive new cars with a tax deduction and not care about ever owning an asset, the lease is the easier way to go. It just depends on whether someone considers a tax-deduction as more important than income. Like when your wife comes home with all that stuff and says, "Honey, look at all the money I saved!"

 

[ccsami4x4]

As others have alluded to, these numbers are horrible for leasing (which was to be expected). The goal has generally been to get your lease at or below the 1% of MSRP target, and these numbers are nowhere close to that (even if you consider that some folks will be getting below MSRP...it likely won't be far enough below to make up the difference).

 

[bf4445]

The higher the residual value, the lower the payment, ***assuming that the interest rate is the same*** which is not always the case (so you should double check that). If you are buying, and you have the same interest rate regardless, you can directly compare this percentage. The higher the better.


For example:
A Base 2-door Bronco will be worth:
72% of its original value after 24 months
67% after 36 months (3 years)
66% after 39 months
62% after 48 months (4 years)

When you see this, you understand why people like to buy vehicles that are about 2-3 years old, because the depreciation curve flattens out after year one.

My only open question: Does this % include the destination charge? So is a Base 2-Door start at $28,500 or $30,000 NEW?

So if you plan on keeping a vehicle leasing is not the way to go. Never have leased always seems expensive to me to have to buy a vehicle I already bought after 2-3 years. But i always pay cash

 

[bf4445]

I do not believe this is accurate. You can depreciate, but not write off loan payments. Check with your accountant

I think If the payment is made by a business and the vehicle is a company vehicle then you can write off either way as a buriness expense.

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