Example: Depreciation When Future Value Is Less than Residual Value |
| Lease | Buy | |||
|---|---|---|---|---|
| Vehicle value | 19,000 | Purchase price | 19,000 | |
| Minus residual value | - 10,000 | Minus future value | - 9,000 | |
| Equals depreciation1 | 9,000 | Equals depreciation2 | 10,000 | |
|
Footnotes
1. Lease depreciation, as it is
used here, includes the capitalized cost reduction amount plus the depreciation
portion of the "Depreciation and any amortized amounts" stated
in your lease agreement. Return
2. Loan depreciation, as it is used
here, is the purchase price of the vehicle, excluding any sales tax, minus
the projected future value (the trade-in or sale price). The loan depreciation
amount is determined by the trade-in value or the sale price you negotiate.
The higher the price, the less the depreciation. Return
|
| Return |