New Residual Opportunities
11/10/09 15:30
The last ALG book period of the year represents particularly good opportunities. Usually, large volumes of rental vehicles coming into the fall market, coupled with a model year change and residuals that remain somewhat constant, provides some compelling payments on certain vehicles. This year, the volumes of vehicles generally aren’t present as in previous years, but all the other elements of compelling deals are. Of course, 2009 pre-owned vehicles at wholesale can be purchased for substantially less than original invoice.
The following examples are approximate and meant only as a starting point. Use your own knowledge of the market and inventory sources, AND your finance calculator and/or RouteOne to run your own payments. These are only examples. Nothing draws traffic better than a compelling payment!
The examples are based on approximately $2500 Gross Profit and a 6% finance rate. TT&L is not calculated. Miles are average and purchase values are based on auction averages. These examples were selected for more than their payments. They are vehicles that are available for purchase based on previous week auction transaction frequency. To keep things equal, all calculations are with zero down payment or trade equity. Annual allowable miles is 12000. Watch your mileage bands when buying!
Inventory is sometimes hard to get these days. Enterprise, Dollar Thrifty, and OpenLane are excellent inventory sources you might not have used. Let me know if you need contact information.
YR/MAKE/Model Recent Sales Miles MMR DS36/mo DS48/mo
2009 Cadillac DTS 118 23260 $28,000 $661 $563
2009 Chevy HHR LT 224 20900 $10800 $225 $205
2009 Chevy Impala V6 LT 750 24500 $13000 $294 $260
2009 Chevy Malibu 4 cyl LT 179 26900 $13000 $243 $231
2009 Kia Sportage V6 4WD LX 50 21000 $15000 $358 $308
2009 Chrysler Sebring 4cyl 47 28700 $10700 $251 $223
2009 Ford Edge FWD SE V6 70 17700 $21000 $459 $395
2009 Ford Fusion 4cyl SE 35 16000 $14700 $329 $290
2009 Lincoln MKS 128 17900 $28500 $507. $472.
2009 Lincoln Town Car 267 17000 $25700 $575 $510
2009 Nissan Altima S 88 26900 $14300 $247 $232
2009 Nissan Murano AWD S 107 19800 $19800 $337 $312
Important to know about residual based financing is the fact that money down or trade equity has a more positive effect on monthly payment than on conventional financing, especially for shorter terms. Take the 2009 Nissan Murano example above.
24 mo payment with no down - $407.00
24 month payment with $5000 Down - $177.00
If you think 60 - 84 month terms are in your best interest, keep doing it. If you think shortening term and keeping control of your buyer to do business with them more often might recession proof your dealership for the future, then residual based finance is your answer!
The following examples are approximate and meant only as a starting point. Use your own knowledge of the market and inventory sources, AND your finance calculator and/or RouteOne to run your own payments. These are only examples. Nothing draws traffic better than a compelling payment!
The examples are based on approximately $2500 Gross Profit and a 6% finance rate. TT&L is not calculated. Miles are average and purchase values are based on auction averages. These examples were selected for more than their payments. They are vehicles that are available for purchase based on previous week auction transaction frequency. To keep things equal, all calculations are with zero down payment or trade equity. Annual allowable miles is 12000. Watch your mileage bands when buying!
Inventory is sometimes hard to get these days. Enterprise, Dollar Thrifty, and OpenLane are excellent inventory sources you might not have used. Let me know if you need contact information.
YR/MAKE/Model Recent Sales Miles MMR DS36/mo DS48/mo
2009 Cadillac DTS 118 23260 $28,000 $661 $563
2009 Chevy HHR LT 224 20900 $10800 $225 $205
2009 Chevy Impala V6 LT 750 24500 $13000 $294 $260
2009 Chevy Malibu 4 cyl LT 179 26900 $13000 $243 $231
2009 Kia Sportage V6 4WD LX 50 21000 $15000 $358 $308
2009 Chrysler Sebring 4cyl 47 28700 $10700 $251 $223
2009 Ford Edge FWD SE V6 70 17700 $21000 $459 $395
2009 Ford Fusion 4cyl SE 35 16000 $14700 $329 $290
2009 Lincoln MKS 128 17900 $28500 $507. $472.
2009 Lincoln Town Car 267 17000 $25700 $575 $510
2009 Nissan Altima S 88 26900 $14300 $247 $232
2009 Nissan Murano AWD S 107 19800 $19800 $337 $312
Important to know about residual based financing is the fact that money down or trade equity has a more positive effect on monthly payment than on conventional financing, especially for shorter terms. Take the 2009 Nissan Murano example above.
24 mo payment with no down - $407.00
24 month payment with $5000 Down - $177.00
If you think 60 - 84 month terms are in your best interest, keep doing it. If you think shortening term and keeping control of your buyer to do business with them more often might recession proof your dealership for the future, then residual based finance is your answer!