Why Have Lease Payments Increased?

If you’ve been shopping for a Dodge lease at Helfman Dodge Chrysler Jeep® RAM, you’ve probably noticed the prices seem higher than they used to be. We’re diving into the details of lease pricing to illustrate why.

How are Lease Prices Calculated?

When you drive a leased vehicle, you are essentially paying to borrow it from our dealership. You will sign an agreement to have it for a predetermined term. So, when paying for a lease, you only have to pay for its depreciation in value during that time.

First, we start with your vehicle’s current value. Then, we estimate what it will be worth at the end of your term, which is known as its residual value. You’ll need to pay the difference between the two.

How is a Vehicle’s Residual Value Determined?

Your vehicle’s residual value is determined by the leasing company. They use your vehicle’s current value and subtract a percentage of it, which accounts for your vehicle’s depreciation during your lease. This is known as your residual value factor, which typically ranges from 40 to 60 percent.

Keep in mind, your residual value is based on your vehicle being returned with typical wear and tear. If you have excessive damage or mileage on your vehicle, you will have to pay more when your lease is up.

Why Have Lease Prices Increased?

As we mentioned, lease prices are determined by looking at your vehicle’s market value. These values are reflective of the current market conditions. Lately, auto supply has been limited, while the demand still exists. This forces manufacturers into overdrive, which raises costs across the board.

We encourage you to visit our Dodge dealership in Houston, TX to chat more about your new lease options today!