[Tetsu Learning] What is a residual value credit?

Is driving an Alphard with a 'residual value credit' (Zankure) good business? Uncovering the true benefits and risks from an accounting perspective

You have likely been hearing more about 'residual value credit' (Zankure), which is a hot topic on social media, when it comes to driving high-priced cars like the Alphard.
At first glance, it looks like a 'magic plan that keeps monthly payments low,' but when you look at the numbers calmly from the perspective of an accountant or business owner, a completely different side emerges.

Recently, even 'residual value-type home loans' have appeared, making it an era where we can 'enjoy the present by using the future value of houses and cars as collateral.' However, is this a 'weapon' for business, or a 'trap that tightens the noose'?

Today, without being swayed by trendy mechanisms, I will thoroughly analyze the 'true nature of residual value setting' from the perspectives of business rationality and risk management.

The true nature of 'residual value credit' and the costs business owners should know

Residual value credit (Zankure) is a mechanism that keeps monthly payments low by guaranteeing and deducting the 'trade-in price (residual value)' several years in the future in advance.

Perspective of business rationality

Many business owners tend to misunderstand the equation that 'easier payments = cost reduction.' However, in reality, you need to pay attention to the fact thatyou are continuing to pay 'high interest rates.' Since interest is charged on the entire vehicle price including the residual value, compared to cash purchases or bank loans,the total payment amount will definitely be higher.

The trap of tax-saving effects

Some business owners choose it because 'it can be treated as an expense,' but vehicle depreciation and interest payments are ultimately'tax savings that only work if you are making a profit.' Carrying high fixed costs when business is struggling is the behavior that should be avoided most from a risk management perspective.

Alphard vs. Home Loan: Comparison Table of Exit Strategies

When compared from the perspective of asset liquidity and cost, the differences in their nature become clear.

Analysis as an accountant

By daring to use residual value credit to drive a vehicle like an Alphard, which holds its value well, you can retain cash within the company and divert it to other investments. For a business owner who can 'avoid opportunity costs,' residual value credit can be an excellent financial strategy.
In contrast, with a residual value-type loan for real estate, the business owner bears all the risk if the 'residual value' falls short due to changes in market conditions. Taking this approach with low-liquidity assets must be called an extremely high-risk 'gamble'.

I use it as a 'weapon.' What will you do?

I have written this far, but in the end, I am someone who actively uses 'residual value credit.' However, there are conditions.

Do you have a clear business strategy to 'maximize cash on hand and divert it to the next business investment, even if it means paying the cost of interest'? That is all.
If you are choosing it just because 'monthly payments are easier,' please stop right now. That is not business; it is just waste.

Do not choose with emotion; choose with calculation. That is the etiquette of us accountants.

Learning from this time

Residual value credit is a financial strategy to ensure 'flexibility in cash flow,' not 'ease of payment.' It only becomes a rationally sound business choice when you understand the cost of high interest rates and operate it in conjunction with an exit strategy.
On the other hand,applying it to low-liquidity assets like housing requires extremely careful judgment because it increases business risk.

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