Why does residual value matter on a lease?

Q: Why does residual value matter on a lease?

It directly affects your monthly payment AND your lease-end buyout price. A higher residual = lower monthly payment but a worse buyout deal; a lower residual = higher monthly payment but a potentially great buyout opportunity at lease-end.

All terms

LeasingGlossary

Residual Value

The predetermined value of a leased vehicle at the end of the lease term.

Residual is set at lease signing and represents what the leasing company estimates the car will be worth at lease-end. A higher residual = lower monthly payment but a worse buyout deal. A lower residual = higher monthly payment but a better potential buyout.

Frequently asked

Residual Value — FAQ

Put it into practice

Where Residual Value matters on CarSavr.

Calculator

Trade-in value estimator

Guide

Lease vs. Finance

Related terms

Lease Buyout

Purchasing your leased vehicle at the end of the lease (or earlier) for the predetermined residual value.

Money Factor

The interest rate equivalent on a lease, expressed as a decimal.