Car residual value how to#

There are industry sources ( ALG, Blackbook, and others) for automobile residual values that many lease finance companies use as a basis for setting their own values. It is often misunderstood by consumers that residuals are fixed for a particular vehicle make and model - that everyone has the same residual. One dealer who uses a particular lease company may offer a significantly different residual value than another dealer who uses a different company, for exactly the same vehicle and same lease. Residual value estimates can vary, depending on who is doing the estimating. In short, lease residuals amount to nothing more than an educated guess - by experienced “experts” in the business.

The value can be affected by a number of factors, including assumed average annual mileage, number of months in the lease, make/model vehicle, resale history, predicted future supply and demand, rise/fall in gas prices, and anticipated future economic conditions. What are residuals?Ĭar lease residuals are a statement of the expected depreciation of a vehicle’s value over the life of a lease.

The higher the residual, the smaller the difference, the lower the lease cost and payments for a given selling price. Residual values play a key part in the calculation of lease monthly payments since leases are based on the difference between residual value and negotiated selling price. The longer the lease, the lower the residual value, as compared to the original MSRP sticker price. Residual value (“residuals”), in car leasing, refers to the estimated - repeat, estimated - wholesale value of a leased vehicle at the end of the scheduled lease term.

Car residual value how to#

Understand Car Lease Residual Value What are lease residuals and how to find them?