What is a residual value?

Residual value

A lease's residual value is what the car is expected to be worth at the end of the lease, often shown as a percent of its price. A lease payment mostly covers the drop from the starting price to the residual, plus interest (definition, opens in a new tab). A higher residual usually means a lower payment.

Where does this site use it?

• Should I lease or buy my next car?

Related terms

• Money factor
• Cap cost (capitalized cost)
• Depreciation

General education, not financial advice.