Financial glossary
Vehicle Residual Value
In plain English
The estimated value of a leased vehicle at the end of its term, used to calculate depreciation within the lease payment.
Vehicle residual value
Residual value is the estimated value of a leased vehicle at the end of the lease. It is often stated as a percentage of the manufacturer’s suggested retail price and helps determine the depreciation portion of the lease payment.
A higher residual generally means less modeled depreciation during the lease, all else equal. The residual also commonly becomes the purchase-option price at lease end, subject to the contract and fees. It is a contractual estimate, not a guarantee of the vehicle’s actual market value.
The lease vs. buy calculator estimates a buyer’s future vehicle value separately so equity can be compared with the lease’s no-equity return.
Related calculators
- Car Lease vs. Buy CalculatorCompare leasing and buying a car over the same period, including down payments, monthly payments, loan balance, depreciation, maintenance, and equity.
- Car Loan CalculatorEstimate your monthly car payment including trade-in value, down payment, and sales tax. See total interest and the full cost of your auto loan.