The predetermined worth of a leased vehicle at the end of the lease term is a critical factor in calculating monthly payments. This projected value, expressed as a percentage of the Manufacturer’s Suggested Retail Price (MSRP), represents what the leasing company estimates the car will be worth after depreciation over the lease period. For example, a vehicle with an MSRP of $40,000 and a residual value of 60% would have a projected worth of $24,000 at lease end.
Establishing an accurate estimate is important for both the lessee and the lessor. A higher estimate results in lower monthly payments for the lessee, as less depreciation is factored into the lease cost. For the lessor, it impacts their potential profit or loss. A realistic figure mitigates risk and supports a competitive lease offering. Historically, these projections were less sophisticated, leading to occasional miscalculations and financial implications for leasing companies. Today, advanced data analysis contributes to more accurate estimations.
