How Do You Determine Leased Vehicle Residual Value?
Dealers who lease vehicles arrive at the cost of the lease–your payments and amount due at lease signing–by computing a complicated formula that attempts to account for vehicle depreciation, economic conditions, gas prices, expected supply at the end of the lease term and sales history of the particular make and model. In other words, the residual value is a guess. Banks and dealers spend a lot of time trying to come up with a figure that makes the lease deal worth their while. There are a few steps you can take, however, to determine the residual when you’re in the hunt for a car that can help guide you to the right model. Shop around. There is no set residual value for a car, and you may find that one dealer who deals with lease company “A” arrives at a different figure than another dealer who uses lease company “B.” Find a dealer that uses its own financing arm. Ford Motor Credit and GMAC are more aggressive than other private lenders when determining their residual values. It’s a
