Who carries the residual value risk?
The finance supplier. The finance company calculates a residual value at the time of quoting. If at the end of the contract the vehicle is worth less than originally expected, the financier is responsible for the loss. The second-hand car market is very unpredictable. Why should companies risk their profits by gambling with an unknown vehicle sale price when they come to sell in two, three or four years’ time? The suppliers have dedicated used vehicle disposal functions that are expert at predicting and achieving the very best prices for their vehicles at the end of the contract.
