Who sets car lease residual values?
Residual value estimates can be different, depending on who is doing the estimating. One dealer who uses a particular lease company may offer a significantly different residual value than another dealer who uses a different company, for exactly the same vehicle and same lease. It is often misunderstood by consumers that residuals are fixed for a particular vehicle make and model. There are industry sources (ALG, Blackbook, and others) for automobile residual values that many lease companies use as a basis for setting their own values. A lease company may adjust those values up or down, depending on how competitive they want to be, and how much risk (of estimating too high) they want to take. Finance companies owned by leading car manufacturers, such as Ford Motor Credit and GMAC, are the most aggressive in setting residuals. Manufacturers usually set their own residuals and frequently promote limited-time lease deals that offer higher-than-normal residuals — and lower-than-normal month
