Q:

How do you find out the residual value of an auto lease?

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Quick Answer

Cars.com provides a database of automobile residual values based on make, model and year. The residual value of an automobile lease is set by the lending bank, according to Edmunds.com. The banks set the residual value of the lease contract based on historical data models and a prediction of consumer tastes at the time of the lease's expiration.

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The residual value of a leased automobile is the price the lessee can purchase the car at the end of the lease. The residual value is the projected future market value of the car and sets the lease cost during negotiation, explains Cars.com.

The residual value directly factors into the monthly payment amount, states Edmunds.com. In an automobile lease, the lessee pays the leaser for the amount of the car's value used. That amount is then divided into monthly payments, while the residual value is the amount of the car's unused value. A higher residual value results in lower monthly payments. Manufacturers artificially inflate the residual values of low-demand vehicles for faster inventory turnover.

While the automobile shopper usually cannot negotiate the price of the residual value, it is an important factor to consider. Cars with a higher residual value are usually ideal for individuals who are not looking to purchase the vehicle after the lease expires, notes Edmunds.com.

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