Residual Value

Residual value is the lessor's estimate of equipment worth at lease end, expressed as a percentage of original cost. Higher residual values mean lower monthly payments because the lessor expects to recover more value later. For example, a copier with 15% residual value requires lower monthly payments than one with 5% residual. Residual value depends on: equipment type (premium brands hold value better), lease term (longer leases = lower residual), technology obsolescence rate, and expected wear and tear. FMV leases have higher residuals (10-20%) while $1 buyout leases have minimal residuals. Understanding residual value helps compare lease options - don't just compare monthly payments, consider total cost including end-of-lease obligations. Ask: What residual value does this lease assume? Is the buyout amount negotiable? What happens if actual value differs from estimate?