Deal Pack Blog

How to Properly Calculate the Residual Value for a Used Car

posted on: November-08-2012
by: Deal Pack
category: Leasing

First up, definition: the residual value is the projected market value of the vehicle at the end of the lease. Typically a percentage of the vehicle’s MSRP, this value is reduced from adjusted cap cost in the determination of the total of the lease payments.

 

Next, why you should care: in an external lease scenario, the finance company would determine this value; however, as a lease here pay here (LHPH) company, there is no finance company to give this information to you!

 

Finally, how to take action: a good place to start is with the Automotive Lease Guide (ALG) website: (https://www.alg.com/) This company provides a conservative baseline of the projected residual value, and you may find this more suitable than flying blind or guessing!!

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