Negotiating a Lease

Choosing a higher or lower residual price

For most people, choosing the highest residual price is of no consequence to them - at the end of the lease they simply turn your vehicle into their leasing company and walk away.  At that point the bank has to contend with the value of the vehicle and whether or not the residual is higher or lower than it should be. 
For others who may consider buying the vehicle at lease end, a lower residual price makes the vehicle itself sound more affordable.  But in reality, the consumer is just paying the difference during the term of the lease instead of at the end of the lease.  It's the same amount of money, just over a different time period.

Our general recommendation would be to find the highest possible residual price that you can.  Again, some lenders may adjust their residual prices to suit their own needs.  Among lenders, captive leasing companies (leasing companies owned or operated by automotive manufacturers) are most likely to do this in order to drive more vehicle sales.  They can afford to create higher residuals because they have the benefit of making more money in the sale of the vehicle.  Independent leasing companies (those not owned by a manufacturer) do not make money on the sale of the vehicle, and therefore need to be more careful about setting higher residual values.

With a high residual, your lease end buyout price will of course be higher.  We recommend a higher residual because you may or may not buy the vehicle at the end of the term, but you will certainly make the payments during the term.  A higher residual gives you more flexibility during the term of the lease.