Auto Lease Calculator · Practical guide
What Is a Good Residual Value on a Lease?
A good 36-month residual is roughly 55-65% of MSRP — and higher is better for your payment.
At a glance
The Benchmark
For a standard 36-month lease, a residual of 55-65% of MSRP is typical, and anything above 60% is considered strong. Higher is better for the lessee because you only pay for the depreciation — the gap between your net cap cost and the residual.
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Enter your own values, then compare the result with the examples below.
Results
How Residual Moves the Payment
Same car, same deal, three residuals: MSRP $40,000, negotiated $37,000, $3,000 down, money factor 0.00125, 36 months, 7% tax:
| Residual | Residual Value | Monthly (with tax) | Total Lease Cost |
|---|---|---|---|
| 55% | $22,000 | $431.57 | $18,536 |
| 58% | $23,200 | $397.51 | $17,310 |
| 60% | $24,000 | $374.80 | $16,493 |
Moving from a 55% to a 60% residual saves about $57 per month and roughly $2,044 over the lease.
Who Sets the Residual
The residual is set by the leasing company or bank based on the model's expected resale value — it is generally not negotiable. Brands with strong resale values (and subsidized lease programs) carry the highest residuals, which is why some models lease far better than others at the same sticker price.
The One Downside of a High Residual
If you plan to buy the car at lease end, a high residual means a bigger buyout price. A high residual favors turning the car in; a low residual can make the purchase option attractive if the car holds its value anyway.
Frequently Asked Questions
Is the residual based on MSRP or the negotiated price?
MSRP. The residual percentage is always applied to the vehicle's sticker price, not the price you negotiate, which is why negotiating the selling price still matters on a lease.
Can I negotiate the residual value?
Generally no. Residuals are set by the leasing company for each model, term, and mileage allowance. You can, however, shop different lenders or choose a trim with a better residual.
What if the car is worth less than the residual at lease end?
You simply turn it in — the leasing company absorbs the loss. This protection against depreciation risk is one of leasing's genuine advantages.
What if the car is worth more than the residual?
You have equity. You can buy the car at the below-market residual, or in some cases trade it in and capture the difference toward your next vehicle.