Definition of residual value

The residual value is a term associated with leasing operations and represents the value at which, on expiry of the leasing contract, after payment of the last instalment, ownership of the asset is transferred to the user. ☝

When is the residual value paid?

The residual amount can be paid at the end of the lease period. 📑

How is the residual value calculated?

The residual value is not an additional cost, but a part of the price of the good, usually expressed as a percentage. The size of the residual value has a proportionally inverse influence on the amount of the monthly instalments: for example, a high residual value is associated with low lease payments 📉

Usually, for individuals, contracts allow a higher residual value to be chosen so that the monthly lease rate is reduced, whereas for businesses, the reverse is true.

Can the residual value be 0%?

For finance leases offered by BT Leasing the residual value cannot be less than 1%. At the end of the leasing period, by paying the residual value invoice, the asset will become the property of the user and therefore this invoice cannot have a value of 0. ✅