How do finance companies calculate (predict) what the residual value to put in a lease?

LiverX44

How do finance companies calculate (predict) what the residual value to put in a lease?
ex: After 2 year lease RV is $20,000. Regardless of what the agreed upon price was, what calculations do the companies use to decide on $20,000?

kyfdx

LiverX44 said:

How do finance companies calculate (predict) what the residual value to put in a lease?
ex: After 2 year lease RV is $20,000. Regardless of what the agreed upon price was, what calculations do the companies use to decide on $20,000?

The residual value is a percentage of the full MSRP. That percentage is determined by the leasing bank.

How do they decide? History and experience.

Michaell

LiverX44 said:

How do finance companies calculate (predict) what the residual value to put in a lease?
ex: After 2 year lease RV is $20,000. Regardless of what the agreed upon price was, what calculations do the companies use to decide on $20,000?

The residual and money factors are set by the bank to achieve a certain payment.

What difference does it make to you - you can't change the residual.