The residual value of a car is a parameter used by car leasing companies to identify monthly lease payments. Companies calculate it by subtracting the depreciation out of the manufacturer's suggested retail price (MSRP).
For an instance, a car with an MSRP of $20,000 and a residual value of 50% after 3 years or $50,000 would be worth $10,000 at the end of that period i.e. 3 years. Car leasing companies add interest, taxes, and their fee to your monthly lease payments.
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