Residual Value

The estimated value of an asset at the end of a lease term. A higher residual value means lower monthly lease payments. Example: A Nairobi car dealer offers two lease options on a KES 3,000,000 SUV. Option A has a residual value of KES 1,200,000 with monthly payments of KES 65,000. Option B has a residual of KES 600,000 with payments of KES 82,000. The higher residual makes Option A cheaper month-to-month but requires a bigger buyout at the end.