What is residual value on a lease?

Residual value is the lessor's estimate of what the car will be worth at the end of the lease, usually shown as a percentage of MSRP. It's set by the lessor, not typically negotiable, and it's also your buyout price if you purchase the car at lease end. A higher residual means less depreciation to pay for, so lower monthly payments. On OffLot, the lease estimate on new-vehicle pages shows the residual alongside the payment.