Why does a high residual value make a lease cheaper?

Your lease payment largely covers the difference between the capitalized cost and the residual value. A higher residual means the car is expected to hold more value, so there's less depreciation for you to pay over the term. That's why vehicles with strong resale values often lease well. Residuals also change with term and mileage: shorter terms and lower mileage allowances usually come with higher residuals.