An ABC of leasing
Residual value
The residual value is the estimated resale value (market value) of the vehicle at the end of the contract. That value is fixed on the basis of the latest sales figures for vehicles of the same type, and therefore depends mainly on the model chosen and its life cycle (the date when the new model was launched).
A point to bear in mind : the higher the residual value, the cheaper the leasing will be – because the cost of financing a leased vehicle is the difference between its value as new and its residual value. This means that the more recent the launch of a vehicle on the market, the greater the likelihood of its selling for a good price, and thus being less expensive to lease.
Factors affecting the residual value:
| Decisive effect | Moderate effect | Slight effect |
| Past sales results for the same model or for comparable models | Certain options : metallic paint finish, air conditioning, leather interior, GPS, etc. | Taxation and legislation (ecological characteristics) |
| The history of the vehicle | Mileage | Guarantees |
| The popularity of the model and make | The colour | |
| The model's life cycle | The engine | |
| Sales methods | ||
| Purchasing behaviour |
Amortisation
The amortisation is the difference between the purchase price of the vehicle when new (list price, options included) and the residual value. The smaller the difference, the lower the rental that you pay.
Mileage and the length of the contract
As skilled professionals with expertise in the management of risks connected with vehicles, we know that mileage and the length of the contract are the two key factors involved in operational leasing. So, in order to avoid needlessly reducing the residual value of the vehicle chosen by you and thus to secure the lowest possible monthly rate, we try not to go beyond 180 000 km and/or a contractual term of 60 months (thereby limiting technical risks).
Example:
- you travel 24 000 km per year: the lowest monthly rate will in all probability be calculated on the basis of a 48-month term (4 years x 24 000 km = 96 000 km)
- you travel 40 000 km per year: the lowest monthly rate will in all probability be calculated on the basis of a 42-month term (3.5 years x 40 000 km = 140 000 km)
CO2 emissions
The level of CO2 emissions determines the amount of the road tax payable. It also reflects the vehicle's theoretical fuel consumption. Last but not least, a “clean” vehicle means a higher residual value and thus a lower risk of incurring, in the near future, penalties resulting from the application of a “green” taxation policy which has not as yet been fully developed ...
What about options?
The choice of options also affects the residual value – but not always in the way one might think. This is all explained in the next section, relating to the choice of options.