Residual value
What a car is expected to be worth at the end of a loan. It is used to set some balloon payments and to judge lending risk.
Residual value is an estimate of what a car will be worth at the end of a finance term. Cars lose value over time, so a car worth 20,000 dollars today might have a residual value of 8,000 in four years.
Lenders use residual value in a couple of ways. It can set the size of a balloon payment on some loans, and it helps them judge how much the car will be worth as security if things go wrong.
Residual value matters to you too. If a car drops in value faster than you pay the loan down, you can end up in negative equity, owing more than the car is worth.
Choosing a sensible car and loan term keeps this in check. We can help you find a loan that fits the car. Get your fair rate.
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