This price is determined by the leasing company and generally includes the residual value of the vehicle at the end of the lease term as well as a purchase option fee, which usually sits anywhere from £150 to £300, depending on where you are located.
At the signing of the lease contract, your monthly payments are calculated based on the car's current price and its expected residual value by the end of the lease term. There is typically also a monthly financing charge.
This estimated price of the value of the vehicle when the lease term is completed is called the residual value. It is basically the amount of loss in value of the car during the full lease period. For example, a car which costs £40,000 with a 50% residual value will have an estimated £20,000 value by the end of the lease.
Having determined this, find out the actual value, (or market value), of the vehicle. This means, how much would your vehicle retail for on the open market? To get a good, fair estimate carry out some pricing research; this is easily done using the Web.
Try also to find vehicles with similar condition and mileage as your car, from dealers. This will also help determine a reasonable market value estimate of the car.
Now compare the residual value as opposed to the retail market value. If the residual value is lower than the market value you are onto a good thing. However, the residual value of cars coming off leases is generally higher.
But, don’t lose hope. Leasing companies are aware of the fact that the residual values on their cars are in excess of their market value. Because they know this, they usually try to find you a fair offer. It is possible to reduce the purchase price of your lease car with a few persuasive negotiating skills.