Originally Posted by TwinsPoppa

I'm not familiar with leasing ins and outs but I thought leasing is mostly for people who like to have newer rides and don't want to worry about ownership.

I thought the purpose was to only pay for the depreciated part of the car during the lease - hence cars that hold their value are the best for leasing. So, if it's a 50K car and it depreciated only 10K during the 3yr lease then that's basically what you pay.

My question is:

The residual/buyout at the end of lease is based on the current market value at the end of the lease or is that agreed upon ahead of time at the time of leasing the vehicle? I always thought it was the first instance.

Can somebody school me on this, please.

EDIT: Hhmm after more thought I guess it would have to be the second scenario. Otherwise you could not figure the lease payment which is based on the depreciation, right? So would the residual value then be based on retail value or wholesale value?