What is Residual Value Insurance

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November 9, 2016

The residual value of a leased vehicle is the amount of money that the car is worth at the end of the lease term, and residual value insurance is therefore a protection against the value of that car decreasing beyond your expectations. Residual car value is one of the ways that a leasing company determines how much to charge for a lease on a car. It can also affect how much it will cost you to buy the car out from a lease at the end of the term. If the residual value changes, you may find that you owe more money than expected, or that the car isn't worth as much when you try to negotiate the end of the lease contract.

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Purchasing Residual Value Insurance

Residual value insurance is often provided as a way of protecting your investment on a leased car by the leasing company specifically. It tracks the value of the car and maintains it against the quality and condition of the vehicle; provided that the vehicle isn't damaged, the residual value will therefore be locked in place and cannot be negotiated upon.

Other Considerations

If you think that you may need to buy out a lease before the end of a term or if you're potentially interested in purchasing a car at the end of the lease agreement, you may benefit from learning about residual value insurance for your vehicle. For more information about residual value insurance, speak with a professional or a leasing company near you for added advice.

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