Residual Cash Flow and Profitability
Eyo Toe | December 21, 2021
What is residual cash flow? What makes a lease so affordable for customers is the residual, which is what the car will be with at the end of the lease. Ideally, a dealer will buy a car at auction that will be able to run through two 36 month leases. At the end of the second lease, the dealer has the option to sell the car to the lessee for the residual value or liquidate it at auction. Where residual cash flow becomes a great advantage is at the end of the car’s life because all the cars the dealer put on the road will have created a significant amount of profitability and still be able to be liquidated for its remaining value maximizing the asset.