The two numbers side by side
| Residual value | Payoff amount | |
|---|---|---|
| What it is | The car's projected value at lease end | What the leasing company would accept to close the lease on a given day |
| Where to find it | Your lease contract | A payoff quote from your leasing company |
| Does it change? | No, it's set when you sign | Yes, it falls with each payment and expires on a "good through" date |
| Used for | Your monthly payment, and often the end-of-lease purchase price | Buying out the car early, or a dealer paying off the lease |
Why the payoff is higher before the lease ends
Your monthly payment covers the car's expected loss in value (from its price down to the residual value) spread over the lease, plus finance charges. Partway through, you haven't paid for all of that loss yet. So the payoff is roughly:
Payoff ≈ residual value + value loss not yet paid + any fees (and tax, where it applies)
Near the end of the lease, the unpaid part is small, and the payoff gets close to the residual value.
Using both numbers to find your equity
What matters for ending a lease early is how the payoff compares with what the car is worth today:
- Car worth more than the payoff: you may have equity. Selling or trading or a buyout may cost little or leave money over.
- Car worth less than the payoff: negative equity. Any early exit means covering the gap, so compare it with transferring or waiting.
The residual value is still useful: if the car is already worth more than the residual value, your equity is likely to grow as the payoff falls toward it.
Getting an accurate payoff
- Ask for it in writing, through your leasing company's website, app, or phone line.
- Ask for both amounts: the payoff for you and the payoff for a dealer. They can differ.
- Note the "good through" date. After it, the amount changes.
- Ask what's included: fees, and whether sales tax is added.