One of the important decisions that you will have to make when you lease a car is whether or not you want to buy the car at the end of the lease term. Your car leasing agreement will give you the option of purchasing the car and tell you what the likely price purchase will be.

This purchase price is dependent on the car’s residual value and includes a purchase option charge. The residual value of your car is the value it has retained at the end of the lease term. For instance, for a residual percentage of 60% on a car costing £40,000, the estimated residual value at lease-end is £16,000.

If the car you have leased has not depreciated in value by much, then it is a good idea to purchase the car. This is because you will get to own the car at a price that is lower than the market rate for a car in this category.

Keep in mind that that the residual value of the car cannot be negotiated at the end of the lease term. Once agreed upon, you have to go by the residual value mentioned in your car leasing contract regardless of the current industry values. Keep this in mind when you make the decision to return or buy the car at the end of the lease period.