A residual value is the amount of money that a leasing company feels a computer will be worth at the end of the lease period. The easiest way to explain this is by giving an example below:
A company buys £10,000 of unbranded computers. A leasing company will think to themselves that after three years of use, the equipment will not be worth much. More importantly, they know the computers will be difficult to sell for any real value.
Compare this to £10,000 of Apple Mac’s. A computer leasing company will be able to see via eBay roughly what the second-hand value of three-year-old Apple equipment is. This might be £2,000 for example. In this case, the residual value will be £2,000. Hence, the leasing company will look to finance £8,000 as opposed to £10,000 as they will take ownership at the end of the rental term and sell the Apple Mac’s. It makes the monthly rentals a lot cheaper.