The end-of-term value of the vehicle established at the beginning of the lease and used in calculating your base monthly payment. The residual value is deducted from the adjusted capitalized cost to determine the depreciation and any amortized amounts. It is an estimate that may be determined, in part, by using residual value guidebooks. The residual value may be higher or lower than the realized value at the scheduled end of the lease.
Source: Federal Reserve Board