Residual Value

Residual value, also known as salvage value, is the estimated worth of an asset at the end of its useful life or lease term. This value reflects what the asset can be sold for after it has been fully depreciated or used. In the context of loans, particularly equipment financing or leasing, residual value is crucial in calculating depreciation, lease payments, and potential return on investment. 

Accurate estimation of residual value helps in managing loan terms and ensuring financial viability for both lenders and borrowers.