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How does auto leasing companies make money?


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Sorry for the dumb question. I tried to google it but it is all about how leases work for consumers.


Can anyone please let me know how lease work financially for the leasing companies?

I know some banks finance auto leases. Let's say I signed a lease and paid $2000 upfront and I will pay $200 per month for 3 years. At lease end the residual value of the car is $20000. Then does the bank pay the entire value of the car upfront for the dealership?


If the used car prices decline and 3 years later the car is only worth $15000, who is responsible for that risk and how?

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Guest Schwab711



Check p.54. This might be what you are looking for.


Edit: Probably should use this instead. Anything on "sales-type lease" should work for you.


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