The residual value is the estimated value of a fixed asset at the end of its lease period or at the end of its economic life. As a general rule, the longer the useful life or lease period of an asset, the lower its residual value. The lessor uses the residual value expected for the asset in the calculation of the rent required for leasing that asset over an agreed period of time.

The lessee can guarantee the residual value of a leased asset to the lessor. If the lessee does not guarantee an estimated residual value, it is called unguaranteed.