Base depreciation Cap cost minus actual predicted value
Subvented depreciation Supported cap cost minus booked residual
Residual gap Book residual above predicted value
Est. payment delta Subvented payment vs. baseline

Capitalized cost to residual value

cash support book residual predicted value excess payoff risk

Payoff exposure through the lease

estimated payoff estimated market value
Lease payoff risk timeline A line chart comparing estimated payoff against estimated vehicle market value through the lease term.

What changes when the residual is subvented

Simplified model for explanation only. Taxes, fees, acquisition costs, dealer contribution, unearned rent charge details, and exact amortization conventions are omitted.