Residual values are an assumption determined prior to funding. Unfortunately, realized residual value does not always lineup with the initial residual assumptions. After viable due diligence, a portfolio may be worth more or, potentially less than the initial offering.

In the event a manufacturer or vendor offers a residual guarantee, there remains unforeseen exposure as the credit worthiness of the guarantor may change over time. Similarly, changing market conditions can negatively affect future economic assumptions. This is equally true for specialized assets with unique applications. Over exposure, regardless of guarantees, can become a serious risk to the actual versus assumed future value. Dedicated vendor leasing/financing providers and others that rely on the equity and residual of their portfolio should review their exposure on an ongoing basis. That’s where the expertise of AMI’s team, as an unbiased third party, comes into play.