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What is the difference between a closed-end lease and an open-end lease?

April 26, 2017closed-end lease open-end

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What is the difference between a closed-end lease and an open-end lease?

2 Answers

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A. With a closed-end lease you are responsible for making a specified number of lease payments over a specific period of time. The amount of each payment is based on a fixed end-of-lease value (residual value) of the vehicle regardless of market conditions at the time the lease is over. If there is a loss of value from depreciation, other than from excess wear and tear or mileage, it is not your responsibility. In an open-end lease, you are responsible for any difference between the estimated residual value and the actual value of the vehicle when it is returned and resold.

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In a closed-end lease you are responsible for making a specified number of lease payments over a period of time based on a fixed end of lease value (residual value) regardless of market conditions at the time of lease termination. If there is a loss of value from depreciation, other then from excess wear and tear or mileage, it is absorbed by the leasing company. In an open-end lease, you take the risk and are responsible for any difference from the estimated residual value once the vehicle is returned and resold.AutoLeaseTrader.ca only suggests closed-end leases.