There are generally two types of automobile leases available including the open end lease and the closed end lease. In this article, we will discuss the open end lease. The open end lease is a type of car lease that is primarily used for business customers and allows for a bit more flexibility at the end of the lease, which can often times be advantageous or perhaps disadvantageous to the lessee (the individual or business that has leased the vehicle).
The essential distinguishing feature of the open end lease is that the difference between the residual value and the market value of the vehicle at the end of the lease is taken into consideration. Depending on the terms of the lease, the lessor or leasing company could be held responsible for paying you, the lessee, for the difference between the residual value and the market value if the market value is higher. However, the opposite can also be true. That is, if the market value of the car at the end of the lease is lower than the agreed upon residual value, you the lessee can be held responsible for paying for that difference.
Generally, open end leases are rarely the option chosen or provided to most customers that plan to use their cars for everyday, personal needs. To learn more about the differences between open end leases and a closed end leases, visit the link below.