A closed-end auto lease is the most common and popular type of vehicle lease. You may have heard of the close-end lease as a walk-away lease. The closed-end lease, or walk-away lease, allows the consumer to return the automobile at the end of the lease agreement term, with no other financial obligations. It’s basically agreeing that a certain number of kilometers or miles will be driven each year.
This type of lease allows you to return the car and be done with it….other than paying for any damage or excess mileage or other lease end charges.
So at the time you lease the car, the leasing company will estimate the lease end residual value of the vehicle based on the number of predicated miles / kilometers its expected you’ll drive in a year. If you exceed this at least end, any drop in the vehicles value when you return the lease is taken upon the leasing company, not you.
The individual leasing the car is not responsible for the value between the vehicles value at lease-end, or residual value as referred to in the lease agreement, and the vehicles actual value when you return the lease at the end of the lease term.
In today’s economic times, this type of auto lease is ideal, since if the value of the vehicle drops lower at the end of the lease term than what’s detailed as the residual value in the contract, you’re not responsible for the difference. Though be aware as leasing companies will try to collect on any additional charges if the vehicle is damaged, or again, excess mileage.
Next: Open end lease