|Types of Leases
In a closed-end lease, you make a predetermined number of
lease payments for a specified period of time and return
the vehicle at the end of the term.
damage to the vehicle, excess wear and tear, or
additional mileage beyond the mileage allocations in the
lease, you have no contingent responsibility for the
vehicle's value at the close of the lease.
(Note: It is
important to discuss these potential additional charge
items up front before you sign the lease.)
With a closed-end
lease, any loss of value through depreciation of the
vehicle is the responsibility of the leasing company.
Most manufacturer-sponsored leases are the closed-end
In this type of lease, you take the "risk"
that, at the end of the lease term, the vehicle will have
a market value comparable to the amount specified in the
lease contract, sometimes called an "estimated
residual value." If the amount the car is resold for
is equal to the estimated residual value, you owe nothing.
If it is not, you may owe all or portion of the
difference, often called an "end-of-lease payment."
The Federal Consumer Leasing Act provides a measure of
protection for lessees in open-end leases by limiting the
end-of-term liability to no more than the total of three