Open and Closed Leases. There are two types of car leases. They are very different and you need to understand the in’s and out’s of both. Federal law states that both types of lease be stated on lease contracts. Do not depend on the sales people to explain open and closed leases, so, don’t bother. Just read that section on your own.

Closed-end lease:

• Closed-end leases can be referred to as “walk-away” leases. They are also the most common consumer leases. When the lease is over, you just turn in your car with no more responsibilities other than the excessive damage/mileage fees. These leases bank on the agreement that you will not go over the 12,000 mile mark and also not drive the car into the ground. They also plan on the residual value staying current at the end of the lease.

• At the start of the lease, the leasing company will project the worth of the vehicle at the end of the determined lease, tempered by how many miles your car has on it. This is a good deal, because whatever depreciation that occurs is not your concern. The leasing company takes the financial hit and not you. This is also cool because if you decide to buy the car at the end of lease, it may be worth more than the residual. Thus, you turn a profit.

Open-end lease:

• Primarily used for commercial and business leasing, open end leases are a little tricky. In this one case, the lessee takes every financial risk. This is not a problem, because most open-end lessees are businesses and the costs can be expensed. Businesses need more miles than a regular consumer, and they are very unpredictable.

• In open-end leases, the difference between the residual and the market value is owed by you at the end of the lease. If your vehicle slips between the market value and the residual, you are responsible for the difference. This lease is different from a close lease, it is much lower and reduces the risk, but, will drive up the monthly payment.

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Important Tip:

• Make sure that you only sign a closed-end consumer lease. Although most leases you run across will be of this type, you must read your contract closely. However the contract forms must state at the top of the form that it is a closed-end lease. If you live in Canada, as an afterthought, open-end leases are more popular. No one knows why. Also, if you live in Canada, you are not allowed to lease-end your leased car.

Bonus: Business Leasing

• Business leases are best handled by a lawyer and a tax advisor. It is complicated and there are many differences, as there are many similarities. Check with the fleet manager at your dealer to get something set up. You must also figure out what will be best for the job you are doing. Again, make sure you double check with your tax advisor.

Important! Before You Go To The Dealer To Lease, Make Sure You Know The Following Information:

• What Insurance Are You Geting? We reccomend AIG Direct or 21st Century for the most relaible and inexpensive young driver insurance. You can also check NetQuote.com to compare Insurance Prices around the web. Also relate to our Complete Guide On Auto Insurance

• Have You Read Our Guide On Buying Used Cars? Read This

• Will You Need A Loan? We reccomend using MyAutoLoan.com
  or Any-Credit-Auto-Loan.com

• Do You Have Good Credit? Why not check for Free with Equifax.