3. 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. Barring physical 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. With a closed-end lease, any loss of value through depreciation of the vehicle is the responsibility of the leasing company. Auto Leasing Specialist Leasing's EZ Lease is a closed-end lease.
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 isn't, you may owe all or a portion of the difference, often called an "end-of-the lease payment." The Federal Consumer Leasing Act provides a measure of protection for leases in open-end leases by limiting the end-of-term liability to no more than the total of three monthly payments.
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