Best Car Leasing Options In This Economy

There are two types of best car leasing options available for a consumer seeking to make a deal in today’s economy – an open end or a closed end lease. Let’s examine both to see which one is best suited for your needs. There is a huge difference between these options, so you need to read all contracts before signing anything.

What Is Closed End?
A closed end lease or a “walk-away” lease is the most common consumer option available today. In simple terms, the lease agreement allows you to return the vehicle at the term end and simply “walk away.” Your only responsibility will be to meet whatever charges applied to excessive mileage or possible damage not covered under the lease agreement contract. Closed end agreements typically account for a predictable amount of mileage (normally 12,000 annual miles) and for typical wear and tear associated with normal driving habits. The value at end-of-lease, or residual, is also predictable. The residual value will be estimated by the leasing company and established at contract signing. If the value is less at lease end, the leasing company takes the loss – not you. But, if the residual value is much more than that established at the beginning of the lease, and you can exercise a purchase option, you can buy it realizing a nice profit. Conscientious consumers who stay well below the mileage limit and keep the vehicle in as close to showroom shape as possible always benefit in today’s economy with a closed end option since you are, in essence, buying a used vehicle that has been well maintained. Therefore, as the consumer leasing the vehicle for a potential end of term purchase, you can exert a great influence upon that vehicle’s value benefiting yourself.

What Is an Open End Lease?
This type of lease is typically used for commercial leasing purposes where the lessee takes all of the financial risks since all leasing costs can be expensed out. Open end leases typically have larger annual mileage limitations that are less predictable than those associated with a closed end option. The lessee remains responsible to pay the difference between actual end-of-term value and the established residual value. This sum can be substantial if your business activity rang up an excessive amount of mileage or damage to the vehicle, which would reduce its value greatly. However, the residual value for business leases is normally set much lower than non-business leasing so at-end risks are lower. Typical open end lease options carry higher monthly payments than a closed end option.

Decisions
Determining if a business can benefit in today’s economy through open end leasing is a task best suited to a tax accountant or other financial advisor who is familiar with that business operation and financial objectives. As a business person, do not rely on the advice of just any dealer salesperson. Their main objective is to make a commission. Furthermore, commercial business leasing might find you in a different ball park when it comes to negotiating pricing if your needs are for a fleet of vehicles that may need to be special ordered from the manufacturer due to availability or specific vehicle features needed.