Types of Car Leases - Open or Closed Car Lease

Definition:

An open lease contract is used primarily for commercial (business) vehicle leases. In this type of lease, the lessee pays the difference between the residual value (estimated resale value) and the actual resale value at the end of the lease. If the vehicle is driven more than estimated, the actual resale can be low, resulting in increased costs for the lessee.

In contrast, at the end of a closed lease, the lessee pays only extra mileage and extraordinary damages.

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