Auto leasing is a popular option for people who want to keep changing their cars every few years without having to bother about selling old ones or buying new ones. Most people find leasing from a consumer friendly company convenient, time saving and efficient. However, there are a number of people who feel that leasing is tantamount to cheating after being let down by their leasing companies. In most cases, people who have bad leasing experiences have them because they did not understand the terms and conditions of their lease or forgot to read the fine print before signing on the dotted line. Leasing is a complicated issue and needs time to be understood. Take out time to know all about leasing and the general terms and conditions that apply to leasing a vehicle before taking the decision to lease a vehicle. The first thing that you need to know about is the different types of leasing options that are present. Leases can broadly be divided into two—open ended and close ended leases.
Close-Ended Auto Lease: Close ended leases are the most common kind of consumer lease. The residual value of vehicles leased under a close ended lease is calculated on the basis of an expected mileage and normal wear and tear that a vehicle is supposed to undertake within the leased period. As a customer, the only thing that you need to do at the end of a close-ended lease is return the vehicle and “ walk away” after paying for extra mileage or unexpected damage if any. The expected mileage that you are generally allowed per year is a thousand miles per month or twelve thousand miles an year. You can offer to buy the vehicle at the end of the lease period if you want to. At times the residual value of the vehicle returned is more than what was calculated at the time of the lease and as a customer, you can end up with a good deal by buying the vehicle. At the same time, if the residual value of the car you return is less than what was expected, then your leasing company will take the hit and you will neither be expected to pay anything extra or be under any obligation to buy the car.
Open-Ended Auto Lease: Open ended leasing is generally more popular with businesses but in order to make sure that you are not handed one of these, it is best to read your lease document carefully. The main difference between an open-ended and a close-ended lease is that the lessee takes the hit if the residual value of the vehicle is less than the market value when returned. You will also be allowed greater mileage on an open ended lease, since most businesses need more than a thousand miles per month on the road. Do not go for an open ended lease just because you need more mileage since the monthly payments on open ended leases are also much higher than close ended leases. As an individual consumer, you will generally be offered a close ended lease but it is not uncommon in some states and Canada for consumers to be given an open ended lease.