Leases come in two varieties: Open-End/Finance leases, and Closed-End/Walk-Away leases.

  • Open-End: The customer accepts the risk that the car will have a certain “estimated residual value” at the end of the lease. The car is appraised at the end of the lease. If the estimated value of the car is equal to or greater than the estimated residual value, you won’t have to pay any additional costs. If the appraised value is lower than the residual value, you may have to pay the difference. However, some contracts may allow you to receive a refund if the appraised value is lower than the residual.
  • Closed-End: At the end of the lease, you simply return the car to the dealer. It must not have received more than normal wear and tear, and must be under the mileage limit stated in the lease agreement. The monthly payments will be higher for this type, since the dealer is accepting the risk that the car’s value will decrease.