A closed-end lease is a type of auto lease in which the lessee is responsible for any depreciation in value of the vehicle over the term of the lease. This type of lease is often used by businesses, as it allows them to claim a tax deduction for the depreciation of the vehicle.
What is the benefit of a closed-end lease compared to an open-end lease? There are several benefits of a closed-end lease compared to an open-end lease.
With a closed-end lease, the lessee only pays for the use of the vehicle during the lease term and is not responsible for its disposition or any residual value at the end of the lease. This type of lease often has lower monthly payments than an open-end lease because the lessee is not responsible for the entire value of the vehicle.
Another benefit of a closed-end lease is that it may include a mileage restriction, which can save the lessee money on wear and tear and depreciation.
How does a car lease work at the end of the lease? Assuming you're referring to leasing a car through a dealership:
When you lease a car, you're essentially renting it from the dealership for a set period of time (usually 2-4 years). At the end of the lease, you have a few options:
- You can buy the car outright for the pre-determined "buyout price" that was set when you signed the lease.
- You can return the car to the dealership and walk away.
- You can trade in the car for a new lease.
If you choose to buy the car or trade it in for a new lease, the dealership will conduct an inspection to make sure the car is in good condition. If there is any damage beyond normal wear and tear, you may be charged for repairs.
If you choose to return the car, you will need to pay any outstanding fees, such as parking tickets or overdue payments. You may also be charged a "disposition fee" by the dealership.
What is the difference between a closed end car lease and an open end car lease quizlet?
A closed-end car lease is a type of car lease in which the lessee is only responsible for making monthly payments on the vehicle during the term of the lease. At the end of the lease, the lessee is not responsible for any residual value of the vehicle.
An open-end car lease is a type of car lease in which the lessee is responsible for making monthly payments on the vehicle during the term of the lease, as well as any residual value of the vehicle at the end of the lease.
What happens at the end of a car finance agreement? At the end of a car finance agreement, the borrower will either need to pay off the remaining balance of the loan in full, or they may have the option to trade in the car for a new one. If the borrower chooses to trade in the car, they may be responsible for any remaining balance on the loan, as well as any additional fees associated with the trade-in. What three things can happen at the end of a finance lease agreement? 1. The lessee can purchase the vehicle for its fair market value.
2. The lessee can return the vehicle to the lessor.
3. The lessee can enter into a new finance lease agreement for a different vehicle.