Open-End vs Closed-End Car Lease
A **closed-end lease** sets a fixed residual—walk away or buy at a known price. An **open-end lease** (common in commercial fleets) can leave you owing the difference if the vehicle is worth less than estimated.
Step by step
1. Read residual clause
Closed-end residual is contractual; open-end exposes gap risk.
2. Compare money factor
Convert money factor to APR to compare with loans.
3. Mileage and wear
Open-end fleets track excess wear charges closely.
Open-end vs closed-end lease
Consumers almost always want closed-end predictability.
- Closed-end: Fixed buyout; limited upside/downside at return.
- Open-end: Lessee may owe shortfall; more common commercially.
Common mistakes
- Ignoring disposition fee
- Underestimating mileage overage
FAQ
Is closed-end the standard consumer lease?
Yes—most dealer leases are closed-end.