Understanding the difference between close-ended lease and open-ended lease arrangements
Make it a point to know the exact parameters of close-ended lease and open-ended lease arrangements. There are some basic differences between the two leasing arrangements.
Open-ended lease gives you the option of buying the car at the end of the slated lease term. However, this type of lease also lets you to walk away without actually buying. Generally, the buying price is determined before the lease is signed. Close-ended lease offers the benefit of choice, depending on the prevailing scenario.
On the other hand, open-ended lease requires you to purchase the car at the end of the lease period. It is important to understand that the price is the projected value. The actual value can be more or less, accordingly making the deal expensive or cheaper.
The difference between the projected and fair market value of the vehicle at the end of the lease will be a deciding factor. Open-ended lease generally offers the advantage of lower monthly payments as compared to close-ended lease and open-ended lease arrangement.
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