Some Frequently Asked Car Lease Questions

What is a closed-end lease?

There are actually two kinds of car leases: closed-end and open-end. A closed-end car lease is one where you may return the car at the end of a lease and simply walk away once your contract is done. However, you are going to be responsible for end-of-lease car charges, which may come in the form of extra mileage, wear and tear, etc. The option for you to buy the car is also given. The residual value of the car is pre-determined upon signing the lease so if you choose to buy the car, you pat the residual value and a processing fee. This is the car lease that most people buy into.

What is an open-end lease?

This type of lease is usually only considered for commercial leases. The market value of a car is determined at the end of this kind of lease contract. This is then compared with the residual value that is predetermined and the lessee ends up paying the difference which can be quite pricey.

Are there lease scams that I should be aware of?

Unfortunately there are many lease scams that you have to worry about. The list is endless and many of these deals are pulled off by dealers who look to make a profit. Be aware of the many shams by looking them up on the Internet, or even get around to asking your preferred dealer about them.

What is a disappearing trade-in?

This is one of the scams that can be quite profitable for dealers. They simply leave your trade-in off the contract and most probably they will exclude the rebate as well. Another way is the creation of random fees that are about the same price as your trade-in value or rebate. Oftentimes, the customer is not aware this is happening so make sure to do your own car lease calculations and make sure to get to know your dealer and see if he or she is trusted.