Open End Lease

An Open End Lease is one of the two main forms of a car lease today; the other being a closed end lease.  If you lease a car under an open end lease, then you are taking responsibility for any difference between the estimated ending value of the car and the actual residual value at lease end.

For example, if the lease payments were based upon a residual car value of $15,000, and the actual value of the car at the end of the lease is $10,000, then the leaseholder would have to pay $5,000 at the end of the lease.  The reverse of this situation is also true.  If the car is worth more than the estimated residual value at the end of the lease term, then the leaseholder would be entitled to a payment from the leasing company.

Because of the added risk associated with an open end lease, this arrangement is found more frequently in a business-to-business lease.  Federal regulations require the lease type be clearly marked on all contracts.