The two types of contracts involved with leasing a car are a closed-end lease and an open end car lease.
Work Step by Step
The two types of lease contracts are explained as mentioned below:- Closed-End Car Lease is a lease option under which a fixed amount of payment is made at the end of each month which is based on its estimated usage of the car. At the time of ending the lease, the car is returned to the lesser and the payment is made in excess of the estimate made in this regards. Open End Car Lease is a lease contract under which a fixed payment is made at the end of each month based on the residual value of the car. At the time of ending the lease, the car is returned to the lesser and the payment is made by comparing the appraised value of the car at that time to its residual value stated in the lease. Residual Value can be defined as the estimated value of the car under which the car can be resale at the time of the end of the lease and such value is generally determined by the dealer of the car.