Types of Car Leasing Options

March 25th, 2014 by

Toyota leasingDealerships that offer car leasing to both individuals and commercial clients normally have two types of car leasing options to choose from. These are referred to as the closed-end and the open-end lease agreements. Knowing the difference between the two will help you determine which one is right for you. Leasing agreements usually last for two or three years so you want to make sure you choose the best option for you personally, based on your individual situation and needs.

Any time you enter into any type of agreement, buying or leasing, it’s smart to have all the facts. This way, you know what all of your options are and what to expect before you set out to do business with a car dealership. Both types of car leasing options are discussed below.

The Closed-End Leasing Agreement

The closed-end leasing agreement is the most common type of lease for individuals because it offers the most benefits. At the beginning of the leasing term, the dealer will estimate the value of the vehicle for the duration of the agreement and that will determine your down payment and your monthly payments. When you have this type of lease, you’ll return the vehicle at the time designated in the agreement and as long as you met all of your obligations, that’s the end of it. You don’t have to do anything else.

You will not have to worry about paying more money at this time provided the vehicle has not been abused, you didn’t exceed your mileage limit and you followed all other requirements stated in the lease agreement. If the dealership under-estimates the value of the vehicle at the beginning of the lease, they’ll have to accept the loss. If the vehicle is worth more than the predicted value at the end of the lease and you decide to buy it, you still get to pay the lower residual price so you come out better.

Open-End Leasing Option

Normally, the open-end lease is for commercial use only because the lessee assumes the depreciation risk instead of the company. This is not something that most individuals are willing to do because it can get expensive. Since the value of the vehicle can change dramatically depending on the economy and other outside factors, you are taking higher risks with this option and that’s why most consumers have closed-end lease agreements.

Another thing about this option that individuals won’t like is that you won’t know if you owe additional money until the vehicle you lease is sold and that can be very stressful. However, if the car is worth more than it was estimated, you could be entitled to the difference and this amount would be added to your account once the vehicle is sold. Another benefit is that the down payment is usually much less than what you’ll pay with a closed-end lease agreement.

The open-end leasing agreement is mainly for companies that lease vehicles because they have the financial security needed to pay the extra money if required, where it could be hard for an individual to pay. They will also have an account set up with the dealership, since they’ll be doing so much business with them.

Now that you know the difference between the two types of leasing agreements, you can make an informed decision when you arrive at the Toyota dealership. Regardless of which car leasing option you choose, you can look for Toyota lease offers to help you save money throughout the leasing term.


Posted in Toyota Leasing