Closed-End Lease

A closed-end lease is the most common type of lease offered to consumers. Under this agreement, the lessee makes fixed monthly payments for a set term, typically two to four years, and at lease-end, they can simply return the vehicle without being responsible for its market value.

The leasing company assumes the risk of depreciation, provided the lessee stays within mileage limits and returns the car in acceptable condition. If the vehicle has excess wear-and-tear or mileage, additional charges may apply.

Closed-end leases are attractive because they provide predictability and flexibility: the lessee can either return the car, buy it at the predetermined residual value, or lease a new vehicle. However, the lessee does not benefit financially if the car’s market value ends up higher than expected.

This structure appeals to drivers who prefer lower monthly payments and the ability to change vehicles regularly without worrying about resale values. Understanding the obligations - such as mileage caps and condition standards - is essential to avoid costly end-of-lease charges.