There are several car lease options you can choose to best suit your situation. Lease payments tend to be lower than a car loan, and you can easily exchange the vehicle for a new model every few years. There are five car lease options to consider.
- Closed end lease. Many people like the closed end lease, mainly because a car's value depreciates. A closed end lease protects the leasee from being responsible for paying the difference between the current market value and the value of the car when it was first leased. With this type of option, you have a mileage limit and must properly maintain the car so that it is in good condition. If you do not follow these agreements then fees will be applied. Often, maintenance can only be done at the dealer where the car was leased. These maintenance costs will sometimes be paid by the manufacturer. You are only responsible for paying for repairs if you do not take the car to the dealer
- Open end lease. These types of leases have no mileage limit and are favored by those that travel a lot. In this case, you have to pay the difference between the market value of the car and the cost when it was first leased. This will be calculated when you return the car. You will not have to pay any additional money if the market value remains the same or increases. You might even get a refund, but most car values depreciate over time
- Subvented lease. This type of lease will normally result in lower interest rates as well as higher market values when you return the car at the end of the lease term. The higher estimated value means that the amount you owe at the end of the lease will be less when based upon the market value at that time
- Single payment lease. You may want to pay the sum of the lease at the beginning of the leasing period so you will not have to pay any interest or worry about monthly payments. To determine the extra you will pay based on interest, calculate the total cost during the leasing period and see if a single payment lease makes sense
- Option to buy. Sometimes you have the option to buy the vehicle at the end of the lease. The "option to buy" price will be found in the original lease contract and you will need to pay this agreed-upon amount in order to hold the car title. Many people tend to prefer to trade in the vehicle for a newer model and get a new lease. Be aware that a buyout value is different from a true value, so make sure it is worth it to purchase the vehicle at the end of the lease