If you lease a car, be aware that there are two basic types:
Open-end leases. Here, you take the risk that the car will not be worth the residual value specified in the contract. When you return the car at the end of the lease term, the lessor will appraise the vehicle and compare that amount to the anticipated residual value.
If the appraised value is higher than the projected residual value, you’ll owe nothing. However, if the appraisal indicates that the car is worth less then the specified amount, you’ll have to make an end-of-lease payment to cover the shortfall.
Closed-end leases. In these arrangements, you return the car to the leasing company at the end of the lease term and walk away. Unless you have seriously damaged the vehicle or abused it, you will not be responsible for any shortfall in residual value.
The catch? Because the leasing company is taking the risk as to the car’s residual value, your payments with a closed-end lease probably will be higher then with an open-end lease. The extra lease payments may be worthwhile, though, if you’re prefer to reduce end-of-lease hassles.