An open-end lease is a lease that requires the consumer to pay the difference between the vehicle’s residual value and its actual value when the lease ends.
This amount is called the deficiency. Conversely, if the car’s value at lease end exceeds the residual value, the consumer can purchase the car and collect the difference on resale. Most residual values are calculated to prevent this outcome, regardless of how well the vehicle is preserved, so open-end leases are a gamble — with poor odds. Such leases are rare, and you should never accept one. Large banks lost huge sums of money with mistaken estimates of residual values at the end of their leases. They’re unlikely to make the same mistake again.
Information for this was taken from the Cars.com’s glossary, written by Joe Wiesenfelder.
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