CLOSED END
VS OPEN END LEASING |
|
OPEN END LEASE (TRAC,
FINANCE, CAPITALIZED) |
CLOSED END (OPERATING,
WALKAWAY, NET LEASE) |
| |
|
 |
Choice of the majority of corporations in the United
States |
|
Used most often by individuals in the retail market |
|
Leasing company if the vehicle owner |
|
Leasing company is vehicle owner |
|
Lessee is entitled to the depreciation. The payment
is amortized during the lease term and depreciates the book value.
If the vehicle is returned with a value less than the depreciated
book value, the Lessee pays the difference. If the vehicle value is
greater than the depreciated book value, the excess is returned to
the Lessee. |
|
Leasing company assumes the depreciation |
|
Lessee pays all maintenance, mechanical and operating
costs |
|
Lessee pays all maintenance, mechanical and operating costs |
|
Unlimited flexibility in lease structure (i.e. payment,
term, multiple drivers, business use) |
|
Preset lease terms with fixed number of monthly payments, mileage
limits and set length of operation; no early term without penalty
to lessee |
|
Ability to customize |
|
No opportunity to customize |
|
Lessee can lease to own |
|
Defined use of vehicle is more difficult to manage |
|
No excess mileage or abnormal wear & tear fees
at lease end |
|
Lessee responsible for all excess mileage and abnormal wear and
tear fees |
|
Can be operating lease so does not appear as liability
on company financial statement and is generally tax deductible; frees
up credit lines and improves financial ratios. |
|
Lessee insulated from fluctuations in used vehicle market |
