Open-End Leasing |
Closed-End Leasing |
| Open-end leasing is primarily used by companies who have fleets ranging from 1-1,000 vehicles. The flexibility provided with this type of lease makes it easier to manage a fleet of vehicles. The lessee has the ability to customize an open-end lease. |
Closed-end leasing is typically provided to individuals leasing a vehicle. This is the type of lease generally provided by a bank or automobile/truck dealership. These leases are more difficult to manage because of the time and mileage parameters. |
| ADVANTAGES |
ADVANTAGES |
- Operating lease
- Off balance sheet financing
- No cash outlay
- 12 month minimum term
- Customized leases
- Ability to manage cash flow easier
- Variable depreciation rates
- Easier to replace vehicles
- Lease to own vehicles
- Share in used vehicle sale gains
- Sell used vehicles to drivers/employees
- No mileage restrictions
- No early termination penalties
- No excess wear and tear penalties
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- Operating lease
- Off balance sheet financing
- At lease term walk away from lease
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| DISADVANTAGES |
DISADVANTAGES |
- Absorb loss on used vehicle sales
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- Requires a cash downpayment
- Requires a specific term
- Requires a specific mileage allowance
- Early termination penalties
- Excess mileage penalties
- Excess wear and tear penalties
- No participation in used vehicle sale gains
- No control over the sale of the used vehicle
- No customization of leases to drivers territories
- Need to move vehicles to different drivers to control mileage levels and eliminate excess mileage penalties
- No control on the acquisiton cost of vehicles
- No control on the interest rate charged
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