Open-End Lease

BD

An open-end lease is a type of lease agreement commonly used for commercial vehicles, where the lessee assumes most of the risks and responsibilities of ownership. In an open-end lease, the lessee is responsible for the difference between the actual resale value of the leased vehicle and the predetermined residual value.

Answer A is incorrect because the estimated actual value of the car is not used to determine lease payments in an open-end lease. Instead, the lease payments are based on the difference between the vehicle's original cost and the estimated residual value at the end of the lease term.

Answer B is incorrect because it describes a situation that occurs in a closed-end lease, where the lessee is only responsible for paying the difference if they exceed the mileage limits or cause excessive wear and tear on the vehicle. In an open-end lease, the lessee is responsible for paying the difference between the actual resale value and the predetermined residual value, regardless of the vehicle's condition or usage.

Answer C is also incorrect because the lesser (the owner of the vehicle) is not responsible for paying the difference between the actual resale value and the predetermined residual value in an open-end lease. Instead, this responsibility falls on the lessee (the person who is leasing the vehicle).

Answer D is also incorrect because the estimated residual value of the car is used to determine lease payments in an open-end lease, not the actual residual value. The estimated residual value is calculated at the beginning of the lease term based on factors such as the vehicle's make and model, the expected depreciation, and the anticipated mileage.

In summary, an open-end lease is a type of lease agreement where the lessee assumes most of the risks and responsibilities of ownership, including the responsibility for paying the difference between the actual resale value and the predetermined residual value. The lease payments are based on the difference between the vehicle's original cost and the estimated residual value at the end of the lease term.