Everything You Need to Know About Closed-End Leases
For many of our customers leasing commercial vehicles, open-end leases are the norm. But depending on your needs, a closed-end lease might actually be the better fit. In this guide, we’ll break down the differences, highlight the benefits of a closed-end lease, and help you determine which option is best for your business.
What is a Closed-End Lease?
A closed-end lease allows you to lease a vehicle for a fixed term and return it at the end with no residual value risk. That means Quest takes on the responsibility for the vehicle’s future market value, not you. You simply pay your agreed monthly payments, return the vehicle in good condition, and move on.
How is a Closed-End Lease Different from an Open-End Lease?
Open-End Lease
- Common for commercial fleets
- You assume the residual risk
- Option to purchase, sell, or trade the vehicle at lease-end
- Monthly payments are often lower
- No mileage limits
- More flexible terms, often starting at 12 months and continuing month-to-month
Closed-End Lease
- Lessor (Quest) assumes the residual risk
- Fixed monthly payments and term (usually 12–48 months)
- Mileage limits apply (typically 16,000–24,000 km per year)
- Option to return or purchase the vehicle at the end of the term
- You only pay for excess mileage and damages, if applicable
Are There Any Downsides to a Closed-End Lease?
The primary limitation is the mileage restriction. If your fleet tends to rack up high mileage, a closed-end lease might not be ideal, as excess mileage fees can add up. However, if your vehicle use is predictable and controlled, a closed-end lease could be the most cost-effective and risk-free option.
Is a Closed-End Lease Right for My Business?
If your business prefers predictable payments, low risk, and a set term with the option to return or buy, then yes — a closed-end lease could be a great solution. It’s especially ideal for businesses that operate within known mileage ranges and want to avoid surprises at lease-end.
Does Quest Offer Both Lease Types?
Yes! While many of our commercial clients go with open-end leases for their flexibility, Quest Auto proudly offers both closed-end and open-end leases. We’ll help you explore the pros and cons of each and recommend the best structure based on your business goals, usage patterns, and budget.
What Are the Benefits of a Closed-End Lease?
- No residual risk. You're only responsible for monthly payments, excess mileage, and damages.
- No obligation to purchase the vehicle at the end of the agreement.
- Typically comes with a fixed rate and term of 12 to 48 months.
- You will know the vehicle's residual value from the start.
- If the vehicle's market value is higher than the residual value, at the end of the contract, you have the ability to purchase and resell the vehicle for a profit.
Closed-End and Open-End Leasing is Available at Quest Auto
While most of our commercial fleet accounts prefer the flexibility of open-end leases without the mileage restrictions, here at Quest Auto, we’re happy to offer both lease options. When it comes down to it, closed-end leases have the benefit of predictable monthly payments with minimal residual risk to you. We also offer a quick and easy trade-in appraisal process if you’re looking to upgrade your current fleet!
Still not sure which leasing option is right for you? Feel free to contact our team to discuss your questions or concerns about leasing your next commercial vehicle!
