A closed end lease is a lease agreement that puts no obligation on the lessee (the company or person making lease payments) to purchase the leased asset at the end of the agreement. Also called a “true lease”, “walkaway lease” or “net lease”.
Since the lessee has no obligation to purchase the leased asset upon lease expiration, that person or company does not have to worry about whether the asset will depreciate more than expected throughout the course of the lease. These leases will include a mileage limitation to allow the leasing company to price more accurately.