Jacob has taken an SUV on lease from Free Cruisers Inc.for a period of four years.Jacob does not need to pay any extra amount,based on the residual value of the car,at the end of the fourth year.He has a _____.
A)residual lease
B)closed-end lease
C)purchase option lease
D)right to early termination lease
E)reassignment option lease

Question

Quizplus · Accepted Answer

A closed-end lease, also known as a "walk-away" lease, allows the lessee to return the vehicle at the end of the lease term without any further financial obligations, as long as the vehicle is in good condition and within the mileage limitations set in the lease agreement. This type of lease typically includes a pre-determined residual value, which is the estimated value of the vehicle at the end of the lease term. If the vehicle is worth less than the residual value at the end of the term, the lessor absorbs the loss. If it's worth more, the lessee has the option to buy the vehicle at the agreed-upon residual price or return it to the lessor. Therefore, in this case, Jacob has a closed-end lease.

Jacob Has Taken an SUV on Lease from Free Cruisers