Closed-End lease:

You return the vehicle to the leasing company at the end of the lease term and walk away. Unless you have seriously damaged the vehicle, given it more then normal wear, or driven it more miles then the lease permits, you are not responsible for the value of the vehicle at the end of the lease period. Because the lessor is taking the risk as to what value the car will be when you return it, your lease payments are generally higher then with a open-end lease. Open-End lease:

The periodic payments are lower.

In return for lower payments, you take the risk that the car will not be worth the amount specified in the contract, called the "estimated residual value."

When you return the vehicle, the lessor will either sell or appraise the vehicle and compare that amount to the residual value stated in the contract. If that amount is higher, you owe nothing.

If the appraisal indicates that the car is worth less then the specified amount, you may have to pay the difference. This cost is called the "End-of-lease" payment.