Is a Down Payment Required to Lease a Car?

Many lease advertisements offer low monthly payments but state that a down payment is necessary. You do not have to pay the entire specified down-payment amount, although your payment will likely increase. Most leasing banks only require you to put your first payment down, although some banks may require additional fees, such as a security deposit.

Advertisements

Manufacturer lease advertisements boasting low monthly payments are designed to attract buyers. Lease programs are usually based on predetermined future resale value and interest rate. For current promotions, the low monthly payment is usually a best-case scenario, meaning a longer term, less money down or additional mileage allowance will increase the price. If you want the exact payment you see, you do have to put the required money down unless you negotiate the vehicle's sticker price.

Lease Modification

You can change the lease's annual mileage allowance, term and money down requirements to fit your driving and budget needs. Any changes to the lease will increase its monthly payment. For example, every $1,000 that you put down toward the lease equals about $30 less in payment per month. Keep this in mind when you're shopping for a lease. A lease that looks attractive at $199 per month can easily become $260 per month if you decrease your down payment by $2,000.

Negotiating

Many lessees focus on monthly payment rather than overall vehicle cost. If you lease a vehicle and don't negotiate, the dealer makes full profit for its sale, as the leasing bank purchases the car at sticker price. The bank must purchase the vehicle before it leases to you. If you negotiate the price of the vehicle, you may achieve a monthly payment close to the one you saw advertised without putting any money down.

Benefits

If your leased vehicle should become a loss from an accident, damage or theft, any money you put down is lost. Even though you will likely pay a higher lease payment, you won't experience the financial hardship that can result from a large down payment. A leasing bank is the true owner of a leased vehicle and your full coverage insurance reflects this. The bank is listed as your insurance policy's loss-payee, meaning any insurance payoff goes to the bank; you will receive nothing.