A car lease agreement requires you to put an initial payment or 'initial rental' down on the vehicle that you're going to lease. As the name implies, an initial payment is a payment made at the start of your lease agreement. It's a one-off payment that can either raise or lower the monthly payments you make for your car, but without taking anything away from the overall total cost.
Below, we'll explain exactly how it works so that no aspects of it remain a mystery.
FAQs
How are initial payments calculated?
Along with other leasing options like contract length and annual mileage, you can change the initial payment amount to suit your needs. It can be anywhere from 3 to 12 times the monthly payment amount. Whatever amount you go for, it's taken off the total cost of the lease deal, so the higher your initial payment, the less you'll be paying on a monthly basis.
Is it better to make a larger initial payment?
It doesn't make a difference in the grand scheme of things. It just means that you'll have lower monthly payments throughout the remainder of the deal, so it all depends on whether you'd rather pay more or less money right at the start. Whatever you choose to do, the total cost of the lease deal remains the same.
Is the initial deposit on a lease car refundable?
Despite often being called a deposit, an initial rental payment isn't quite the same thing. Because it goes towards paying off a portion of the total amount which is due on the car over the course of your lease agreement, you won't get your initial payment back at the end of the contract. That's different from a standard deposit, which is of course refundable.
Is there such a thing as ‘no deposit' leasing?
There is, but it's not quite how it sounds. In leasing terms, 'no deposit' really means a payment that is equivalent to one month's payment of the lease price. If a car costs £100 to lease per month, then the no deposit fee will also be £100. So if you are looking to lease with no deposit, just set the "upfront" initial payment to one month.
How do I pay for my initial rental payment?
To help comply with anti-fraud regulations, bank transfers and direct debits are usually preferred. Credit and debit card payments can work too, but payment via this method should be made in advance. You will never be able to make the initial rental payment using hard cash.
What happens to your initial down payment on a lease?
As stated before, it goes towards paying for the overall cost attached to the lease deal. The payment will be made directly to the finance company that's connected with your lease agreement, after which point you'll be given a delivery date. Once you've signed the paperwork, there's no going back and the amount becomes non-refundable.