$0 Zero Down Car Leases Explained

zero down lease dealsIs it possible to lease a car with no down payment?  $0 down?

Absolutely.

In fact most car leases, even those advertised with a “required” down payment, are also available with $0 due at signing.

Of course, the monthly payment will be higher since you are not pre-paying some of the lease obligation.

In general, for a modestly priced vehicle, you can expect your lease payment to be higher by about $40 a month for every $1000 you don’t make as a down payment.

Although all leases are structured so that a down payment is optional, some special lease deals offered by car manufacturers in monthly promotions may require a down payment in order to get the deal. You could do the lease without a down payment but the actual deal might not be as good (see LeaseGuide.com for details about how to evaluate a lease deal).

On the other hand, some manufacturers such as Honda often offer their special promotional lease deals both ways — with a down payment and without. Even though you pay a higher monthly payment with nothing down, the deal is still a good deal. See Special Honda Leases for recent examples.

In a lease, a down payment is called capitalized cost reduction, or simply cap cost reduction.

Just to understand a bit about how leases work, when you sign the papers for a lease, you pay a down payment (or not), any sales tax on your down payment, your first month’s payment, possibly a security deposit (which you get back at lease-end), and any official fees required in your city, county, or state.

This is called “cash due at signing.” But notice that down payment (if any) is only a part of the total amount due at signing. This important point is often not well understood. Many people mistakenly refer to the entire amount due at signing as the down payment.

This means that there can be differences between lease deals that offer $0 down or no down payment. Even if you make no down payment, you may still pay the other fees.

However, in some “$0 due at signing” or “sign and drive” deals, such as those from Honda and others, not only do you pay nothing down but the other fees are rolled into the lease. You still pay for them in the long run, but you don’t pay them up front in cash.

So, when a dealer tells you there is no down payment required, find out if that really means zero cash up front or if you still must pay the other fees.

See “$0 Down Car Leases Are Back” for specific lease deals that require no money down.

Your credit score is important

In order to qualify for zero down at signing, customers must have good credit. It’s always a good idea to know your current credit scores (you have three of them) before you visit a dealer for such a deal. Don’t be surprised when the dealer checks your credit to see if you qualify,

What’s your FICO® Score? Find out now with a purchase of your Experian Credit Report for $1 with enrollment in Experian CreditWorksSM!

For more details and information about zero down car leasing, go to LeaseGuide.com.

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