Zero-Payment Car Lease. Really?

zero payment car leaseIs it possible to lease a new car and have no monthly payment — $0 a month, zero payment, zilch?


But there’s a “catch.” Isn’t that always the case? It’s not exactly like getting a free car.

Let’s explain.

Everyone knows that if you buy a car, you can pay cash and avoid monthly loan payments. But when new car purchase prices average about $30,000, that’s a lot of cash.

However, you can lease the same $30,000 car and avoid monthly payments for much less cash outlay — maybe none.

Here’s how it works.

If you’ve read our many posts related to car leasing and you understand how leasing works (because you visited our sister site,, you know that when you lease, you simply pay for a car’s natural value depreciation (and some fees), not the entire value of the car. Then you return the car and walk away at the end of the lease term.

Normally, you would make a small down payment (or not) and make relatively small monthly payments to pay down the depreciation and finance charges. By the end of the lease you would have paid off the entire depreciation.

But what if you paid the entire depreciation up front, in cash, at the beginning of the lease? This is called a “prepaid lease” or “single payment lease” and is fairly common. Many leasing customers choose to do it this way simply to avoid the hassle of making monthly payments. It often saves money as well.

Compared to the $30,000 cash (in our previous example) that a buying customer would need to pay to avoid monthly payments, a leasing customer would only need about  half — approximately $15,000 — for an average 3-year lease.

Now here’s where it gets better.

If the customer has a trade-in vehicle, the trade credit would be applied against the single lease payment, reducing the amount of hard cash needed. If the trade vehicle were worth $15,000, there would be no additional cash needed. Therefore, the customer would simply trade his vehicle, sign the lease, and enjoy his new vehicle payment-free for the entire term of the lease. At the end of the lease, he returns the car, or purchases it for its remaining value.

It’s important to understand the concept here — that down payment cash or a trade vehicle is more valuable in a lease than in a loan. It has a much more significant effect — in fact, about twice as much effect. You can use that effect to your benefit in reducing greatly your monthly payment, possibly eliminating the payment altogether.

So, if you are looking for a way to drive a brand new car and make zero-dollar monthly payments, a single-pay lease might be the answer. Having a trade vehicle that can substitute for some or all of that initial payment makes it even better.


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