When I went to shop for a lease car the dealers always want me to put more in downpayment to give me a better monthly payment despite I have an excellent credit score. My question is, will that reduce the total lease payments or just relocate the money from monthly payments to a downpayment?
For example, (let’s say hypothetically) I am shopping for a lease car for $350 a month for 36 months. That is a total of $350 x 36 months = $12600. If I paid $1800 down payment, is that supposed to reduce the payments to $300 a month so I just paid that $50 upfront or can that reduce the total payments so I pay less than $300 a month after paying the $1800 down payment?
Down payments only lower the monthly payment cost number by applying a capital cost reduction to the over lease amount.
Whether you pay 500 a month for 36 months with no down payment, or 350 a month for 36 months after a down payment, the total lease cost to you after 36 months is still the same (roughly, depending on how tax is calculated in your state).
All you’re doing is pre-paying the lease upfront and making the monthly look “better” which is why you shouldn’t shop just the monthly payments and you shouldn’t put a down payment down because you risk losing the money if you total it driving off the lot. You never see that money again.
Spend time reading up on the Leasing 101 articles and blogs. There’s a lot of variables that go into a lease, and it’s In your best interest to know everything that goes into it. Then you can be driving the discussion, and not just the dealer leading you into their deal
Yes. If we take the total cost of the lease as a fixed value (can vary slightly if you do Zero-drive offs because of MF), then paying more money upfront can lower your down payments.
However, this sounds like a dealer line, where they will increase your down payment to get to a “payment goal.” Instead, calculate your own deal. You should be able to know based on previous LH deals (use the search function) what the deal on your car should be.
Dealers are always going to want you to put cash down to lower the monthly payment because the alternative would be for it to come out of their pocket. You need to determine what an aggressive but realistic selling price is for the vehicle you are looking for and work from there. If you are concerned about monthly payments you are much better off taking that lump sum that you would put down and sticking into a savings account where you can draw down from it as needed to meet your monthly payment goals.
