Pay entire lease in downpayment

I’m planning to lease a car for the first time and had a couple of questions…

  1. Does it make sense to pay the entire lease amount together? Is it a substantial benefit as compared to paying it month by month?
  2. If not, should I be looking at high downpayment / low lease or low downpayment / high lease? Is there a substantial difference in the total amount paid for these cases?

Thanks for your time!

It is called single payment and it can save you some coin, but there is also a small chance you could get bit if the car is totaled and you don’t have gap insurance.

Thanks for the reply,
Do you know approx percentage that i would end up saving in 1. or 2. ? Assuming car’s cost is ~30k

I believe GAP is built into all leases, at least in CA it is.

But the reason i wouldnt do it is because of the loss that you may take, its the same reason that people say to put the least amount down. Your are renting a car, if you are 15k into a car and it gets totaled you then have to calculate what (if anything) you’ll get back.

I’d be interested to hearing the actual numbers on what it would save you vs what it may cost you.

@penguin910 there’s no approximate %, it depends on the particular deal. Not everybody offers it. If there are substantials savings to do a 1-Pay lease, you can often find them advertised. Also, you can search this forum about 1-pay leases to read the discussion about risk/reward in the event of an accident, there’s a lot to consider.

The percentage saved would be the percentage of interest also known as rent charge. So if MF = 0.0012, ie 3% interest, then on 30k car, you save around 900 a year.

The answer partially depends on the brand. I believe Mercedes specifically states that they will return a pro-rated amount of the single-pay lease if the car is totaled. Such brands effectively take out the risk of having the car totaled.

the dealer will probably be happy to give you the quote with paying the entire lease up front. Then you can figure the total cost over the life of the lease and see if it’s worth it to you.

GM, because I just leased one from them, has very explicit rules on how a single pay lease is calculated, and basically it just reduces your money factor (interest cost).

On #2, that means you are paying month-by-month (a normal lease)

A downpayment doesn’t do anything, it just reduces the selling price of the car so there is really no point in doing a downpayment. General consensus on the board is to pay $0 down.

What you do want to know about are MSDs (multiple security deposits) as this will drive the MF (money factor or interest rate if you multiply by 2400). These look like a downpayment (you are coming up with the money up front) but they are good because they (1) drive the MF down and (2) you get it all back when you return the car!!!