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For example: Let's say your lease costs $5,000 for 24 months including taxes. If you make a $1,500 down payment, you're going to pay $3,500 over that 24-month lease term, which makes your monthly payment $145.84. If you make a $500 down payment, you're going to pay $4,500 over 24 months, or $187.50 per month.
A Down Payment Doesn't Lower the Lease Price In a car lease, a down payment is often called a capitalized cost reduction, or cap cost reduction. The No. Whether you make a down payment or not, the overall amount you pay doesn't change. However, putting money down does reduce your monthly payment.
Another reason to avoid putting any money down is because in most states, you will need to pay taxes on that amount. (If you roll it into the monthly payment, you'll still pay taxes, but it will be paid off slowly over the life of the lease).
In essence, a down payment is an initial payment on the vehicle before you have to make any monthly payments. For example, if a dealership asks you to pay $2,000 before you can lease a $24,000 car, that $2,000 is the down payment on the car. It means you only owe lease payments on the vehicle's remaining $22,000 price.
Typically, your down payment and monthly charges will be lower with a leased vehicle than one purchased outright. That's why you can usually obtain a better vehicle for the same cash you put down. So-so credit means a bigger down payment and/or higher monthly payments. Poor credit generally means no lease at all.
The simple answer is no, you don't need to make a down payment on a car lease, but you can. Putting money down on a lease doesn't lower the overall cost like it does with an auto loan, but it does lower the monthly payment.
Another reason to avoid putting any money down is because in most states, you will need to pay taxes on that amount. (If you roll it into the monthly payment, you'll still pay taxes, but it will be paid off slowly over the life of the lease).
A Down Payment Doesn't Lower the Lease Price In a car lease, a down payment is often called a capitalized cost reduction, or cap cost reduction. The No. Whether you make a down payment or not, the overall amount you pay doesn't change. However, putting money down does reduce your monthly payment.
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