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Leasing a Car: The Drawbacks of a Zero-Down Lease

If you’re interested in leasing a car, you might be tempted by zero-down leases, which are offered by many automakers to entice deal-hungry shoppers. These leases require nothing down, meaning you can get in a new car and drive off without paying a penny. So, what’s the catch? We have a few items that you might want to consider before you sign the papers. Find a new car for sale near you

Less Now, More Later

When you lease a car, you’re essentially paying the depreciation on the vehicle during the period that you own it. Think of it this way: If you pay $300 per month for 36 months, you’ll spend nearly $11,000 over the life of the lease. When you return the car to the dealer, it’ll likely be worth around $11,000 less than it was when you leased it, minus a little extra for profit to the dealer and the automaker.

As a result, a zero-down offer usually just means that you’ll end up spending more in monthly payments to account for the depreciation. An automaker and a dealer are unlikely to lose money on a car, so this type of deal means that they’ll get the dollar amount they need one way or another.

As an example, imagine that the $300-per-month lease requires $2,000 down. Now, imagine that an automaker is offering a 36-month lease with nothing down and payments from $359 per month on the same car. For many shoppers, the second deal seems more appealing, since it requires nothing down and only $60 extra per month. But it’s a trick: The latter deal ends up being more expensive, since the automaker simply rolled the down payment into the monthly payment — and maybe tacked on a little extra on top.

Of course, your situation may be different, but we strongly recommend running the numbers before signing a lease, as the zero-down deal might end up being more expensive than one that requires a down payment.

Just an Offer

Another drawback to the zero-down lease deal: It may not exist. Or if it does exist, it might be tremendously difficult to get.

This is primarily because zero-down lease deals are typically only offered to buyers with excellent credit. For shoppers with bad or even average credit, automakers often want to see money up front before they’ll approve a lease deal.

As a result, zero-down lease deals are sometimes just a flashy way to get you through the door. If you arrive and learn that you don’t qualify for a zero-down lease, don’t be afraid to walk away before a dealer tries to talk you into a more expensive lease with a down payment.

Not Zero Down?

Our last potential drawback to leasing a car with nothing down is that a zero-down lease may actually require something down. Yes, that’s right: Even though an automaker refers to a lease as “zero-down,” they may not be able to deliver a vehicle with nothing down at signing.

Here’s what we mean: Many dealers require a documentation fee, which they’ll often require at signing — even if you’re leasing a car, and even if your deal is supposed to be zero-down. If it’s not the doc fee you have to pay, sometimes there will be other fees, including a title fee or sales tax, which some states collect at the beginning of a lease. In other words: Even if you qualify for a zero-down deal, don’t go to the car dealer empty-handed.

Don’t Bother?

We’re certainly not saying that you shouldn’t bother with a zero-down lease. On the contrary, we happen to think that it’s an excellent way for many shoppers to get a new car. But we think you should be aware of some potential drawbacks before you eagerly rush to a dealer when you see a zero-down lease deal advertised on TV.

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Editor’s Note: This article has been updated for accuracy since it was originally published.


Doug Demuro
Doug Demuro
Doug DeMuro writes articles and makes videos, mainly about cars. Doug was born in Denver, Colorado, and received an economics degree from Emory University in Atlanta. After graduation, Doug spent three years working for Porsche Cars North America. Eventually, he quit his job to become a writer, largely because it meant that he no longer had to wear pants. Doug’s work has been featured in a... Read More about Doug Demuro

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  1. I leased a 2018 Rav 4, which had a sticker price of 31,300, I was told it would be 268 a month with no down payment, I had a trade in worth 2500 so my lease payment went down to 175, the purchase price after 36 months is 17000, lets do the math,  36×175=6300+2500DP =8800 +17000 purchase price= 25800 for a car that was 31300 when new,if you don’t do a lot of mileage this car can last for a few more years and it cost a total of 25800. Everyone’ s situation is different , do the math and good luck with your decision.
  2.  If you put up a $3,00 payment to buy down the lease and a year later the car get stolen or it is totaled the insurance will pay the  value for the finance company but not your loss use of a car 

  3. Silly to put money down if you don’t have to. If you turn it in early on a new lease you lose all that money you put down 

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