The idea of a low monthly payment for a new car is very appealing. All lease advertisements that you will come across are based upon two variables: Buyer’s credit score and the assumption of cash down. The higher your credit score the lower your finance rate. All of those attractive lending offers are based upon top tier credit scores (generally 700 and above). Finance rates can range from affecting your monthly payment by a matter of a few cents to causing you to question whether or not the lease makes financial sense. Can you lease with bad credit? In many cases yes, but it depends upon just how low your credit score is. Leasing with a low credit score is a topic all of its own. Putting down cash is another way manufacturers and dealers can offer low monthly payments. A down payment on a lease is essentially just paying for a portion of the lease in advance. Leasing and renting are synonymous. When you rent you have zero equity. When you lease you have zero equity. Putting a sum of cash down to pay off a portion of your lease in advance is simply putting equity into something that does not belong to you. This method of achieving a low monthly payment is always advertised because of its marketing appeal. Unfortunately, this strategy benefits only the dealers in terms of sales and has the potential of becoming a major burden on the lessee. The risk with prepayment leaves the lesse vulnerable should there be an accident and the car is declared a loss. In this case the money is gone and the lessee is out a car. The lessee’s insurance pays the manufacturers bank to cover the cost of the vehicle. Nothing is paid to the lessee. Gap insurance is the only way to protect yourself should you put money down on a lease. However, if you chose this route you are now taking out an insurance policy to protect yourself from risky and avoidable expenditure. Gap insurance will only add to your monthly expenses and ultimately result in a greater financial investment. The total expense of a lease is the same regardless of a down payment. Your cash will do more good in your bank account (or under your mattress) than being allocated to paying down your lease to in order to have a more palatable monthly payment. Keep your cash. Put zero $ on your next lease.
