WHAT $0 DOWN ACTUALLY MEANS
Surprise! Every single dealer on the planet can offer you a Porsche for $99 a month.
How you ask? By slapping you in the face with a $20,000 downpayment due on signing. You see, down payments are meant to distort the price of any vehicle – you are still paying the same amount as anyone, you are just paying it all at once upon signing your lease instead of in bits and pieces monthly. Actually, you’re usually spending even more than you would otherwise because dealers are notorious for shoving hidden fees in your downpayment in order to make more money off of you. This is how dealers can get away with advertising ridiculously low monthly prices and inserting a tiny disclaimer in size 2 font stating “taxes, fees, and upfront payments may apply.”
So why does anyone do it?
Depends on who you’re asking. A lot of the time, dealers will advertise zero down deals with ridiculously low monthly payments in order to get you to walk into the dealership and inquire about it. Once you’re there, the chances of you leasing a car with that dealership increase significantly just because you’re already there, and what’s a few hundred dollars more a month anyway? (a lot: a few hundred dollars more a month is a lot, but your dealer will assure you it’s the best deal around).
But, that being said, zero down deals do exist in a fair and legitimate environment, but it’s important to know how they work in order to spot a phony ad when you see one.
It’s all about the options
The way that zero down deals work in the gross majority of cases is that they are offered as an option rather than a locked-in-once-in-a-lifetime-exclusive-offer-you-must-take-this-deal-now-or-it-will-be-gone-forever-just-sign-here. While rebates and rates do change month-to-month, more often than not the dealer you just happen to be dealing with is trying to meet his quota as quickly as possible.
All leasing offers should be available in varying forms: if you want to pay $5000 upfront, your monthly payment will be lower. If you want to pay $0 upfront, your monthly payment will be higher. In both cases, however, you are paying the same amount – the only difference is WHEN you’re paying it.
But I was told a deal was $0 down upfront and still ended up having to pay a couple thousand upon signing the lease. What’s that about?
Good question! So, let us first break down what exactly goes into a lease offer:
- Sales tax
- DMV fees
- Bank fees
- First month
- Downpayment (optional)
As you can see, there are a couple more fees due on signing that really have nothing to do with the lease payment of the actual vehicle. Your downpayment is quite literally a dollar amount you put down in order to decrease your monthly payments. All the other taxes and fees due are separate. It’s kind of like not having to put a downpayment on a house, but then being confused about having to pay maintenance fees – they’re separate.
So, is there ever a case where I can lease a car without having to pay ANY money upfront?
In short, no. The best you’ll be able to do is only have to pay your first month’s payment upfront – but keep in mind, car lease payments are ALWAYS paid at the start of every month, so you’re really just paying your regular lease payment in this case.
Can I see an example of a lease offer?
Sure! Here’s an actual lease offer for a Subaru Forester all-wheel drive taken from our site.
As you can see, you are given the option to decide what you want to pay and when. “Nothing Enrolled” means that all your taxes, fees, and the first month is due upon lease signing. The middle option allows you to have your sales tax enrolled in your monthly payments, making the payments slightly higher but making your amount due on signing significantly lower. The “Everything Enrolled” option allows you to have all the necessary taxes and fees enrolled into your monthly payment, making your monthly cost higher still, but exclusively charging you your first month’s payment upon signing.
Also, it’s important to note that all of these options don’t require any downpayment. This is because a downpayment ultimately just distorts your monthly costs and gets in the way of transparency.
It’s better to put down a few dollars down as possible in order to maintain transparency in a deal. Also, if you wreck your car, all the money you put down at the start of your lease is gone, whereas if you wreck your car and didn’t put any money down, then you just stop making your monthly payments and walk away penalty-free.
Check out our exclusive lease deals here.