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Author: admin | Category: Auto Rate Calculator | Date: 29.03.2016

Car dealers love to keep the details a secret about buying and leasing cars, but the purpose of this website is expose all the secrets of the car business.
When you see or hear automakers advertisements for low monthly car lease payments there are always disclaimers. However if you have an acceptable credit score as specified by the car-makers finance division you can still lease a car without a down payment.
So if you were wondering do I need a down payment on a car lease the answer is no you don’t. Sometimes it can be as simple as having the required (larger the better) down payment to leave yourself with the most affordable payment possible. For the sake of this story I’m going to take a normally equipped 2011 BMW 535i, a model that sells very well and has been credited in the BMW’s best first quarter earnings in the history of the company. The MSRP of the example I’m using is $59,125  (see below the build sheet from BMWUSA for explanation of options included).
In either of these examples your credit score plays a huge part in whether or not a bank will finance you and at what terms and rate. In our example with the 535i, the lease payment is $771 for a 36 month term with a $34,292 buy out. To finance the same BMW 535 with a $10,000 down payment would leave you with a payment of $881 for 60 months at 4.9% interest. For most people, the “what if” future value of the car is enough to scare them into leasing.
Well, after 4 years of payments totaling $42,288 and a trade value of $20,500 I’m still only left with $9,928 of equity. It’s been my 20+ years of experience in the auto business that tells me unless you plan to keep this car for 5 years or longer, leasing is the way to go. As you see, both options have pros and cons and the final decision comes based on your own situation:  income, down payment, and specific set of circumstances. According to the report, BMW is preparing a new version of the i8 plug-in hybrid which will deliver 750 horsepower. BMWBLOG goes to Dallas to test drive the new 2015 Rolls Royce Ghost Series II When is a car not a car?
Click in the box next to print, if there is no checkmark in the box the program will not print out your lease payments.


To understand how your down payment affects your monthly car lease payment, you first need to familiarize yourself with the different components that make up your down payment.
The portion of your down payment that is used toward the reduction of your monthly payment is called the cap reduction or capitalized cost reduction.
If you observe the section of your car lease agreement that provides a break down of the different fees that make up your “total amount due at lease signing,” you will find that the cap reduction is just one of multiple different fees. One of the more commons questions I get from readers is do I need a down payment on a car lease.
These disclaimers will provide you with the details for being able to qualify for those low payments and they usually require a down payment on a car lease. Obviously your monthly payment will be higher than the advertised special, but you won’t need a down payment on a car lease.
If you have good credit and you are willing to accept a higher monthly lease payment you are good to go. It is a BMW affordable to many customers in this segment, and almost 80% of them choose to lease.
You are borrowing the full purchase price of the vehicle with a BMW Financial Services set “buy- out”. For those of us that see security in consistency, and have the down payment, financing is your blanket. With the ever changing models, technology, and resale killing redesigns, the future value of cars is always a “what if”. However, based on my experience, I will tell you this: if you like to keep up with the newest and latest tech, design, or want to stay in warranty, leasing is your answer. Many people falsely assume that the total sum of money that they pay during the signing of the lease is used towards reducing the monthly car lease payment. Some of the other fees include the first month payment, title fees, registration fees, and document preparation fees.
My short answer would be no you don’t need a down payment, but first there are several conditions or stipulations you must meet.
Not to mention that you still need to add tax, title and license to your price and ultimately you lease payment. The amount of the increase will be determined by several factors including the cost of the car, the residual value and the money factor.


The dealership where you get your new leased car will also be happy to roll your sales tax, fees, title and license in your payment and you will not need to put any money down on your new leased car. For this example, we’re assuming a FICO score of 700 which is the average for most BMW purchasers.
The important part in that figure is that you paid BMW FS $2,923 in finance charges for borrowing their money for 3 years. Some lease specials require several thousand dollars down and then add on your other fees and you could be putting out $5,000 or more, which in my book is a down payment on the car lease. Now don’t forget that you still need to add the sales tax, title, license and any required car dealer fees. To simplify things and not introduce even more variables, I did not include your state taxes, local taxes or motor vehicle documentation in these figures.
If you have no intention in buying the car, then your only exposure was $27,756 in payments for borrowing this new BMW 535 for 3 years. According to today’s wholesale and auction reports, a 3 year old BMW 535i with 36,000 miles is worth around $26,000. Here, we see that the total due at signing was $1500 and the capitalized cost reduction was a total of $823.61. In these cases, leasing allows you to pay for the set depreciation and the rest is BMW Financial Services’ problem.
Again, this means that $823.61 went toward reducing the selling price of the car, which lead to a lower monthly car lease payment. The buyout at the end of the term can be paid in full or it can be refinanced by BMW Financial Services at the end. Leaving myself exposed to a future “what if” trade in value, or worse, having to slap a “For Sale” sign on my prized possession and having to subject myself to would be buyers poking and prodding at my BMW. You will be subject to whatever the interest rates are 3 years down the road, in case you choose to finance the buyout.



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