Car leasing, no deposit

Low monthly payments with nothing to pay: how to get car leasing with no deposit

BuyaCar team
May 30, 2018

If you're looking for the lowest monthly payments on a brand new car, then leasing may well be the answer.

It's a long-term rental agreement that generally requires lower instalments than other finance options. There are no surprises either: once the term is over, you simply return the vehicle.

Lease agreements generally require an initial payment - often called a deposit. It's normally equivalent to between three and nine months-worth of payments, and can range from around £500 to beyond £2,000.

If you can’t fund this up-front sum, then leasing may be out if reach. But that doesn’t mean missing out on affordable payments for your next car.

 

No deposit lease-type finance

Other types of finance are available with low monthly payments that are similar to leasing, and with the same option to return the car at the end. There's also the possibility of no deposit.

Personal Contract Purchase (PCP) finance has low monthly payments because they only cover part of the cars cost - the value that it's expected to lose during the agreement. At the end, you can return the car with nothing more to pay and there's also the option to buy the car for the remainder of the cost.

Unlike leasing, PCP is available on new and used cars. And depending on your credit rating, you may be eligible for no-deposit finance.

If you’re ordering your next car with BuyaCar, then you’ll need to pay £199 to reserve the vehicle. There will then be nothing more to pay for at least a month. The £199 deposit will also be refunded after your new car has been delivered.

  

Car leasing with no deposit - what’s the catch?

With no deposit to pay, you’ll have at least a month to save before your monthly repayments begin, and there’s no need to raid any of your savings to pay an initial sum.

However, you will be in a position where you won’t have paid off any of the car’s cost and this will mean that your monthly repayments will be higher than if you had put down a deposit.

You’ll also pay more in interest because you’ll be borrowing the full cost of the car; any deposit would have been taken off your loan.

Finally, you’ll also be in a position of negative equity for longer. This is where you owe more than the car is worth. It’s only a problem if you want to return the car early (you’ll need to pay the difference if the car is worth less than you owe), or if the vehicle is written off, as the insurance payout may not cover a like-for-like replacement, In that situation, Gap insurance can be of use.

 

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