Car leasing, no deposit

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

BuyaCar team
Apr 27, 2018

Leasing is one of the cheapest ways of getting behind the wheel of a new car.

These long-term rental agreements generally require lower monthly payments than other finance options and there are no hidden surprises: once the term is over, you simply return the vehicle.

Strictly speaking, you can’t normally lease a car without a deposit. Most agreements require an initial sum that’s equivalent to between three and nine months-worth of payments. This 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

There are other types of finance that bring similarly low payments and the option to return the car at the end - as well as the possibility of no deposit.

Personal Contract Purchase (PCP) finance has some similarities to leasing. Monthly payments are low because they only cover part of the car’s cost. At the end, you can simply return the car
with no more to pay, although there’s also an option to buy the car.

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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