Car leasing, no deposit

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

BuyaCar team
Jul 24, 2019

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

Car leasing essentially works like a long-term rental agreement and generally requires lower payments than other finance options. At the end of the term, you hand the car back and walk away.

Leases often require an initial payment before the car is delivered. This is typically linked to the monthly payments - some deals require the equivalent of one monthly payment; others may require the equivalent of nine. In general, the more you pay upfront, the less you'll pay each month.

BuyaCar doesn't offer car leasing with no deposit, but you can choose a similar option with Personal Contract Purchase (PCP) finance. This is often available with no deposit and affordable car repayments, bringing most of the benefits of leasing but adding extra flexibility. That's because with PCP you can choose to buy the car at the end of the contract, hand it back and walk away or effectively trade it in for a new car, putting any equity towards your next car, reducing your monthly payments.

Unlike leasing, you can also use PCP finance for a used car. Read on for more details.  


No deposit lease-type finance - PCP finance

Personal Contract Purchase (PCP) is a cross between leasing and more traditional forms of car finance.

Like leasing, monthly payments are low because these only cover part of the car's cost - the value that it's expected to lose during the agreement. This is referred to as depreciation.

At the end of the agreement, you can return the car with nothing more to pay - just like leasing - but there's also the option to make the optional final payment and own it. Many drivers however, choose to trade it in for another vehicle.

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

There are currently 65063 cars on BuyaCar eligible for PCP finance, with finance repayments starting from £69 per month. If you’re ordering your next car with BuyaCar, then you’ll need to pay £199 to reserve the vehicle - which is refuned after your new car has been delivered. There will then be nothing more to pay for at least a month.


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 payments begin, and there’s no need to raid any of your savings to pay an initial deposit.

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 payments will be higher than if you had paid something upfront.

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.

If you're in negative equity and looking to move into a new car, check out our guide to negative equity car finance.

Car deals for under £150 per month                    


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