Car leasing, no deposit

Low monthly payments with nothing to pay upfront? You need car leasing or PCP finance with no deposit - take your pick

BuyaCar team
May 30, 2020

If you're looking for the lowest monthly payments on a brand new car, then leasing could be the answer. Car leasing essentially works like a long-term rental agreement and generally requires lower payments than other finance options. You make a payment upfront, followed by a series of monthly payments. At the end of the term, you hand the car back and walk away.

Lease agreements often require you to pay an initial payment before the car is delivered. This is typically presented as a number of monthly payments - some deals require the equivalent of one monthly payment upront, while others may require the equivalent of nine. Generally, the more you pay upfront, the less you'll pay each month.

This isn't the only way to get a new car with no-deposit for an affordable monthly payment, however. Personal Contract Purchase (PCP) finance offers similarly low monthly payments, while giving you the option to buy the car at the end of the contract. It's also available on used cars - something that isn't normally the case with leasing - which means you should be able to get even lower monthly payments with PCP.

We don't offer leasing with no deposit here at BuyaCar but there are a number of lease deals with only one or two months' worth of deposit available that could fit the bill. Alternatively, you can take advantage of a no-deposit Personal Contract Purchase (PCP) finance deal that provides you with low monthly payments and some added flexibility. Our PCP finance explainers will give you all the details.

Unlike leasing, you can also use PCP finance for used car purchases, so it may be worth checking out if you fancy the lowest possible monthly payments on your next car.

No deposit lease-type finance - PCP finance

Like leasing, monthly payments in a PCP finance contract are low because these only cover part of the car's cost - the value that it's expected to lose over the course of the agreement, also known as depreciation.

At the end of a PCP 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 to buy the car outright. Many drivers, however, choose to trade it in for another vehicle.

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

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.

With PCH leasing that means you're tied into a contract with higher monthly payments than if you paid something upfront and if your circumstances change, it can be difficult and costly to end the contract early. Meanwhile, if you opt for PCP finance, putting down no deposit means you'll pay more in interest because you’ll be borrowing the full cost of the car; any deposit would have reduced the amount you borrowed.

In the case of PCP you’ll also be in negative equity for longer, which could be an issue if you need to end the contract as soon as possible once it's started. Negative equity 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 between the remaining finance balance and the car's current value if that's the case), or if the vehicle is written off, as the insurance pay-out may not cover a like-for-like replacement. In that situation, Gap insurance can cover this risk.

Meanwhile, if you know you're in negative equity and are looking to move into a new car, you do still have a number of options. Check out our guide to negative equity car finance to see which works best for you.


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