Do You Get Your Down Payment Back on a Car Lease?

Get Car Financing
Even with poor credit.

By

Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


, - November 19, 2018

If you decide to make a down payment on a lease, you aren’t going to get that money back at the end of the term. A down payment isn’t required in a lease, but you can still make one if you’re looking to lower your monthly payment.

What Happens to the Down Payment on a Leased Car?

The interest on a lease car is part of the payment, and isn’t simple interest like an auto loan. This means a down payment isn’t going to lower the overall cost of the lease, instead it's a capitalized cost – or "cap cost" – reduction. The capitalized cost includes the vehicle’s selling price, any inception fees, and title and license fees (if not paid upfront). As for the monthly payment, depreciation (including any extra miles), the money factor (interest rate), and monthly taxes are what determines how much you pay each month.

So, when you put money down on a car lease, you essentially pre-pay for the lease and reduce the monthly payment. It may feel like you’re saving money by making a down payment, but in reality, you’re just pre-paying the depreciation and interest charges.

If you decide you want to make a down payment, you can pay out of pocket, apply a trade-in if there’s equity, or use a combination of both. The biggest benefit to putting money down in a lease is that it could help you offset any additional lease fees such as an acquisition fee – the amount charged to set up a lease by the leasing company that’s added to the cap cost – or a security deposit that’s due at signing, which is typically the same amount as your monthly payment.

Is a Car Lease Down Payment Refundable?

In both a car lease and a loan, the down payment is only refundable if you don’t sign any paperwork. Once you sign all the documents, the deal is done and you can’t get your money back. But, if a lender requires you to make a security deposit, know that you could get that money back.

You can get the security deposit back at the end of the lease term if there’s no excess wear and tear. If you made a down payment in addition to the security deposit, you aren’t getting that back at the end of the lease term.

Need a Dealer to Work With?

You don’t have to have a down payment on a lease. But if you do put money down, keep in mind that you aren’t getting that money back if you go through with the lease and sign the paperwork. If you’re on the fence about leasing because your credit isn’t stellar, know that there are dealerships and lenders out there willing to work with you.

If you’re looking for the best current lease deals or need help connecting to a local dealer that has these special financing resources, CarsDirect can help. We work with a nationwide network of dealerships that specialize in helping bad credit car buyers get the financing they need. All you need to do is fill out our auto loan request form to get started.

Need a Car Loan?

It only takes a minute.

Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


Search New Cars by Lease Payment »

Explore estimated lease payments with the latest manufacturer discounts.

Loan approval is not guaranteed and is subject to credit application and approval of the lender. Individual loan terms may vary. Use of this website constitutes acceptance of CarsDirect.com's Terms of Use, Disclaimer, Privacy Policy, and Cookie Policy.