Can You Pay for a Lease Upfront?

A one-pay lease, also called a single pay or pre-paid lease, is a special car lease where you make one large payment upfront to cover all the monthly payments for the entire lease term. In that case, instead of you making monthly payments over two to three years like in a normal lease, you make one big sum payment at the beginning to pay for the full lease period. This upfront payment is usually lower than the total of all the monthly payments combined. One great advantage is that you're lowering your monthly costs. A disadvantage though is that you need more cash upfront versus spreading payments out.

Can you pay ahead on a car lease? 

It is possible for you to pay ahead on your car lease. There are some important aspects that you should know about when paying ahead on auto leases:

• Prepaying lease payments: Many leasing companies allow you to prepay lease payments by making one large upfront payment or several lump sum payments over the course of the lease. This can lower your monthly payment amount.
• Paying off early: You can pay off the full remaining balance on a lease earlier than the end date. This ends the lease contract early. However, there may be early termination fees.
• Paying down the lease: Some leases allow you to make extra payments that go towards the principal balance. This can help reduce fees at lease end for excess mileage or wear.
• Limits may apply: Dealerships typically set limits on how far ahead you can pay or how much extra you can pay per month. Paying ahead policies vary by company.
• Interest savings: Prepaying payments reduces the interest paid over the lease term if the lease has a money factor interest rate. Paying off early can eliminate remaining interest.

So in most cases, paying ahead on a car lease is possible but be sure to check the specific prepayment policy with the leasing company. 

There are a couple of reasons why the upfront payment on a one-pay lease is usually cheaper than the total of all the monthly payments:

• Time value of money: Paying everything upfront means the dealership gets all the money sooner rather than waiting months or years for payments.
• Administrative savings: With a one-pay lease, the leasing company doesn't have to send monthly bills and process monthly payments, saving administrative costs that they can pass on as consumer savings.
• Interest savings: One-pay leases typically don't charge interest or have a lower money factor interest rate since you aren't financing over time. This interest savings gets passed on upfront.

To calculate the upfront payment amount, you first calculate the total of all monthly payments (monthly payment x number of months). Then the upfront payment is usually 5-15% less than that total amount.

For example:

36 monthly payments of $400 is $14,400 total

10% savings on $14,400 is $1,440 in savings

$14,400 total - $1,440 savings = $12,960 upfront payment

The upfront payment is a percentage discount off the total monthly payments.

If you don’t want to do the math or simply don’t have the necessary cash for an upfront payment, you can pick a car subscription from FINN. A car subscription relieves you of all the worries of a traditional car lease. With FINN, everything but fuel is taken care of in your single monthly rate. No down payment or unexpected costs. Plus, never feel stuck with a car again. You’ll have access to an ever-growing selection of cars after only six or 12 months. 

Paying for a lease upfront means that you're paying the entire lease at the beginning. This type of lease has its pros and cons.

Pros 

• No monthly payments: With a one-pay lease, you don't have to worry about monthly payments for the duration of the lease.
• Lower interest rates: One-pay leases often come with lower interest rates compared to traditional leases.
• Easier approval: If you're willing and able to pay the whole lease balance upfront, it can make getting approved easier.

Cons

• Large upfront payment: You'll need to finance a large lump sum payment which may be difficult if you do not have the full amount saved and readily available.
• Overpaying: If you end the lease early, the leasing company may not refund any of the upfront payment.
• No flexibility: With the lease fully prepaid, you lose the flexibility to change terms if needed.
• Penalties for damage: Any excess wear or mile overage comes out of your pocket rather than just higher payments.

If you’ve decided that paying for a lease up front is the route for you, here are ten tips and questions to ask: 

1. Ask the dealership if they allow one-pay or single-payment leases. Not all will offer this option.
2. Calculate the total monthly payments and ask for a discount off that lump sum amount. Aim for 10-15% off if possible.
3. Ask about any fees that can be waived by pre-paying such as acquisition fees.
4. Ask if the money factor (interest rate) can be reduced since you are not financing over time.
5. See if you can pay sales tax just on the reduced one-pay amount rather than the full vehicle value.
6. Check if there are mileage restrictions and overage charges if you pre-pay.
7. Make sure there is no penalty for early termination if you were to return the vehicle before the lease ends.
8. Ask about any prepayment penalties that may apply if trying to refinance the one-pay lease.
9. Get all agreement terms in writing before signing the one-pay lease contract.
10. Explore financing options for the large upfront payment such as cash, trade-in equity, or a personal loan.

Just like with a traditional car lease, you will have the same options when your one-pay lease comes to an end: 

• Return the vehicle and walk away: Like a normal lease, you'll return the vehicle to the dealership. It must be in good condition and under the mileage limit.
• No more payments due: Since you prepaid the full lease upfront, you don't have to make any additional payments at lease end. 
• Option to buy the vehicle: You may have the option to purchase the car at the predetermined residual value set in your lease. 
• Swap to a new lease: Many lessors will apply your one-pay balance towards a new lease on another vehicle.