Can You Lease a Car With No Money Down?

It’s easy to confuse a zero-down lease with driving off the lot without paying anything upfront, but that’s not true. A zero-down lease agreement waives the requirement for a down payment. However, any other cash due at signing (such as taxes, registration, titling fees, etc.) is still required to obtain the keys to your new lease. 

Down payments can reduce the financed amount, lowering your monthly payments. It can be worthwhile to put a down payment on a car you buy to reduce the gap between what you owe on the car and its actual market value. However, both finance and leasing deals come with gap insurance that accomplishes the same goal. 

The best car leasing deals don’t require a down payment because the leasing agreement offers agreeable terms. Be aware that many dealers will advertise a zero-down lease to entice shoppers to visit the lot and investigate. Qualifying for a zero-down lease may also be more complicated than you think (more on that in a minute). 

Benefits of a zero-down lease

Consumers often prefer a zero-down lease because it requires less capital upfront. Dealerships advertise low monthly payments on special lease deals, often with several thousand due at signing as a down payment. In contrast, zero-down leases don’t require such a hefty sum but advertise a low monthly payment all the same. 

Zero-down leases also highlight the traditional value of a lease agreement. Leases have historically made driving a more expensive car easier without qualifying for or paying a high purchase price. A short-term car lease can also help you avoid the hefty maintenance costs of a premium vehicle.  

Disadvantages of a zero-down lease

One of the biggest mistakes to avoid when leasing a car is assuming that a zero-down lease agreement doesn’t just include the down payment in another way. Dealerships can sometimes roll the down payment into your monthly payments over the life of the lease, which can increase your monthly payment significantly. You’ll also pay more for your lease than you would if you had made a down payment, even a modest one. 

Lessees often assume that a larger down payment will qualify them for a lower money factor (which also lowers your monthly payment). Though you might be able to use a larger down payment as a bargaining chip to get a lower money factor, it’s often better to put that cash toward other goals. For example, you can keep it in your savings account to earn interest and act as a rainy day fund should an emergency occur. 

Though lowering the financed amount in a car purchase by making a down payment can help you increase your equity, the same cannot be said for a lease agreement. Leased car equity works differently. You can build lease equity during the lease, but it disappears once you turn your lease in.

As you come across zero-down leases, you may encounter some of the following lease types. These types of lease agreements all require zero down but offer various terms: 

• $0 due at signing/Sign and Drive: Many “Sign and Drive” deals advertise zero out-of-pocket expenses when you sign the lease. However, dealers may roll the down payment into your monthly payments.
• No capitalized cost reduction: Down payments, trade-ins, and dealer rebates qualify as capitalized cost reductions that reduce how much you finance in the lease. This type of zero-down lease excludes a down payment but includes your first month’s payment and any associated fees. 
• No capitalized cost reduction and no first month’s payment: Similar to the zero-down lease type above, this type incorporates your down payment and first month’s payment into your subsequent payments. All you pay at signing are the fees required by the state (such as registration, titling, and taxes). 
• No down payment, and the dealer pays the first month: This zero-down lease agreement type is relatively straightforward. Your down payment gets added to your monthly payments, but the dealer covers your first month’s payment.  

Compare these zero-down lease agreements to a one-pay lease. You pay the entire lease amount in a lump sum in a one-pay lease. Affording a one-pay lease can be difficult, but you can potentially negotiate a better deal (including a lower money factor) with this buying power. 

When you lease a car, you typically pay for depreciation based on the mileage limit you choose. Cars with higher mileage are worth less than newer cars. The leasing company or dealership typically estimates the value of the leased car upon the lease termination through a calculation. This equation accounts for that model's lease miles per year, condition, and popularity. 

The amount due at signing typically includes your security deposit (if required), documentation fees, registration, sales tax, and your first month’s payment. Sales tax and the acquisition fee may also appear in the capitalized costs of the lease if they’re not due at signing. A zero-down lease still requires paying these due-at-signing fees. 

The perk of obtaining a zero-down lease is that you can use the money you had set aside for the down payment on the due-at-signing fees. If you can pay those fees with the cash you had stacked up and still walk away with an affordable monthly payment, you’ve worked out a valuable lease deal. 

If you want to lease a car with no down payment, a credit score above or as close to 700 is best. The higher your credit score, the more favorable a dealership or leasing company will consider your application. Higher credit scores also mean a lower interest rate, but you can lease a car with bad credit. 

The minimum credit score most leasing companies require is 620, though some go as low as 600. However, a lower score often comes with stricter requirements, such as: 

• A hefty security deposit
• A cosigner
• Limited vehicle selection 
• A higher money factor

Learning how to increase your credit score to lease a car can help you get a better monthly payment and money factor on your next lease. Improving your score, even by a handful of points, can put your monthly payment back into an affordable range. 

Not everyone will qualify for a zero-down lease. Here are some of the ways you can qualify to pay nothing down with your lease, depending on what the dealership or leasing company allows:  

• Maintain excellent credit: Zero-down leases are typically only offered to lessees with excellent credit scores. The higher your credit score, the more likely you’ll qualify for this type of lease. 
• Use your superior negotiating skills: If you know your way around a lease deal, you might be able to score a zero-down lease with some persuasion. You can use several tactics to negotiate a zero-down lease, including agreeing upon a price first before you mention leasing as an option. 
• Lease a low-demand car: Not all cars sell as quickly as others. Dealers may offer special pricing or be more willing to negotiate on a low-demand car if you express interest in making a deal. 
• Take advantage of special offers and dealer incentives: Leasing companies may offer zero-down leases to clear out inventory before new arrivals. 
• Find a cosigner: Your cosigner should have a higher credit score to improve your eligibility for a zero-down lease.

If your credit score is 680 or higher, you have a better chance of qualifying for a zero-down lease. Shop around to see which leasing companies and dealerships offer the best deals. You can also prepare for a zero-down lease by improving your credit score. Check your credit report frequently, pay your bills on time, keep your credit card balances low, and pay off debt to improve your score over time.  

Qualifying for a zero-down lease or even finding a good lease deal can be challenging, especially with supply and demand favoring leasing companies in recent years. If you’re looking for a lease alternative, check out FINN car subscriptions. You can even prequalify for a car subscription and receive a special offer for your time. It only takes a few minutes to see if you’re eligible for a FINN car subscription and weigh your options. 

Here are a few examples of the cars you can subscribe to with FINN: 

• Subscribe to an Audi A3 Sedan starting at $699 per month
• Choose between 6- and 12-month subscriptions on the best-selling Ram 1500 pickup 
• Reduce your CO2 emissions with a premium Tesla Model 3 subscription
• Add anywhere from 850 to 1,500 monthly miles to your Chevrolet Traverse subscription

FINN doesn’t require any money down and offers a wide selection of cars to fit your needs. Your monthly payment includes registration, insurance, depreciation, and maintenance. Pick the exact car (including color and trim) you want, and FINN delivers it straight to your door. You can choose a new make, model, and subscription terms when your subscription ends.