At the start of your lease contract, you have to pay an initial payment. Or, initial rental, or down payment, whichever you choose to call it.
Typically, this used to be a number of monthly payments, and was anything up to 12 months’ worth of rentals.
When you have to pay this depends on how you pay for this initial payment and the terms of the finance approval.
So, how can you pay for your initial payment?
In this article we look at the ways you can pay this, and how this affects when you have to pay.
How much will my initial payment be?
You will know how much your down payment will be before you sign your contract.
There will be some finance houses that stipulate you have to put down a certain amount. This could be down to their policy, your financial circumstances or your credit history.
However, excluding these exceptions, you and your sales person will decide how much you want to put down as your initial payment. If you want to lower your monthly payments then you might want to look at increasing the amount of your down payment. Alternatively, if you are happy to pay more monthly then you can pay less initially.
You can find out how much you are going to pay initially on your order form. This will either be written in monthly payments (for example, 3+25) or just written as the amount.
How can I pay for my initial payment?
How you pay for your initial payment depends on the finance house – so we would recommend asking at the point of order.
However, usually you will pay by direct debit. Sometimes you will be able to pay by bank transfer or by debit card. But again, it depends on the finance house. Some will only allow payments made by direct debit or by bank transfer. This is due to things such as money laundering and anti-fraud regulations. These can limit how much the finance house can take.
You cannot pay by credit card or by cash. If you are going through a broker, then they will take the administration fee by credit card, but not the initial payment. This is because you should not pay for a deposit for something using other credit.
When will I have to pay the down payment?
When you have to pay will depend on how you’re planning to pay.
If you pay by debit card then this will be taken before the delivery of your car. You will get a call from the dealership or broker telling you that your car is in the country and ready for delivery. It is then that they will take the down payment for your lease car. It’s only once you’ve made the payment that you will be able to book your lease car for delivery.
If you are paying via bank transfer or direct debit, then this will be made after the delivery of your car.
This can be up to ten days after the delivery of your car. But, every funder has its own rules so again, you should check at the point of order.
Do I get my initial rental back?
No, is the short answer. The initial payment is non-refundable. Essentially, it’s a payment that will make your monthly rentals less or to meet the requirements of the underwriter.
So you can pay for your initial rental either by bank transfer, direct debit or by debit card. However, some finance houses will only take bank transfer or direct debit, so it’s best to check beforehand. How you pay will depend on when you pay. But again, this is something that varies between funders so if you are unsure then you should check at the point of order.
Martin loves to challenge the team to make sure every aspect of the leasing process is clear and fully compliant, but that doesn't mean he doesn't love to joke around as well. He's always smiling, even on the busiest days in the office.