Car leasing with no deposit

Your guide to car leasing without a deposit

Sometimes, people are put off car leasing because they think they will have to part with a substantial amount of money for a deposit.

But, this isn’t always the case.

We look at whether you can lease a car without putting a deposit down, whether it’s viable, and your alternative options.

Can I get a lease contract with no deposit?

In all honesty, there isn’t such a thing as a no deposit lease/contract hire. But, you can simply put down one monthly payment at the start of the contract. That’s technically not a deposit because you aren’t putting anything more down, you are just paying the first month.

So, not necessarily no deposit but you aren’t putting any more money down. For example; instead of having a contract that is 3+35, you would have 1+35.

person handing over a credit card to a person in a suit in a car dealership

This applies to all contracts, there are a few exceptions, however. If you have a  van or another commercial vehicle, then you have to pay the VAT up front. However, if you are a VAT registered company then you can claim the VAT back (you can read more about the business benefits of leasing here).

Also, you may not be able to put down just one monthly payment, it depends on your credit score. But, more on that later.

Is there a minimum deposit amount with car leasing?

It’s usually the case that you can’t put down any less than one monthly payment. So, if you’re monthly payments are £200 a month, then you can’t put down £100 or £150 because it’s less than your monthly payments.

Is there a maximum deposit amount with car leasing?

One of the advantages of putting down a deposit, or a  larger deposit, is that your monthly payments will be significantly less than if you only put down one monthly payment.

However, there is a  maximum amount you can put down. It does depend on the deal, however. For example, some deals won’t allow the monthly payments to be below £50 a month. So, you can’t put down so much that you are only paying something silly like £10 a month.

What are the benefits of leasing a car with no deposit?

car leasing with no deposit

Believe it or not, not putting down a deposit can be a really viable option for some people. I’ve had a few customers that have only paid one monthly payment and I’ve just done it myself. It’s really personal preference, but there are some benefits.

Some people prefer it because they would rather not part with that much money. If their monthlies are still going to be affordable, then people tend to find it more financially viable to simply put down one monthly payment.

If you are a business then you may prefer it for cash flow reasons, but again, this is down to personal preference.

I have paid for my Contract Hire with only one monthly payment down. This is because I’m saving money for a holiday and my monthly payments are still affordable without the massive deposit.

Another reason is if you have a lease contract ending soon and you know you will have to pay an excess mileage charge, then you may want to forego the larger deposit in favour of paying that off. This is the same if you want to get out of your contract a few months early. I’ve had a customer that had two months left on his contract and he wanted to get out of it early. So, I reduced the deposit and he used that money to pay off the final two months.

So, there are a few scenarios in which no deposit is viable.

What are the disadvantages of car leasing without a deposit?

The main disadvantage to not putting a deposit down is that you will have higher monthly payments. The more you put down as a deposit the less you will have to pay every month, so if you want to keep your monthly payments low, then you will most likely have to put down a larger deposit.

Another disadvantage is that you may not be able to depend on your credit strength.

Can I get a lease car with no deposit and bad credit?

If you don’t have a strong credit score, then you may not be able to only put down one monthly payment. It’s down to the underwriter. They may say that they will approve it as long as you put down a  larger deposit.

This is because as you have a lower credit score, you are more of a risk and therefore they need to be sure that you are going to make the monthly payments. If you have bad credit, then you probably won’t be able to put a smaller deposit down. For more information on leasing with bad credit, you can read our article here. Alternatively, you can contact us for more advice.

printed credit report with a score of 425 and a rating of poor

Alternatives to no deposit leasing

If you do not have a deposit and you cannot get a contract with no deposit then here are your options;

car leasing with no deposit
  • A personal loan
  • 100% funding
  • A made up deposit

Personal loans are pretty common so I won’t go into too much detail. It’s essentially where you will borrow money from a bank, building society or a lender. You will borrow a certain amount of money and then pay it back over a set period of time.

Another alternative is 100% funding, but this is very rare so don’t rely on this as your first and final option. This is where specialist dealers or suppliers will have relationships with finance houses who will lend 110% of the value of the vehicle. However, you have to have an exceptional credit score. And by exceptional we mean 950 or higher. Out of 999.

Your final alternative is a made up a deposit. This is where the dealership or the broker will give you the deposit by taking it off the discount of the vehicle.

We’ve only touched upon these alternatives, but you can read more about them here.

So, technically you can’t get a lease contract without a deposit. You can however, only put one month down which doesn’t really count as a deposit anyway. This is good if you don’t want to part with a substantial amount of money and your monthly payments are still affordable. It is a financially viable option for some people. But then again, if you want lower monthly payments then you will want to consider putting down a larger deposit in order to do so.

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Matt Measor

Team Leader at OSV Ltd
Matt enjoys: Family time, fishing and football.

Matt is known for being the joker around the office, but he also takes his job seriously. He's got a knack for knowing the best ways to get people approved on credit and works directly with OSV's key accounts across the UK.
Matt Measor

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