What are the ways I can pay for my initial payment?
The initial payment is essentially a deposit that you put down at the start of your contract. Traditionally, it used to be a number of monthly payments up to 12 months. But in recent years it’s become more common to just put down a cash amount. We’ve had anything from £1000 to £20,000 depending on the vehicle.
But, how can you pay it?
In this article we look into how the initial payment is calculated and the different ways you can pay for it.
What is an initial payment?
The initial payment is, as we mentioned above, a type of deposit that you put down at the start of your contract. It’s the same thing as when you get a mortgage. It’s a larger sum of money that you pay at the start of the contract to make your monthly payments lower. While many consider the initial payment a deposit, it technically isn’t. It’s a non-refundable deposit because you are putting that money down to make your monthly payments lower. Also, while we are on technicalities, it’s not really a payment but a rental. Because you won’t own the car at the end. But people refer to it as a payment so we will continue to do so in this article. So your initial payment is how much you want to put down at the start of the lease contract.
How is the initial payment calculated?
Usually the amount you put down as your initial payment is up to you. You and your salesperson will discuss your budget and decide how much you want to put down initially.
If you want to pay less monthly then you may want to consider a higher initial payment. This will make your monthly payments lower. Alternatively, you could opt for a lower initial payment and higher monthly payments. It’s really down to what you would prefer.
There might be some exceptions. Some finance houses may require you put down a certain amount. This could be down to your financial circumstances, credit score or just the finance houses policy. Usually, though, it will be your choice.
The amount you will pay as your initial payment will be in your order form. It will either be written in monthly payments (for example, 3+25). Or, just written as the amount on the form. We advise that you double check this before you sign the order form. You can read more about the documents process when leasing a car here.
What are the ways I can pay for my initial payment?
There are different ways you can pay for your initial payment. But it is usually down to the finance house so double check at the point of order to avoid confusion.
Usually, you will be asked to pay via direct debit. This is pretty straightforward and is the most common way of paying for your initial payment. However, you might also be able to pay by bank transfer or debit card but this depends on the finance house. Some will only allow either direct debit or by bank transfer.
This is mainly due to things such as money laundering and anti-fraud regulations. This can limit how much the finance house can take through direct debit or bank transfer.
You cannot pay by cash or by credit card. If you are going through a vehicle broker then you will be able to pay the administration fee by credit card. But you won’t be able to pay for the initial payment using a credit card. This is because you can’t pay for a deposit for something using another form of credit.
So, normally you will have to pay for the initial payment through direct debit. Sometimes you will be able to pay via bank transfer or direct debit but it depends on the finance house.
When do I pay the initial payment?
It depends on how you are planning to pay. If you are paying by debit card then this will be taken before your car is delivered. You will get a phone call from the dealership or the vehicle broker telling you that your car is ready for delivery. It’s at this point that you will be able to pay the initial payment. After you have paid they will be able to book the delivery of your lease car. When you pay by bank transfer or direct debit then this will be made after your car has been delivered. Usually, this can be paid up to ten days after the delivery of your car. But every funder has different rules so check at the point of order.
If you cannot make the initial payment and you are paying using debit card then your car won’t be booked in for delivery. As a result, you won’t get your car. Or, if you cannot make the payment after you have taken delivery of your car then it will count as a late payment. And if it continues to be declined then you will go through the debt collection procedure.
How can I pay for my initial payment?
In conclusion, the most common way of paying for your initial payment is by direct debit. Some finance houses will allow you to pay by bank transfer or debit card. But this depends on the finance house so we recommend you check at the point of order. The main reason they will not let you pay by bank transfer or debit card is because of anti-fraud purposes. Which we are sure you can understand.
You cannot pay for your initial payment using cash or credit card. Each finance house has their own rules so make sure you are aware of their process and rules before you have to pay. However, if you do have any questions please contact us as our finance experts go through this every day.