Car leasing deposit explained?

Car-leasing-deposit-explained

Upfront costs to leasing a car with CVS

 

When you lease a motor vehicle of any type you will be required to make an initial payment or car leasing deposit. This initial payment is for the use of the vehicle for the first month, after the first month, the payments will reduce to a consistent monthly amount.

This method of payment is known as a payment profile – 3×35, 6×35, 9×35.

 

How does the above payment profile work …?

Let’s assume you require a 36-month contract term, a regular payment of £300.00 per month and your payment profile is 3 x 35, your initial months rental will be £900.00, followed by 35 monthly payments of £300.00.

 

Why do Initial Payments vary?

There are a number of factors that Influence the level of initial payment: –

The leasing company will need to mitigate its risk relating to the motor vehicle, and the individual or business that wants to lease the vehicle.

Examples that affect risk relating to the vehicle include:

 

  • The make and model of the vehicle required
  • The value of the vehicle
  • The mileage allowances

 

Examples that affect risk relating to the individual or business include:

 

  • The number of times an individual has moved over the past few years
  • Is the person on the electoral role
  • How long the individual has been employed or the business been running.
  • How much disposable income is available to cover the cost of the vehicle after regular costs have been taken into account.

 

How much you will be required to pay initially will affect the amount of the remaining monthly payments. For example – the higher the initial payment, the lower the remaining monthly payments will be. This is a method that finance companies use to manage the overall risk in the financial arrangement.

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