Leasehacking 101: What "$0 Down" Really Means
Zero down payment doesn't mean $0 due at signing.
A down payment simply refers to the amount paid upfront to reduce the amount financed over the course of a lease. Even with a $0 down payment lease, there are still fees and other expenses to pay before you can drive off in your new car:
first month's payment;
license and registration;
taxes; and
document fees.
These drive-offs, as they're called, can amount to hundreds of dollars, or in some instances, even a few thousand. You can request to roll the drive-offs into the monthly payment, or have it paid with rebates (if available), should you want a true $0 drive-off lease.
Read the fine print carefully!
Unfortunately, there's no standardized way of advertising a lease. Terms like drive-off, down, down payment, and due at signing are sometimes used interchangeably, or they can refer to different things. Sometimes, taxes and fees are included in the due at signing amount; other times, they are not.
The best thing to do is to read the fine print carefully. When asking for pricing, confirm that the amount you're quoted includes all applicable taxes and fees. You can provide your ZIP code so the dealer can calculate fees accordingly.
Here's an example.
Take a look at this ad below from a California-based Alfa Romeo dealer:
Fine print: "Low-mileage lease for well qualified lessees. Lease a 2018 Alfa Romeo Giulia for $305 for 24 months. Bank acquisition fee of $595, tax, title, license & first payment due at signing. Must qualify for FCA returning lessee rebate or put an additional $500 down at signing. 10,000 miles per year ..."
From a glance, one might expect to pay $0 out-of-pocket and $305 per month thereafter. If you read the fine print, however, you'll see this doesn't include the standard drive-offs, or even the bank acquisition fee of $595. Moreover, it assumes use of a $500 returning FCA lessee rebate.
In total, the amount due at signing will be approximately $2,000 for a non-FCA lessee. Still a fantastic deal, but perhaps pricier than you expected.
Another example, this time from the manufacturer.
Here's a "lease special" on a manufacturer's website (it's actually close to full price, so it's not that special) that uses the terminology due at signing. But again, the actual amount paid upfront will be greater than the advertised amount:
Fine print: "Security deposit waived. Plus tax and license ... 12,000 miles per year. Lessee to pay $209 a month for 36 months with $1999 drive-off ..."
In this case, the ad includes the $209 first month's payment, $650 acquisition fee, and a $1,140 down payment in the $1,999 due at signing amount. However, after taxes and registration fees, the actual drive-off will be closer to $2,600 (assuming Los Angeles County taxes).
An ad where due at signing means just that.
And finally, here's an example of a dealer ad where due at signing truly means that:
Fine print: "...$289 per month plus tax for 36 months ... $1,995 due at lease signing ... Includes 1st payment, $0 security deposit, tax, license and fees. Drive off example based on 9.5% tax rate and actual amount may vary. 10,500 miles per year with $.20 per mile thereafter..."
In this ad, the $1,999 due at signing includes the first payment and applicable taxes and fees based on the local tax rate of 9.5%. How refreshing.
In sum, it's important to keep in mind these differences as you browse ads and receive quotes. One deal might look better than the other, but after accounting for upfront costs, it might actually be the worse deal.
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Posted: September 1, 2018 (Last updated November 20, 2019)