## What Difference Does a Down Payment Make?

It isn't hard to determine if a large down payment is right for you. Simply ask your dealership to provide you with two lease quotes: one with the down payment amount you're considering starting the lease with and another with no down payment. Take the offers and compare the total amount you'd spend over the course of the lease. To find the overall amount spent, multiply the monthly payment by the number of payments due and combine that with down payment amount, including all startup costs. With the total lease costs in front of you, the decision becomes easier.

Here's an example of how to make the calculations using an advertised lease that's being offered by a popular import automaker. The lease offer: $1,999 down, 36 months at $189 per month.

I asked a local dealership that sells this brand to send me the lease special with different down payments, ranging from $0 to $2,999. I also requested the total amount to start the lease, including drive-off fees (the first month's payment and registration costs). Since the drive-off fees include the first payment, there will be 35 remaining payments.

Let's see how the math worked out:

**Zero down payment plus $638 in drive-off fees**

Total out-of-pocket to start: $638

Monthly payment: $268

$268 times 35 payments equals $9,380, plus the $638 out-of-pocket

Total lease cost: $10,018

**$999 down plus $701 in drive-off fees**

Total out-of-pocket to start: $1,700

Monthly payment: $237

$237 times 35 payments equals $8,295, plus the $1,700 out-of-pocket

Total lease cost: $9,995

**$1,999 down plus $761 in drive-off fees**

Total out-of-pocket to start: $2,760

Monthly payment: $206

$206 times 35 payments equals $7,210, plus the $2,760 out-of-pocket

Total lease cost: $9,970

**$2,999 down plus $824 in drive-off fees **

Total out-of-pocket to start $3,823

Monthly payment: $175

$175 times 35 payments equals $6,125, plus the $3,823 out-of-pocket

Total lease cost: $9,948

In this case, making a large down payment reduces the monthly payment, but it doesn't save much money over the course of the lease. There's just a $70 difference between the zero-down lease and the $2,999 down payment lease.