Odds are, you haven’t heard of a one pay lease before. One pay leases have been around for many years but they don’t get much action. One pay leases allow you to make all of your lease payments up front instead of over the life of the lease (for example 36 or 39 months). Yes, it can be a lot of money up front but there are no other payments for the life of your lease. It could be quite beneficial for you to take this route if you have the capital hanging around. Let’s look at the benefits of a one pay lease.

Interest rate

Some manufactures give you a cut on the interest rate for a one pay lease (usually the luxury brands like Porsche or Mercedes Benz). The interest rate for leasing purposes is called the money factor. A lower rate always benefits you.

Tax

Depending on the brand and month, some automakers will even give you a break on the tax. This benefits you in Texas because we pay tax on the entire car and not just the time you have the car.

No Monthly Payment

I know a lot of people who avoid getting a new car because they don’t want a monthly payment. A one pay lease would be a great alternative for those who would like a new car but who would also like to skip a monthly payment.

At the end of the lease, you are presented with the same options similar to if you signed for a traditional lease. You can turn the vehicle in or purchase it at the residual value. In the event the vehicle is damaged/wrecked during the time of your lease, it is your responsibility to have it repaired before turning it in. If the vehicle is totaled, your insurance will cover the loss but please ensure your lease includes GAP insurance (a past blog discusses GAP).