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Originally Posted by findtom
Some people say you should never put money down on a lease but I honestly have yet to hear a compelling argument why... it seems to just be misinformation that people repeat without really knowing what they're talking about, like when people say don't get a plasma tv because of burn in.
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From Edmunds.com:
Down Payment for Leasing
The strategy for leasing a car is the opposite of buying — no down payment is recommended (in leasing, the down payment is called a "cap cost reduction"). Often, consumers put down as much as $3,000 to lower their monthly payment. While it's true that the monthly payment is reduced, consider this: If the buyer gets into a serious accident in the first few months of his or her lease contract, and the car is totaled, the down payment is completely lost. Even with collision and gap insurance, no portion of the $3,000 down payment is ever refunded.
So, when leasing a car, take the $3,000 you wanted to put down on the car and open a separate bank account. Make higher payments out of this account rather than putting the money down on the car. You can go one step further and roll the "drive-off costs," which would normally be paid upfront, into your monthly lease payment. Drive-off fees are the related fees required to drive your car off the lot: security deposit, acquisition fee, etc. You drive off the lot with no money tied up in your car and all of it in your pocket (or bank account). After all, the appeal of leasing is to maximize your cash flow. How can you do that with your money tied up in a large down payment?