What is a One-Pay Lease?

When purchasing a vehicle, you have several options. You can pay the entire vehicle cost and fees in cash. You can also contact your local bank or credit union to see if you qualify for an auto loan. Many dealerships, such as Monument Chevrolet, offer in-house financing through local and national lenders to give you more options. Consider leasing the vehicle, especially if you prefer to upgrade sooner rather than later. A one-pay lease is one way to lease a vehicle. Explore this purchasing option before deciding.

What Is a One-Pay Lease?

A one-pay lease option means you make a single lump-sum payment at the start of your lease without any additional payments during the lease period. You make one large payment upfront instead of dozens of monthly payments. One-pay leasing has a higher initial cost but offers more overall savings. Leasing companies use various factors to set the lease payment amount. You can often negotiate your monthly payments to work with your budget, but a one-pay lease offers you more significant savings than traditional leasing or financing.

One-Pay Lease Example

If you select a 24-month lease with payments of $400 a month, you’ll pay a total of $9,600 for your lease period. If the dealership offers a one-pay lease option that drops the monthly payment by $40, or 10%, you would then make a single payment of $8,640 upfront. That’s a savings of almost $1,000 on the same lease period for the vehicle. Dealership discount offers on one-pay lease agreements will vary, but saving money is always good.

What Is the Vehicle Leasing Process?

Leasing a vehicle is like a long-term rental. You make monthly payments for a specified period and mileage to enjoy driving one of the latest models. When you return your leased vehicle to the dealership, additional fees may be associated with excessive wear and tear or high miles. If you end your lease early, you may also be subject to early termination fees.

Leases are typically two to four years. When your lease expires, you can upgrade to a newer model or purchase the vehicle outright by paying the residual value.

How Are Lease Payments Calculated?

Leasing companies use various factors to determine your lease payments. These include:

• Gross capitalized cost: The gross capitalized cost is the vehicle’s total value, including purchase price, insurance, and service contracts. The total value is negotiable.
• Capitalized cost reduction: These include rebates or trade-in allowances that reduce the gross capitalized cost of the vehicle.
• Adjusted capitalized cost: This value is the gross capitalized cost minus the capitalized cost reduction. For example, if the vehicle sticker price is $30,000 and you have a trade-in allowance of $8,000, the adjusted capitalized cost is $22,000.
• Residual value: The residual value, calculated at the start of your contract, is an estimated value for the vehicle at the end of the lease term. The actual value at the end of your lease term depends on mileage and condition.
• Depreciation: Every car depreciates or loses value with age and use. The leasing agent will subtract the residual value from the adjusted capitalized value to determine the vehicle’s depreciation.
• Rent charge: Like interest rates, rent charges are typically determined by a money factor based on your credit history and score. It also considers the leasing agent’s commission markup.
• Lease payments: The total cost of your lease is divided into monthly payments for your lease period, usually 24 to 48 months. If you select a 24-month lease, you make 24 payments. With a one-pay lease, you only make one payment for the total amount owed throughout the lease, minus a discount from the leasing agent.

Advantages of a One-Pay Lease

There are several advantages to opting for a one-pay lease, including:

• No monthly payments: You have no monthly payments when you pay the entire leasing fee upfront.
• Interest savings: Paying the entire lease in one lump sum eliminates interest charges, saving you more money.
• Easier qualification: It may be easier for you to qualify for a one-pay lease than any other type of financing or leasing because you agree to pay the total amount, minus any discounts, upfront. This can be especially helpful to drivers with poor credit history.

Disadvantages of a One-Pay Lease

There’s only one real disadvantage to a one-pay lease agreement: the large upfront payment. Many drivers don’t have the thousands of dollars necessary to make a one-time payment at the start of a lease contract. A traditional lease or financing allows you to make smaller monthly payments.

Is a One-Pay Lease Right for You?

When upgrading your vehicle, stop by Monument Chevrolet to discuss your financing options with our financial experts. We can help you decide if regular financing, standard leasing, or one-pay leasing is right for you. Let’s explore the differences in financing:

• Traditional financing: When you finance a vehicle, the payments go toward ownership so that you own the vehicle outright at the end of the loan terms. Financing a vehicle can require a significant down payment, including tax, title, and license. If you plan to finance a vehicle, you may need cash or a trade-in to apply to the down payment and fees.
• Traditional leasing: Drivers who don’t have money for a down payment or those who enjoy upgrading their vehicle more frequently may prefer to lease a vehicle. Lease payments are typically lower than loan payments, but you won’t own the vehicle at the end of your lease period.
• One-pay lease: A one-pay lease option is excellent for drivers with poor or no credit history who may not qualify for traditional financing or leasing. You do need to have enough cash to make the large upfront payment.

Visit Monument Chevrolet in Pasadena, Texas

Our team at Monument Chevrolet is available Monday through Saturday from 9 a.m. to 9 p.m. at 3940 Pasadena Freeway in Pasadena. We’d love to answer your questions, give you a showroom tour, discuss financing options, or set up a test drive. Call us or complete our secure online form to get started today.

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