What Are Multiple Security Deposits?

April 21, 20201 , Kiri Nowak

What Are Multiple Security Deposits?

To lease a new vehicle from a dealership, it is common to have to put down a security deposit first. This means that you would have to save up enough money before you even get the keys to the car.

In this article, w'l go through what it means to make multiple security deposits and why you should so that you can have that new car as soon as possible.


What are Multiple Security Deposits?

When you take up a lease and decide to put down a security deposit, this means putting down a certain amount of money upfront. This is usually the same amount as one mont' lease payment.

Security deposits help you save money over the lease period by reducing the money factor, or annual interest rate, by a predetermined amount.

Therefore, if you put down multiple security deposits, the money factor is reduced even further.

At the end of the lease period, your security deposits will be returned. However, the amount tha'l be given back to you could be lower than what you had initially put down - w'l explain more in the next section.

Why Should I Put Down Multiple Security Deposits?

First, putting down multiple security deposits allows you to enjoy lower monthly payments compared to not putting down a security deposit at all.

Second, multiple security deposits protect the lease provider or lessor and reduce any out-of-pocket expenses you, as the lessee, may have to make.

If any damages were to happen to the car during the lease period, the costs of it would be covered by the security deposits.

Issues naturally happen to the vehicle as you use it. These issues could range from being easily repairable, like a flat tire, to requiring proper servicing, such as damage to a particular car part.

By putting down multiple security deposits, you reduce the risk of spending on these expenses.

Which Car Brands Allow You to Make Multiple Security Deposits?

The following car brands offer multiple security deposits:


These companies sometimes provide incentives to attract customers to pay multiple security deposits. For example, Ford Motor Company offers a $500 rebate toward the vehicl' purchase price.

However, the customer must agree to adhere to the lease agreement, which includes the mileage limit or the number of miles driven per year, and meet other requirements, such as a good credit score, to be eligible.

How Much Can I Save by Putting Down Multiple Security Deposits?

How much you save varies on the price of the car.

Le' take an example of a 2020 BMW 328i with an MSRP (manufacture' suggested retail price) of $43,845. W'l assume that the lease will be for three years or for 12,000 miles, and the car will be returned in pristine condition at the end of the lease.
Without any security deposits, yo' have to pay $20,350 over the lease period. This is based on the following assumptions:

  • Money factor: 0.00135.
  • Drive-off fees: $2,500.
  • Monthly payment (inc. tax): $500.
  • Lease disposition fee: $350.

However, putting down three security deposits of $500 each (totaling $1,500) could reduce the money factor to 0.00114.
The amount of the reduction varies by company and is usually predetermined based on the number of security deposits you put down. Consequently, your monthly payment will also reduce.

As a result, yo' have to pay a total of $19,825, saving you $525 over three years. This is based on the following assumptions:

  • Money factor: 0.00114.
  • Drive-off fees: $2,500.
  • Monthly payment (inc. tax): $485.
  • Lease disposition fee: $350.

In short, you could save hundreds, or even thousands, of dollars by putting down multiple security deposits!


Are Multiple Security Deposits the Only Choice for Car Leases?

Consumers are increasingly opting for multiple security deposits. However, you will need to consider whether leasing a vehicle with multiple security deposits is the best option.

This is because putting down multiple security deposits can be costly, and i' have to be paid upfront. It may cost you thousands of dollars, with taxes and signing fees included.

Therefore, there are other options for your consideration:

1. Close-ended lease

These are the most common, where the end of the lease is predetermined, as well as the payment schedules and payment amounts. You may incur penalties if you return the car earlier or later than agreed.

2. Open-ended lease

These provide you a certain window of time to return the car, so you wo' be penalized for turning in the car earlier or later than agreed.

For example, a two-year open-end lease that starts on January 1, 2020, with a six-month turn-in window, allows you to return the car between December 2021 and June 2022.

However, the vehicle price is' predetermined, which would affect your payment amount every month.

3. Sub-vented lease

In a type of closed lease, yo'e entitled to particular discounts, such as discounts on the money factor, interest rate, or rebates on the price of the vehicle.

As a result, these reduce your monthly payments, but yo' usually need a high credit score to qualify.

4. Single payment lease

Instead of making monthly payments, yo' pay for the whole amount in the beginning. This allows you to save on interest payments in the long-term but is financially heavy in the short-term since yo' need to have the cash upfront.

To Sum Up: More Security Deposits Equals More Savings

If you plan to lease a new car, you should definitely consider putting down multiple security payments.

You can rest assured that any unexpected costs of accidents and damages will be covered and you wo' have to worry about high interests.

Furthermore, multiple security deposits are a great way to reduce your monthly payment. They can yield significant savings, especially on higher MSRP vehicles.

There are a few things to be put into consideration beforehand, such as whether you are financially capable to be putting enough amounts of money upfront, as you can easily be spending thousands of dollars with the inclusion of taxes and signing fees.

If the car brand yo'e thinking of supports multiple security deposits and provides incentives for it, then be sure to do your research before engaging in any type of contract or lease. Consider going the multiple security deposits route, as it’s a great option for leasing.

Contact us today to discuss your auto lease needs.

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