In some situations, posting a security deposit can help buyers get a cheaper car rental. Even better, multiple security deposits can be used strategically to drive down the money factor (interest rate). These refundable security deposits can have notable benefits if you have a less than perfect credit score.
How are security deposits different from installments or the amount due at signing? An important distinction is that security deposits are generally optional and are refundable or transferable at the end of the lease. They are also paid in addition to a deposit or an amount due on signature.
However, it should be noted that this strategy may not be available for all brands or in all locations, as is the case in New York State, where security deposits on a lease cannot exceed $749. That said, different brands may have different program guidelines. In fact, some brands allow multiple deposits, with each deposit reducing the money factor by a predetermined number of points.
Security deposits are generally calculated based on the basic monthly payment (before any monetary factor reduction) rounded to the nearest $50. In other words, if a base payment is $309/month and you wanted to lower the money factor, you could simply put up a $350 security deposit, in some cases. Depending on your credit rating and if you can afford the upfront cost, it may be a good idea to offer multiple security deposits to save a few thousand dollars in interest over the lease term.
Nissan’s multiple security deposit option to reduce monthly payments allows lessees to pay up to a maximum of five security deposits to reduce the money factor by 4 points (0.00004) per deposit, so they don’t fall below a rate of 0.00001 (equivalent to 0.02% APR). However, Nissan requires that to use this option, a minimum of two security deposits be paid, as the rate reduction does not begin until after the second security deposit is paid.
Similar to Nissan, INFINITI’s multiple security deposit option, which allows lessees to pay up to a maximum of nine security deposits, also requires a minimum of two security deposits to be tendered to achieve the advantage. The monetary factor is reduced by 10 points (0.00010) per deposit, so as not to fall below a rate of 0.00001, after the payment of the first two security deposits.
BMW’s ongoing multiple security deposit program allows renters to pay up to a maximum of seven security deposits to reduce the monetary factor by 4 points per deposit, not to fall below a rate of 0, 00005 (equivalent to 0.12% APR). A few caveats to consider: This program cannot be used in conjunction with regional rental rates, and BMW allows multiple existing security deposits to be transferred before closing the current rental account to a new rental account. BMW also doesn’t require at least two security deposits before you can reap the benefits.
The strategy of multiple refundable security deposits may not be feasible for many people, but that doesn’t mean there aren’t great rental deals to be had. Every month, most brands typically offer promotional rental incentives, and we compile this data across the country and publish the best deals available with insider knowledge of what constitutes the best value.
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