A prepaid lease, which has made its way into the automotive retail market in recent years, is a type of automotive rental agreement. With a prepaid lease, buyers forfeit monthly payments in lieu of one large pre payment at the time the lease is signed.

There are two amounts in a conventional lease that add charges and a monthly lease bill. First, there is a depreciation charge which assesses the value the car at the time it’s turned in.  Second is a residual amount which is the predicted value of the car at lease’s end. The idea behind a pre-paid lease is to get rid of both these charges and fold them into one payment at the beginning.

Single-payment leases are designed specifically for those who like to economize: there are no monthly payments, a new car is made available every two to three years and there is no interest tacked on at the end of the lease. This type of lease is really only best for those who have a lot of cash upfront.

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