What an initial rental is
An initial rental is the first payment on a contract hire agreement, taken at the start of the lease. It is usually stated as a multiple of the monthly rental, such as three times or six times, rather than as a fixed sum.
People often call it a deposit, but on contract hire it works differently. It is a payment towards the rentals, not a refundable security sum, and it is part of the cost of the lease. Some agreements also take a separate documentation fee, which is not part of the initial rental.
The how it works page explains where the initial rental sits in the full structure of a lease.
Reading profiles like 3+35 and 6+47
Quotes are often written as two numbers joined by a plus sign. The first is the size of the first payment, expressed as a number of monthly rentals, and the second is the number of regular monthly payments that follow. Add the two together to get the term in months.
A "1+23" lease is a 24 month agreement: one payment of a single rental, then 23 regular payments. A "3+35" is a 36 month term where the first payment is three times the monthly rental. A "6+47" and a "9+47" are both 48 month terms, with a first payment of six or nine times the monthly rental.
So a 9+47 lease has the same number of payments as a 6+47, but it collects the equivalent of 56 monthly rentals in total rather than 53, and the regular rental should be correspondingly lower. Read the profile, not just the term.
| Profile | First payment | Regular payments after | Term in months | Rentals paid in total (equivalent) |
|---|---|---|---|---|
| 1+23 | 1 x rental | 23 | 24 | 24 |
| 3+35 | 3 x rental | 35 | 36 | 38 |
| 6+47 | 6 x rental | 47 | 48 | 53 |
| 9+47 | 9 x rental | 47 | 48 | 56 |
How the profile changes the monthly cost
A bigger initial rental pays down more of the cost up front, so the regular rental falls. Funders typically price the profiles so that the overall cost stays similar, with a small difference reflecting the interest saved on money paid early.
The important point is that the monthly figure is not comparable between profiles. A quote with a larger initial rental will show a lower monthly rental, which looks better on a comparison page but may cost the same or slightly more in total. Put differently, you are moving cash forward in time, not saving it.
Because the money leaves your account sooner, a high initial rental also has an opportunity cost. If you would have kept it in savings, or used it to clear a debt, the true cost is higher than the quote suggests.
A worked comparison
The figures here are invented, round and illustrative, to show the method. They are not offers. Take a 36 month lease on the same car priced three ways.
With a 1+35 profile and a monthly rental of £400, the initial rental is £400 and the 35 regular payments total £14,000, so £14,400 overall. With a 3+35 profile and a monthly rental of £380, the initial rental is £1,140 and the 35 payments total £13,300, so £14,440. With a 9+35 profile and a monthly rental of £330, the initial rental is £2,970 and the payments total £11,550, so £14,520.
Overall the totals are close, but the effective monthly cost rises slightly as you pay more upfront in this example, and you have £2,570 less cash for 36 months compared with the first option.
A second way to see the same thing is the cash you hold at the end of the first year. Under the 1+35 profile you will have paid £400 plus 11 payments of £400, a total of £4,800. Under the 9+35 profile you will have paid £2,970 plus 11 payments of £330, a total of £6,600. The difference of £1,800 is cash that left your account sooner and, if the agreement ended then, would not come back. The same pattern holds on any term.
| Profile | Monthly rental | Initial rental | Regular payments total | Total over term |
|---|---|---|---|---|
| 1+35 | £400 | £400 | £14,000 | £14,400 |
| 3+35 | £380 | £1,140 | £13,300 | £14,440 |
| 9+35 | £330 | £2,970 | £11,550 | £14,520 |
Is the initial rental refundable?
Generally no. On personal and business contract hire it is treated as part of the rentals, so you do not get it back at the end. If the agreement ends early, you may owe an early termination charge calculated on the remaining payments, and the initial rental you paid is not returned to offset it.
There are limited exceptions. A cooling-off or cancellation right can apply to some consumer agreements, within a short window after signing, and a car that is supplied faulty or not as described may entitle you to remedies. Those rights depend on how and where you signed, so check your paperwork.
If the car is written off or stolen, the upfront money is usually gone. Guaranteed asset protection (GAP) cover can help with the gap between the insurer's payout and the amount you owe the funder, so ask whether it is worth considering. See the guide on whether car leasing includes insurance for how cover interacts with a lease.
A short example shows the risk. Suppose you pay an initial rental of £2,970 on a 36 month lease and the agreement ends after 12 months because your circumstances change. The funder will calculate an early termination figure on the remaining rentals, and the £2,970 you already paid is treated as rental for the months you used, not returned. That is why people unsure about their plans often choose a smaller initial rental, even at the cost of a higher monthly figure.
How to compare quotes with different profiles
Treat the profile as an input, not a headline. The aim is a single figure for each quote that you can set against the others.
The true cost of leasing tool accepts the initial rental, the monthly rental and any fees, then shows the total and the average monthly cost over the term.
- Write down the profile for each quote, such as 3+35, and the monthly rental it gives.
- Multiply the initial rental multiple by the monthly rental to find the cash due on day one.
- Add that to the regular payments to find the total, then add fees.
- Divide the total by the number of months in the term to get the average monthly cost.
- Compare that average cost between quotes, not the monthly rental alone.
Choosing an initial rental that suits you
A lower initial rental keeps cash in your hands and reduces what you lose if the car is written off or the agreement ends early. A higher one lowers each payment, which helps if your monthly budget is tight but you have savings to spare.
Many people compare the two by asking what the cash would otherwise do. If you can earn little on savings, a higher initial rental can be sensible. If you carry debt that costs more than the effective interest on the lease, paying that off first usually makes more sense.
Check the profile and the initial rental in the contract, not just on the quote, and confirm whether any part of it is described as a refundable deposit. For wider context on structures, the lease vs PCP vs buy tool shows how upfront payments compare across finance types.
Consider two drivers with the same lease. The first has savings earning little and a steady job, and prefers a 9+35 profile to keep the monthly figure low. The second expects to move abroad within a year, might need to end early, and chooses a 1+35 profile to keep cash accessible. Both choices are sensible, because they answer different circumstances, and neither pays dramatically more overall.
Questions to ask and mistakes to avoid
Ask these before you agree to a profile and get the answers in writing. They remove the uncertainty that makes upfront payments feel riskier than they need to be. If an answer differs from what the quote implies, ask for the quote to be corrected before you proceed.
The most frequent mistake is comparing a low monthly rental on a 9+47 profile with a higher one on a 1+47 profile and calling the first better value. It looks cheaper each month only because you have already paid a large sum at the start.
The second is treating the initial rental as a deposit that will be returned. The third is forgetting VAT: on a business lease the initial rental carries VAT in the same way as the other rentals, so check whether a quote is shown with or without it before comparing it with a personal one.
- Is the initial rental one payment of a stated multiple, and when does it fall due?
- Does the profile, such as 1+23 or 3+35, match the term stated on the quote?
- Is any part of the initial rental refundable, and under what circumstances?
- Is the documentation fee included in the initial rental or charged on top of it?
- What happens to the initial rental if the car is written off, stolen or the agreement ends early?
- Can I choose a different profile for the same car, and what does that do to the monthly rental?
- Is the monthly rental shown with or without VAT?