Multiple security deposits (MSDs) on a lease

Your base monthly payment covers the car's loss in value (plus any other costs rolled into the lease) and a rent charge. The Federal Reserve says the rent charge is like interest on a loan, and it's usually set with a money factor (a small decimal). The math works like this:

The Federal Reserve says some leasing companies let you pay a higher security deposit to get a lower rent charge and a lower monthly payment. A security deposit isn't a down payment, so it doesn't lower the capitalized cost. On the same car, a lower rent charge means a lower money factor.

Leasing companies often don't tell you the money factor. But federal lease rules (Regulation M) require the lease disclosure to show the rent charge in dollars. Those rules cover personal leases with total obligations up to $73,400 in 2026. Ask for the money factor anyway, and compare the rent charge line on both versions of the lease.

You should, minus anything you owe. The Federal Reserve says the leasing company can use a security deposit if you default, or at lease end to cover anything you owe under the lease. Any amount left over may be refunded to you.

• Toyota's and Lexus's programs, for example, say the refund is reduced by anything you still owe, such as excess wear and use, extra miles, or the disposition fee.
• Ending the lease early can cost a lot. The FTC warns that you may owe a substantial early termination charge. Ask how your deposits are handled if that happens.
• Ask what happens to the deposits if the car is totaled or stolen, if you buy it at lease end, or if you transfer the lease. Ask how soon you'll get the refund, too.

Regulation M also requires the lease disclosure to itemize the amount due at signing. Any refundable security deposit gets its own line, separate from any down payment. Check that your deposits are on that line.

As of October 2026, these leasing companies describe MSD programs on their own websites:

• BMW Financial Services: up to seven security deposits on a new lease. BMW says you can also transfer the balance from an existing lease when it ends. (BMW's terms)
• Toyota Financial Services: up to nine extra security deposits on new and certified Toyotas. Not available in New York. (Toyota's terms)
• Lexus Financial Services: up to nine extra security deposits. Not available in New York, and can't be combined with its one-payment lease. (Lexus's terms)

For any other brand, ask the leasing company, not just the salesperson. Programs change, and they can depend on your state, credit, and car. Don't assume another brand's or lender's program applies to your deal. Ask to see the current written rules next to your final lease.

It depends on the dollars. The Federal Reserve notes that security deposits usually don't earn interest, and they're often set at about one monthly payment, rounded up to the next $25 or $50.

MSDs can make sense when:

• You have spare cash you won't need for emergencies during the lease.
• You plan to keep the car for the whole lease.
• The written comparison shows real savings, with every other number the same.

Skip them if you might need the money, you might end the lease early, or the savings only show up when other numbers change.

• Keep every other number the same: price, rebates, term, mileage, fees, taxes, and other cash due. Otherwise the lower payment might come from a changed number, not the MSDs.
• List the deposits on their own line, and compare the total cash due at signing.
• Compare the rent charge and the total of payments on both versions. The FTC also says to ask whether a “$0 due at signing” lease still requires things like a security deposit.

Then check each quote's math with the lease payment check, and see why a lease down payment works differently.