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Glossary Term

Security Deposit

A refundable amount some lenders hold for the term of a lease.

All glossary terms

In short

A security deposit is a refundable amount some lenders hold for the term of a lease, returned when the agreement ends and all obligations are met.

How a security deposit works

The deposit gives the lender a cushion against risk, and unlike a down payment, it's designed to come back to you:

  • Held by the lender for the length of the lease.
  • Refundable when the term ends and obligations are met.
  • Different from a down payment, which reduces the amount financed and isn't returned.
  • Amounts and requirements vary by lender and deal.

What it means for you

A security deposit ties up some cash during the lease, but you get it back at the end provided the equipment and payments are in good standing. When comparing offers, note whether a lender requires a deposit, a down payment, or first-and-last payments — each affects your up-front cash and what returns to you differently.

Common questions

Is a security deposit the same as a down payment?

No. A security deposit is refundable and held for the term; a down payment reduces the amount financed and isn't returned.

When do I get my security deposit back?

Typically when the lease ends and all obligations — payments and equipment condition — are met.

General information only. This page is educational and does not constitute financial, legal, or tax advice. All financing is subject to credit review and lender approval. Rates, terms, and eligibility vary by applicant, asset, and lender, and are not guaranteed. Any figures or examples are illustrative. Please speak with a qualified advisor about your specific situation.