Timeline for Suppose leased car is totalled: what are financial implications?
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14 events
| when toggle format | what | by | license | comment | |
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| Jun 11, 2019 at 20:22 | comment | added | prl | @Anoplexian, I think you misunderstood. The leasing company doesn't own the vehicle; the insurance company does, because they paid for it. (Note, this is true whenever a vehicle is totalled; it's not different for a leased vehicle.) | |
| Jun 11, 2019 at 14:31 | comment | added | Anoplexian | @user71659 That's seems a bit wonky to me. If they're not the ones paying for the insurance, then how do they reap the benefits of the payout? I guess that's how it is, but still seems awfully convenient for the leaser. | |
| Jun 10, 2019 at 20:54 | comment | added | David W | GAP insurance is a by-product of the new vehicle purchase market where people walk into an upside-down situation, often paying down 72-month or longer notes with minimum or zero down payments. It also part of the reason that buying new vehicles these days borders on fiscal insanity. | |
| Jun 10, 2019 at 16:29 | comment | added | user71659 | @Anoplexian In a total loss, insurance company paid 100% of the value (minus deducible) so they own 100% of the car. You can buy the car back from them for the salvage value. | |
| Jun 10, 2019 at 16:04 | comment | added | Anoplexian | Additional question regarding this, but not enough for its own. In the case the car is only technically totalled (IE, the car runs fine, but the cost of damage outweighs the value), once the insurance/excess are paid, is the remainder of the car owned by you? | |
| Jun 10, 2019 at 15:58 | comment | added | Helpful Friend | +1 to Jphi's comment above. When I was 16 my parents leased me a new Hyundai specifically because gap insurance was offered as part of the already incredible lease deal. Sure enough I totaled that car, and by having that gap insurance, I was essentially allowed to walk away from the lease. | |
| Jun 10, 2019 at 15:39 | comment | added | JPhi1618 | Some companies provide a form of GAP insurance automatically on leases. I know when we leased from Ford, it was included. Before you consider buying the protection, make sure it's not included in your deal. I talked with other companies about a lease and they also had the inclusion, presumably to protect themselves and make it seem like a more premium experience to buyers. | |
| Jun 10, 2019 at 15:04 | comment | added | TomTom | It is not in the leasing. it is a separate insurance covering the difference between insurance value of the vehicle and open money in the lease (which is particularly bad in the first year as you loose a lot of resale value the moment you drive off the lot). Mine covers up to 20% of purchase price. And it is not that we are super people - we just consider finances something you should do on a bachelor degree as this is what life demands. Ok, I have a backoffice with 2 people handling my paperwork ;) | |
| Jun 10, 2019 at 15:04 | comment | added | Rich | @davidbak I don't know it's implications for leasing, but when purchasing, GAP is a big deal. I have a family member that opted to skip the GAP insurance, then totaled the car a year later. There was a difference in what the insurance paid them, and what was still owed on the car, of a few grand, which they ended up being responsible for. | |
| Jun 10, 2019 at 14:59 | comment | added | davidbak | @TomTom - don't remember anything called "gap" insurance but it could have flown by me (I know, I know, SE PF&M contributors - I shouldn't have signed the lease without reading and understanding every word, but unlike you guys I'm a normal human being...guess I'll go and read the contract now...) | |
| Jun 10, 2019 at 12:25 | vote | accept | davidbak | ||
| Jun 10, 2019 at 4:49 | comment | added | user71659 | The leasing company doesn't ask you for the value of the car. The leasing company will demand from you the current buyout value of the lease. This is equal to the purchase price of the car plus interest to that point minus lease payments already made. This is equivalent to the residual value of the car at the end of lease, plus unpaid lease minus remaining interest. | |
| Jun 9, 2019 at 19:16 | comment | added | TomTom | And that is where you should have been offered and signed what is known as a GAP insurance to cover the possible shortfall of insurance payout. | |
| Jun 9, 2019 at 16:48 | history | answered | xirt | CC BY-SA 4.0 |