Topic: Questions to ask before leasing

[stodge]

Post content deleted at request of original poster.

[ArticSteve]

Didn't see it.

GAP Insurance.  Included or not included?

[Niklasky]

Should gap insurance be taken through your car insurance company ?

[Hannibalsmith]

I wonder about #4: any down payment will be lost if the car is totalled. I find it hard to believe that if you put down say $5,000, drive off the lot, get into an accident and total the car, that the money is gone. Presumably insurance will cover the loss on the car, so the leasing company gets paid. What happens to the $5,000?

[ArticSteve]

Should gap insurance be taken through your car insurance company ?

GAP and WOD (Waiver of Depreciation) are 2 different products.  GAP essentially clears your lease obligation after your regular insurance is used up.  The waiver can result in one getting back all their lease payments.

Most leasing companies include GAP.

[neil]

I wonder about #4: any down payment will be lost if the car is totalled. I find it hard to believe that if you put down say $5,000, drive off the lot, get into an accident and total the car, that the money is gone. Presumably insurance will cover the loss on the car, so the leasing company gets paid. What happens to the $5,000?

If you don't have replacement cost coverage it's no different if you lease or buy. 

[Northernridge]

I wonder about #4: any down payment will be lost if the car is totalled. I find it hard to believe that if you put down say $5,000, drive off the lot, get into an accident and total the car, that the money is gone. Presumably insurance will cover the loss on the car, so the leasing company gets paid. What happens to the $5,000?

That is exactly what happens in Manitoba...your downpayment is toast unless you buy the optional coverage. Here's what happens (at least with Mercedes) if the car is totalled the lease is cancelled and its up to Mercedes Financial to settle with the insurance company – the value of the car is between its owner (Mercedes Financial) and the insurer, the lessee is out of the picture because they have been released from the lease. The customer can just go get another car.

Another reason not to put money down on a lease.

[Hannibalsmith]

I wonder about #4: any down payment will be lost if the car is totalled. I find it hard to believe that if you put down say $5,000, drive off the lot, get into an accident and total the car, that the money is gone. Presumably insurance will cover the loss on the car, so the leasing company gets paid. What happens to the $5,000?

That is exactly what happens in Manitoba...your downpayment is toast unless you buy the optional coverage. Here's what happens (at least with Mercedes) if the car is totalled the lease is cancelled and its up to Mercedes Financial to settle with the insurance company – the value of the car is between its owner (Mercedes Financial) and the insurer, the lessee is out of the picture because they have been released from the lease. The customer can just go get another car.

Another reason not to put money down on a lease.

Thanks, I think that makes sense. I just thought that a down payment on a lease is simply a prepayment on the lease payments and if a car gets totaled, that prepayment can be either paid out or used towards the lease of another car. And the real benefit of a zero down lease is you can use the funds elsewhere (i.e. investments).

What kind of insurance coverage do you buy to cover for this "gap."

[ArticSteve]

Exactly the same endorsement that you should have on your 2014 Oddy.  Waiver of Depreciation.  4 years is most commonly offered.

[Northernridge]

I wonder about #4: any down payment will be lost if the car is totalled. I find it hard to believe that if you put down say $5,000, drive off the lot, get into an accident and total the car, that the money is gone. Presumably insurance will cover the loss on the car, so the leasing company gets paid. What happens to the $5,000?

That is exactly what happens in Manitoba...your downpayment is toast unless you buy the optional coverage. Here's what happens (at least with Mercedes) if the car is totalled the lease is cancelled and its up to Mercedes Financial to settle with the insurance company – the value of the car is between its owner (Mercedes Financial) and the insurer, the lessee is out of the picture because they have been released from the lease. The customer can just go get another car.

Another reason not to put money down on a lease.

Thanks, I think that makes sense. I just thought that a down payment on a lease is simply a prepayment on the lease payments and if a car gets totaled, that prepayment can be either paid out or used towards the lease of another car. And the real benefit of a zero down lease is you can use the funds elsewhere (i.e. investments).

What kind of insurance coverage do you buy to cover for this "gap."

I just priced out a 2014 E350...if you put $10,000 down on a lease the annual rider is $135. Here it's called Leased Car Protection. The one oddity is that the option is removed after a certain point in time. I've never been able to figure it out but essentially you lose the option to insure the downpayment after some time frame but before the lease expires.

[Hannibalsmith]

^^Thanks!

[Hannibalsmith]

Exactly the same endorsement that you should have on your 2014 Oddy.  Waiver of Depreciation.  4 years is most commonly offered.

The Odyssey was bought outright but yes there is gap insurance. But in this case the gap truely is the depreciation the van incurs between new and when the van gets totaled.

A down payment amount on a lease is variable, so I assume the type of insurance would be a bit different. Or am I missing something?

[ArticSteve]

As I outlined earlier in the thread, GAP and WoD are too different things.  In Ontario, GAP is 99% included in leases.  For GAP to be honoured you must have Collision and Comp coverage in force.  After your own insurance pays out, the GAP will take effect and payout any outstanding balance, less one's deductible.  If one has put money down on the lease, that money is history.  To recover that money you would need WoD which is pretty well standard fair on new vehicles.