Thinking about one-pay lease of ES350 but have a question?
02-06-10, 04:00 AM
#1
Pit Crew
Thread Starter
Thinking about one-pay lease of ES350 but have a question?
I am thinking of leasing an ES350 for 3 years by paying the entire 36 months upfront and then turning the car in at the end of the lease.
However, what would happen if I get in accident and the car is completely totalled at some point during the lease?
Would I be out the remaning payments that I've already made?
Please let me know. Thanks.
However, what would happen if I get in accident and the car is completely totalled at some point during the lease?
Would I be out the remaning payments that I've already made?
Please let me know. Thanks.
02-06-10, 10:51 AM
#5
When I asked about a one-pay lease I was told that Lexus Financial does not do one-pay leases (BMW does and at a discount) and that the only option was to pay all 36 payments at one time which of course made no sense. I believe that there was a recent post from someone about turning in and signing a new one-pay lease on a Lexus so the response I got may not have been correct.
Between your auto insurance and gap insurance on the lease car I think the concern about totaling the car may not be important.
Here is another issue that may or may not apply to your lease. Years ago my brother died about 18 months into a 36 months GMAC lease on a Cadillac and I was informed and my attorney agreed that upon dying he was in default on the lease and the only option was to return the car and pay the remaining payments - not selling the car or taking over the lease. I was never very happy about that response. Stay alive just in case.
Dave Mac
Between your auto insurance and gap insurance on the lease car I think the concern about totaling the car may not be important.
Here is another issue that may or may not apply to your lease. Years ago my brother died about 18 months into a 36 months GMAC lease on a Cadillac and I was informed and my attorney agreed that upon dying he was in default on the lease and the only option was to return the car and pay the remaining payments - not selling the car or taking over the lease. I was never very happy about that response. Stay alive just in case.
Dave Mac
02-06-10, 11:02 AM
#6
When I asked about a one-pay lease I was told that Lexus Financial does not do one-pay leases (BMW does and at a discount) and that the only option was to pay all 36 payments at one time which of course made no sense. I believe that there was a recent post from someone about turning in and signing a new one-pay lease on a Lexus so the response I got may not have been correct.
Between your auto insurance and gap insurance on the lease car I think the concern about totaling the car may not be important.
Here is another issue that may or may not apply to your lease. Years ago my brother died about 18 months into a 36 months GMAC lease on a Cadillac and I was informed and my attorney agreed that upon dying he was in default on the lease and the only option was to return the car and pay the remaining payments - not selling the car or taking over the lease. I was never very happy about that response. Stay alive just in case.
Dave Mac
Between your auto insurance and gap insurance on the lease car I think the concern about totaling the car may not be important.
Here is another issue that may or may not apply to your lease. Years ago my brother died about 18 months into a 36 months GMAC lease on a Cadillac and I was informed and my attorney agreed that upon dying he was in default on the lease and the only option was to return the car and pay the remaining payments - not selling the car or taking over the lease. I was never very happy about that response. Stay alive just in case.
Dave Mac
If no one pay option is available,you lose money if you total the vehicle during the lease period when paying all payments up front.
We leased our RX and I asked about paying 3-4 payments in advance at times and was told that's not a good idea because if I should total the RX,I wouldn't get that money back.
We wound up buying our leased RX 21 months into it.
Gap insurance is another issue.
02-07-10, 04:53 AM
#7
Pit Crew
Thread Starter
Thank you for the responses.
I am being told by my local that a one-pay lease from Lexus is definitely available and commonly purchased.
I really like the idea of making one payment now and then just turning the car back in after 36 months.
Is there anything I can do to cover myself so I can get a pro-rated amount of the one-time pay back should something happen?
Please let me know. Thanks.
I am being told by my local that a one-pay lease from Lexus is definitely available and commonly purchased.
I really like the idea of making one payment now and then just turning the car back in after 36 months.
Is there anything I can do to cover myself so I can get a pro-rated amount of the one-time pay back should something happen?
Please let me know. Thanks.
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02-07-10, 06:00 AM
#8
A possible disadvantage of pre-paid car leasing
There is a possible disadvantage to single-pay car leases that should be considered.
If your car should be stolen or destroyed in an accident, your insurance would pay only the current market value of the vehicle, not the total amount you have invested in your lease. You would stand to lose a large chunk of your up front cash payment, the same loss you would incur if you had paid cash for your car.
Contrast the above total-loss situation with a normal monthly payment lease — no pre-payment and no down payment. The lease company picks up financial responsibility for the difference between what you still owe on the lease and your insurance settlement. This is known as "gap" coverage and is automatically included in most leases. You would lose nothing except your insurance deductible. This is one of the good benefits of car leasing with little or no down payment.
Gap coverage, even if included in your pre-paid lease, provides no benefit to you. It does not cover your cash losses. This risk is greatest in the early months of a pre-paid lease, and lessens as the lease nears its completion.
Summary
In summary, single-pay pre-paid car leases offer benefits of no monthly payments and some savings in finance charges (depending on how your lease company calculates the single payment), and sales tax savings, but carries the risk of possible cash loss if the leased vehicle is stolen or destroyed early in the lease term.
Make your decision about a single-payment lease knowing and understanding the benefits and the risks.
http://www.leaseguide.com/sn/prepaid-lease.htm
There is a possible disadvantage to single-pay car leases that should be considered.
If your car should be stolen or destroyed in an accident, your insurance would pay only the current market value of the vehicle, not the total amount you have invested in your lease. You would stand to lose a large chunk of your up front cash payment, the same loss you would incur if you had paid cash for your car.
Contrast the above total-loss situation with a normal monthly payment lease — no pre-payment and no down payment. The lease company picks up financial responsibility for the difference between what you still owe on the lease and your insurance settlement. This is known as "gap" coverage and is automatically included in most leases. You would lose nothing except your insurance deductible. This is one of the good benefits of car leasing with little or no down payment.
Gap coverage, even if included in your pre-paid lease, provides no benefit to you. It does not cover your cash losses. This risk is greatest in the early months of a pre-paid lease, and lessens as the lease nears its completion.
Summary
In summary, single-pay pre-paid car leases offer benefits of no monthly payments and some savings in finance charges (depending on how your lease company calculates the single payment), and sales tax savings, but carries the risk of possible cash loss if the leased vehicle is stolen or destroyed early in the lease term.
Make your decision about a single-payment lease knowing and understanding the benefits and the risks.
http://www.leaseguide.com/sn/prepaid-lease.htm
02-07-10, 06:18 AM
#9
Pit Crew
Thread Starter
And how would "market value" of the car be determined since the car can't be inspected?
The insurance company writes a check to Lexus for the "market value" and any excess dollars left over that amount gets refunded back? Do I have that right?
So I would not be out all of my remaining payments, would I?
The insurance company writes a check to Lexus for the "market value" and any excess dollars left over that amount gets refunded back? Do I have that right?
So I would not be out all of my remaining payments, would I?
02-07-10, 04:09 PM
#11
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This time (yesterday) I decided to make payments...either way I didn't have to
pay sales/states taxes.
02-07-10, 07:07 PM
#12
Lexus Financial does indeed do one pay leases, I'm on my 3rd one. I have "gap" insurance through my insurance company just as I would if I had a conventional lease. What I don't pay is interest on the money. Leasing is still not the best use of your money if you keep your car more than a couple of years. I don't, so leasing works for me and the one pay is the cheapest as long as I can't make much money investing the money at today's low interest rate. It is an option to making payments that I like.
Steve
Steve
02-08-10, 04:42 AM
#13
Pit Crew
Thread Starter
I understand that leasing is not the best use of your money. However, I know I'm not going to keep my card more than 3 years and I don't drive that many miles plus I keep my car very clean.
Given the situation, I find leasing hard to beat in my situation. Should I contact my insurance company to purchase "gap" insurance or would this already be included in my policy?
How is "gap" insurance purchased from my insurance different than what Lexus would offer?
Given the situation, I find leasing hard to beat in my situation. Should I contact my insurance company to purchase "gap" insurance or would this already be included in my policy?
How is "gap" insurance purchased from my insurance different than what Lexus would offer?
10-07-11, 01:36 PM
#14
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I have done a bit of research and study on this subject since I am about to do a one-pay on a 2012 RX.
If the car is totaled or stolen your insurance will only cover the book value of the vehicle. So, if you lease a $40,000 car, make a one-pay payment of $15,000 with a $25k residual, your insurance may only pay you a total of $35,000 the day you drive off the lot (depending on the book value). So, you could potentially take a $5,000 loss. There is no gap insurance on a one-pay like there is on a monthly payment lease.
However, this exposure will gradually decrease the longer you keep the car during the lease period. At some point, say month 30 or so, the residual value of the car is pretty close to the book value.
It is important to note that your only dire exposure is in a worst-case scenario of a total loss, either through a wreck or a stolen car. If you have an accident that does say, $7,000 worth of damage, your insurance should still pay for the repairs. If you live in a high crime area and park on the street, or if you drive a lot of miles at high speed, you may be at higher risk. For me, we only drive about 8,000 miles a year and park the car in a secure garage. My risk of total loss is very low. So, for me it is a good bet.
Also, consider that even if you opt for the monthly lease with gap insurance, you will end up paying $4,000 to $5,000 in interest and sales tax that you would have saved with the one-payment lease option. So, is it really worth it? In my case, I would rather take the risk and save the $5k in interest and sales tax.
If the car is totaled or stolen your insurance will only cover the book value of the vehicle. So, if you lease a $40,000 car, make a one-pay payment of $15,000 with a $25k residual, your insurance may only pay you a total of $35,000 the day you drive off the lot (depending on the book value). So, you could potentially take a $5,000 loss. There is no gap insurance on a one-pay like there is on a monthly payment lease.
However, this exposure will gradually decrease the longer you keep the car during the lease period. At some point, say month 30 or so, the residual value of the car is pretty close to the book value.
It is important to note that your only dire exposure is in a worst-case scenario of a total loss, either through a wreck or a stolen car. If you have an accident that does say, $7,000 worth of damage, your insurance should still pay for the repairs. If you live in a high crime area and park on the street, or if you drive a lot of miles at high speed, you may be at higher risk. For me, we only drive about 8,000 miles a year and park the car in a secure garage. My risk of total loss is very low. So, for me it is a good bet.
Also, consider that even if you opt for the monthly lease with gap insurance, you will end up paying $4,000 to $5,000 in interest and sales tax that you would have saved with the one-payment lease option. So, is it really worth it? In my case, I would rather take the risk and save the $5k in interest and sales tax.
