FYI, 1-pay leases are generally a poor way to lease, because if the vehicle is totaled the insurance company will pay off the remaining value and you can be out big time depending... Worst case scenario, heaven forbid the car is totaled the 1st month you are out your $18K instead of 1/24 th of the $18K.

I was told this by my Lexus dealer General Manager. Regardless, beautiful MBZ! Congrats!

 

Oh yeah, just looked it up:

"However, one-pay leasing is not without its drawbacks. Other than the obvious fact that you may be looking at a payment of $20,000 or $30,000 at signing, it puts you in much higher risk in case something happens to the car during your lease. If the car is stolen or totaled, insurance will pay only for the current market value of the car, not how much money you’ve already put into it"

https://capitalmotorcars.com/one-pay...pros-and-cons/

If you are wealthy enough to afford that hit, than it could makes sense as you pay very little interest and write it off on your taxes. But even then, that would suck if you drive out of the dealership lot and someone ran into you, totalling your car

 

This isn't how a one-pay lease works, but I understand how it can get confusing. It is important to note that one pay is not equivalent to a single large down payment, as is often mistakenly assumed. Making a down payment on a lease is generally considered unwise, and it is essential to understand that your scenario does not accurately reflect how one-pay works. On the contrary, in some situations, it can actually save you quite a bit of money by reducing taxes and lowering the Money Factor (interest rate), ultimately lowering the overall cost of your lease.

In case of a totaled car, your insurance company will cover its value, regardless of whether it was leased, financed, or had MSD or a pre-paid lease. If you had paid for your lease in advance, the leasing company would reimburse you for the remaining payments under a separate transaction. However, if it was a cap reduction (down payment), it might be lost if the payoff value exceeds the car's actual value.

The current payoff of the vehicle is adjusted each month based on a pro-rated amount of the one-pay value. The gap still applies to a one-pay.

So, if the information you received from a Lexus GM suggested otherwise, it may be wise to exercise caution when considering doing business with them. It's always better to be well-informed about the leasing process to make the best decision for your financial needs.

The bottom line is that if I total my car after driving off the lot after doing a one-pay lease, the one concern I would not have is whether I just lost all of the cash I just paid.

 

Added information but made a duplicate post in error.

 

This is how its SUPPOSED to work, but in reality it doesn't always work this way. Whenever you are beholden to the leasing company for a refund, that money is at risk...full stop. They tell you a one pay lease or MSDs are protected when the vehicle is totalled, but I have seen first hand where that is not necessarily true.

 

That article is quite frustrating. As without further examples and context, it can be misleading, but it also causes confusion for those seeking to understand how a specific element of leasing works. As a result, it may cause individuals who are looking to save money to miss out or, at the very least, not have all the necessary information to make an informed decision.

 

Nice deal! The EQS is a great car and there are amazing deals to be had. There's a big EQS superthread on Leasehackr with many reports (and evidence) of substantially similar EQS deals too - these good deals are out there. The onepay/MSD here is key as it drives a lower effective finance cost, the .00152 MF drives to about 3.6% APR, good for the current market.

 

The article is accurate and those risks are real. A one pay lease essentially is prepaying rent. Whenever you have to rely on somebody else to refund you money in the event of a loss, that money is at risk. Bottom line. If the leasing company feels they have the right to keep that money, they will, and the language of the lease agreement gives them the right to do that. If they take the position that they can do that, what are you to do? You have to fight them legally...which you don't want to have to do.

 

The point you made requires more context and examples to support it. The scenarios where you are attempting to demonstrate why an MSD or one-pay payment may not be secure typically involve situations where the lease or loan includes not just the car loan but also additional expenses such as services, warranties, or money carried over from a previous lease or loan. These additional expenses can increase the total amount owed by the customer beyond just the cost of the car itself. So in that case, it's likely that the one-pay funds or MSDs could be forfeited to offset what the customer still owes the finance company. However, this has more to do with elements outside of a standard one pay. Extra factors that don't paint the full picture unless clearly explained. Otherwise, Gap would cover any market value deficit in the instance of a total loss therefore not causing the customer to use any of the funds from their one-pay to cover.


The text above explains a situation where a customer has a balance of $20,000 on their lease or loan, but their insurance only covers $15,000 in the event of a total loss. If the customer had made MSDs (multiple security deposits) or a one-time payment, those sources could potentially cover the remaining $5,000. However, if the customer had a traditional lease or no MSDs, they would still be responsible for paying the $5,000 to the finance company. It is important to consider the context of a situation before making a blanket statement, as it could be misleading.

Please let me know if there are other examples that I might not have covered or if further clarification is needed.

 

It is not a matter of whether the finance company has the right, but rather if the customer truly owes them money based on facts that have not been presented, rather than assumptions. Providing examples, as opposed to anecdotes or conjecture, will assist us in comprehending your perspective.

 

If you look around on forums there are examples of this happening, and it has nothing to do with additional services etc. Gap insurance kicks in when the finance company has a loss, when they have a bunch of your money for MSDs or a one pay lease...they have no loss. They don't want to file a claim against their master GAP policy if they don't have to.

Here is an example recently from MBWorld where someone lost their MSDs on their EQS when their car was totaled:

https://mbworld.org/forums/eqs-suv/8...-deposits.html

With a one pay lease its a little more secure than MSDs, the lease speaks to a refund for loss of use, but whenever you have to get a refund from a finance company that money is at risk. For me, the savings for the one pay would have to be pretty significant.

 

When these things started to pop up around me, I was like... why would people pay this much for this thing? Looked like a Kia design. This morning, I was behind one. I was like... that looked pretty good. I really have no idea why.

 

They have grown on me some

 

To make another point. This original topic/argument was related to One-Pay leases and the security of receiving the money back in the case of a total loss. Where the topic got derailed/sidetracked is when you introduced MSDs into a topic that is not relative to One-Pay leases. If you want to debate the aspects of MSDs relative to the security of a loan then that's another topic all together. By your own admission One-pays are more secure than MSDs but in reality MSDs aren't relative to any part of the topic of a One Pay lease. Thats because you can't use MSDs along with a One Pay lease so therefore it confuses the topic of the security of the One Pay lease.

So, I stand by my viewpoint that OnePay leases are secure against total loss insurance situations since insurance payouts have little to do with how One Pay lease funds are handled.

I appreciate the spirited debate.😁

 

It’s the same concept, you can be secure in your assumptions all you want lol. I have dealt with banks for decades and I’m telling you, when you give them money in advance with the promise that you will get refunded if something unforeseen happens, your money is at risk. Don’t listen to people at the dealership, do your own research.

Letting people know that there are potential pitfalls to certain decisions benefits others. Pretending everything is hunky dory when it may not be to protect your confidence in your own decision doesn’t help anybody.

To those considering a one pay lease, there is a risk that you may lose that money if the car is totaled. Just have to understand that. I’m not saying don’t do it, just be aware of the potential pitfalls.