That’s just not how it works. You don’t own the car, LFS does. So the payment from the insurance goes to LFS, not to you. You have prepaid rent in order to use the car for a fixed period of time. The accounting there is not that simple.

This is not unique to Lexus or LFS. It would work the same way regardless of what brand of car was leased.

 

Good point on the accounting, maybe its their internal system that is set up this way. But it is definitely different with other brands, like my BMW experience that I posted about earlier.

 

Your experience during hurricane sandy may have been unique. That was a situation where they were processing a huge amount of total losses and perhaps they were simply avoiding the accounting process of sending money back to people.

 

Could be, but it actually worked out nicely for me, at least as far as the BMW was concerned. It was due for return in exactly a month, and I would either have to buy it out or just return it. This way my insurance paid off BMW and gave me a nice $5k bonus. Of course the amount of other stuff I lost to the damage far exceeded that.

 

I would read the section of your LFS lease agreement under Total Loss or Theft.

 

Depends on one's situation. In Texas, LFS offers tax credits on one-pay leases up to 36 months. If you end up buying the car for the residual value after the one-pay lease, you still make out not having to pay the full sales tax on the entire amount of the car.

 

There are benefits to one pay leases for sure, but IMO theyre not worth the downside. My money invested makes up for any cost savings of a one pay lease and in the event the car is a total loss...I just stop paying.

 

Not to take away from this thread, but some may think putting all your eggs in one basket on one depreciating asset is a risk. I think paying cash for any new car is silly, but that's just my opinion. I would prefer doing a one-pay lease (with tax incentive and lease cash rebates), and put the other half on a high yield account of some sort.

 

I totally agree, but I wouldn't do a one pay lease either. The benefit would have to be really big.

 

Okay I gave this some thought. The settlement check from the insurance company goes to the vehicle owner who in this case it's LFS. Since LFS is the owner of the RX, they will determine the part that will be refunded back to you as a settlement. If the ACV for the RX was high, LFS will ultimately keep any equity as it is their car. They will do their calculation on the time you had ownership of it and figure out how much to return back to you.

I worked in auto insurance for a good portion of my professional career. They are basically doing anything they can to save money and pay the least amount possible. The discussion of the T/L settlement is between your insurance and the vehicle owner who in this case is LFS.

 

In more normal economic times, I'd agree, Ryan, particularly if one had a steady job and was not facing the likelihood of a layoff. But interest rates are at record (or near-record) lows, and today's "High-Yield" accounts and funds, by historical standards, are basically a joke. On top of that, if they are not municipal-bond-based, you will be paying either Federal or state-tax (or both) on what little interest you do get.

 

Investments are at all time highs for return. Sure a savings account or CD is worthless, but my portfolio is providing 30% YoY returns in some areas. Using cash getting those returns to buy a depreciating car, or even to pay a one pay lease to save some small interest or tax costs would be insane.

 

The cost of the vehicle right now is still $65k. It's not the residual $35k, which is the car after I assume 3 years. Thus, Lexus wants $65k for the vehicle not the $35k residual. Unfortunately, the $25k down payment that you paid is to essentially "rent" the vehicle. From my understanding you lose that money, and that's why it's not good to make a large down payment.

 

In the case of a one pay lease, its a little different than a downpayment. There is a clause that entitles you to a pro-rata refund in this scenario. Bot the case with a big downpayment.

 

Odd indeed. Ins policy is an issue. Not your question, but can co consider depreciation of auto so new...maybe so, prob not. Fact is, one sold and yours, it cash value is decreased.
Assuming ins co agrees it owes full cost amt (65K) it most sensible for carrier to pay off debt, and pay you difference. The ticky part is the ins co will want title cert signed both by you, and release of lien by lender.
PERHAPS...idea is for ins co, to release lien, then send title to you to sign to the ins com. and then you get paid.
What you need to understand is: the you, the insurance company and the lender do not all have your offices in the same building, much less the same town or state. Call and talk to both the ins co and the dealer...and when you have clear understanding, email all and be sure to write to proper person, give auto vin, the ins policy number...everyone involved need to be on the same page.