Diminished Value - Lexus Lease
02-11-14, 05:26 PM
#16
I'm in a very similar boat as GSFHouston. My 2013 GS 350 F Sport in Nebula Grey/Cabernet was hit by a red light runner and is currently being repaired at Westside Lexus--told you it was a similar boat! One difference is that I own the vehicle, so no lease to worry about, just my own future resale value.
So where does one get a "trustworthy appraisal" from in Houston to calculate the diminished value (a.k.a. diminution in value)? I went here, but have no idea how trustworthy their information is.
So where does one get a "trustworthy appraisal" from in Houston to calculate the diminished value (a.k.a. diminution in value)? I went here, but have no idea how trustworthy their information is.
Your insurance company is not your friend. Remember that. You may need to fight them tooth and nail for this, but it is your right to be compensated for diminished value to your vehicle. To put things into perspective for you, before I had the GS-F, I had an Infiniti G37S. I got into an accident with it involving a hit and run driver who didn't stop. The vehicle's market value was around $30k. The appraisal for repair was $12k. I threatened the insurance company with retaining an attorney but before doing so, I made all the relevant legal arguments myself. For one, I argued that diminished value should also be considered in their calculation and that based on my research and calculations, that accounted for about $10k by itself. In addition, I argued that all OEM parts must be used in the repair rather than a mix of OEM and aftermarket parts. Long story short, when the appraisal was recalculated using full OEM parts and including the $10k for diminished value, they made the decision to declare my car a TOTAL LOSS.
I hope this information was helpful.
02-11-14, 10:07 PM
#17
Driver School Candidate
Thread Starter
Join Date: Feb 2014
Location: Texas
Posts: 4
Likes: 0
Received 0 Likes
on
0 Posts
Wow, Nismo, that is crazy how similar your story is to mine. Your diminished value case will be more cut and dry though since you own your car and it's titled in your name. The check will go straight to you. I used the company that Westside Lexus referred me to. (AVR REcovery). I got the appraisal today and they will be sending a 20 page report which I will send to the insurance company and go from there!
02-11-14, 11:29 PM
#18
Driver School Candidate
Join Date: Dec 2013
Location: CA
Posts: 13
Likes: 0
Received 0 Likes
on
0 Posts
As stated previously, every LFS vehicle does come with GAAP. As for returning a car with frame damage, I did that with my parents 2007 ES back in 2009. Basically my front end went into the side of a jeep and there was frame damage on the front left of the car. Costed $22K to repair all of the damage if I recall correctly. We got all the body work done from an authorized Lexus mechanic as well as all the electrical work done properly from Lexus itself, and then my parents continued to drive the car until the lease end and when we returned it there were no issues at all. And we returned it in 2011 we had a 3 year lease.
02-12-14, 04:09 AM
#19
Rookie
Join Date: Jan 2014
Location: Ohio
Posts: 62
Likes: 0
Received 0 Likes
on
0 Posts
GAP Insurance: In CA, it is the law. Every lease must include GAP insurance in the lease contract by law.
As far as the diminished value, here is the deal based upon the law. Your lease contract has a expected residual value included in it which is what is used to calculate your payments. The expected residual value assumes that there be no significant damage done to the vehicle and repaired. Lexus usually wants to be able to sell a car as a CPO (Certified Pre-Owned) vehcile after its lease return.
Now, usually with small accidents and minor fender benders, there are no worries here because there is no true diminished value of the vehicle so long as it is repaired properly. However, with larger scale accidents where the cost to repair is extensive or if there is frame damage, the resale value of that vehicle is diminished ebcause that accident will forever show up on the vehicle history report. Lexus can no longer sell that vehicle as a CPO, nor can they even sell that vehicle on a Lexus lot. Consequently, the vehicle will most likely go to auction to be sold after you return the lease. Therefore, Lexus will not be able to meet their expected residual value and they technically can, and usually likely will, pursue you and your insurance company for that difference in value.
So if I were you, I would get a trustworthy appraisal to appraise the diminished value of the vehicle and have your insurance cut Lexus or you a check because you could be on the hook for that money when the time comes to return the lease.
Hope this helps!
As far as the diminished value, here is the deal based upon the law. Your lease contract has a expected residual value included in it which is what is used to calculate your payments. The expected residual value assumes that there be no significant damage done to the vehicle and repaired. Lexus usually wants to be able to sell a car as a CPO (Certified Pre-Owned) vehcile after its lease return.
Now, usually with small accidents and minor fender benders, there are no worries here because there is no true diminished value of the vehicle so long as it is repaired properly. However, with larger scale accidents where the cost to repair is extensive or if there is frame damage, the resale value of that vehicle is diminished ebcause that accident will forever show up on the vehicle history report. Lexus can no longer sell that vehicle as a CPO, nor can they even sell that vehicle on a Lexus lot. Consequently, the vehicle will most likely go to auction to be sold after you return the lease. Therefore, Lexus will not be able to meet their expected residual value and they technically can, and usually likely will, pursue you and your insurance company for that difference in value.
So if I were you, I would get a trustworthy appraisal to appraise the diminished value of the vehicle and have your insurance cut Lexus or you a check because you could be on the hook for that money when the time comes to return the lease.
Hope this helps!
I have been in this situation with Chevy and I turned the car in with no issues.I disclosed the car had been hit and was repaired and that was it. Done.
02-12-14, 10:35 AM
#21
Good to know that the lease comes with GAP insurance - a peace of mind.
One question remaining is when a leased car is involved in an accident and loses its value (i.e. concensus on the web is if Lexus can't sell it at dealerships due to frame damage or something to that extent), can Lexus demand lessee to cover the deficiency? i've read through my lease contract and found nothing and didn't find relevant articles in google.
Can anyone chime in on this?
One question remaining is when a leased car is involved in an accident and loses its value (i.e. concensus on the web is if Lexus can't sell it at dealerships due to frame damage or something to that extent), can Lexus demand lessee to cover the deficiency? i've read through my lease contract and found nothing and didn't find relevant articles in google.
Can anyone chime in on this?
02-12-14, 02:43 PM
#22
That is what gap insurance covers. If you turn in the lease at end of term there shouldn't be any issues. So rather than speculate, is there anyone here who had an LFS lease, had their car damaged in an accident, then carried the lease to termination and had to pay Lexus additional money?
I have been in this situation with Chevy and I turned the car in with no issues.I disclosed the car had been hit and was repaired and that was it. Done.
I have been in this situation with Chevy and I turned the car in with no issues.I disclosed the car had been hit and was repaired and that was it. Done.
I am sure in your situation, the damage that your vehicle sustained was light to moderate at best. Most companies will not make a big deal about repairs like those if they are done at a reputable company especially if that company is an affiliate of their company. However, try returning your lease with repaired frame damage and see if they let you slide that easily. I guarantee you that the majority of companies will not.
Furthermore, what I am telling you is not speculation, it is the law and the only reason why I mention it is so that our fellow CL members can better protect themselves financially in similar situations. It is better to always be safe than sorry. This comes from several summers of interning at Personal Injury and Insurance law firms so take it as you may.
Last edited by LEXSTASY; 02-12-14 at 02:47 PM.
02-12-14, 02:55 PM
#23
I want to also clarify something. If there was serious damage done to your vehicle that would warrant your dealership pursuing you for diminished value upon a lease return. This does not mean that you should be paying out of pocket. You would simply need to contact your insurance company again and have them do a supplement to your previous claim for the difference that you owe the dealership because it is your right to obtain compensation from your insurance company for diminution of value. You should never pay this out of pocket.
More importantly however, if there is ever frame damage to your vehicle after an accident. You should never allow the insurance company to repair the frame damage. They will tell you that its not a big deal and that they do it all the time, but you should never be satisfied with this. Push them to total a vehicle out if there is frame damage. It will never be the same. If you have further questions on how to do this without having to get an attorney involved, you can PM me for more information.
More importantly however, if there is ever frame damage to your vehicle after an accident. You should never allow the insurance company to repair the frame damage. They will tell you that its not a big deal and that they do it all the time, but you should never be satisfied with this. Push them to total a vehicle out if there is frame damage. It will never be the same. If you have further questions on how to do this without having to get an attorney involved, you can PM me for more information.
02-12-14, 05:30 PM
#24
Rookie
Join Date: Jan 2014
Location: Ohio
Posts: 62
Likes: 0
Received 0 Likes
on
0 Posts
That is NOT what GAP insurance covers. GAP insurance only covers the difference between your vehicle's payoff and the current market value of your vehicle that your insurance will pay should your car be declared a total loss. That is it.
I am sure in your situation, the damage that your vehicle sustained was light to moderate at best. Most companies will not make a big deal about repairs like those if they are done at a reputable company especially if that company is an affiliate of their company. However, try returning your lease with repaired frame damage and see if they let you slide that easily. I guarantee you that the majority of companies will not.
Furthermore, what I am telling you is not speculation, it is the law and the only reason why I mention it is so that our fellow CL members can better protect themselves financially in similar situations. It is better to always be safe than sorry. This comes from several summers of interning at Personal Injury and Insurance law firms so take it as you may.
I am sure in your situation, the damage that your vehicle sustained was light to moderate at best. Most companies will not make a big deal about repairs like those if they are done at a reputable company especially if that company is an affiliate of their company. However, try returning your lease with repaired frame damage and see if they let you slide that easily. I guarantee you that the majority of companies will not.
Furthermore, what I am telling you is not speculation, it is the law and the only reason why I mention it is so that our fellow CL members can better protect themselves financially in similar situations. It is better to always be safe than sorry. This comes from several summers of interning at Personal Injury and Insurance law firms so take it as you may.
a. inoperative mechanical and electrical parts - doesn't apply since everything works
b. damage due but not limited to failure to maintain the vehicle - doesn't apply since car was repaired and all scheduled maintenance has been done.
c. damage to the body, lights, trim, or paint - doesn't apply since car is repaired
d. damaged broken or tinted glass - doesn't apply
e. torn, damaged or stained interior - doesn't apply
f. damage from flood, water, hail, or sand - doesn't apply
g. damage from removal of equipment or signs placed on the vehicle - doesn't apply
h. missing equipment, parts and accessories, including missing keys or remote entry devices; or
i. tires with less than 3/32 of tread remaining..
So if the car is repaired properly there is no remaining damage, and hence no adjustment. Nowhere is there any mention of recovering a loss in value due to a repair. Further, the lease states if the vehicle is a total loss or theft resulting in a total loss, the fair market value will equal the amount of any insurance proceeds they receive from my insurance. If there are no insurance proceeds the fair market value will be zero.
When I turned in my Chevy lease I disclosed the damage, had the paperwork showing the repair. Chevy wasn't happy, but I also had a copy of my lease. I turned in the car and never had to address the loss in value. That doesn't mean that someone couldn't sue you, as you know you can sue anyone for damn near anything.
02-12-14, 05:36 PM
#25
Rookie
Join Date: Jan 2014
Location: Ohio
Posts: 62
Likes: 0
Received 0 Likes
on
0 Posts
I want to also clarify something. If there was serious damage done to your vehicle that would warrant your dealership pursuing you for diminished value upon a lease return. This does not mean that you should be paying out of pocket. You would simply need to contact your insurance company again and have them do a supplement to your previous claim for the difference that you owe the dealership because it is your right to obtain compensation from your insurance company for diminution of value. You should never pay this out of pocket.
More importantly however, if there is ever frame damage to your vehicle after an accident. You should never allow the insurance company to repair the frame damage. They will tell you that its not a big deal and that they do it all the time, but you should never be satisfied with this. Push them to total a vehicle out if there is frame damage. It will never be the same. If you have further questions on how to do this without having to get an attorney involved, you can PM me for more information.
More importantly however, if there is ever frame damage to your vehicle after an accident. You should never allow the insurance company to repair the frame damage. They will tell you that its not a big deal and that they do it all the time, but you should never be satisfied with this. Push them to total a vehicle out if there is frame damage. It will never be the same. If you have further questions on how to do this without having to get an attorney involved, you can PM me for more information.
02-06-15, 11:15 AM
#27
Lead Lap
I thought earlier someone said it's the law in CA to have GAP coverage.... WTH???
02-06-15, 04:17 PM
#28
Lexus Fanatic
I have NEVER seen a LFS lease without GAP insurance. In my lease, its typed into the printed boiler plate body of the lease, so when they put a blank document in the printer. the GAP coverage is already written into the document. The Ally lease on my Jeep is the same way.
What does your lease agreement say? The woman who sent you that could be wrong.
Having a lease without GAP is crazy risky, the payoff is the lease residual plus all the remaining payments...so a lease is typically always upside down until right towards the end.
What does your lease agreement say? The woman who sent you that could be wrong.
Having a lease without GAP is crazy risky, the payoff is the lease residual plus all the remaining payments...so a lease is typically always upside down until right towards the end.
