sdg1871

There is a fundamental difference between what happens when you buy a car and when you lease a car if the car is totaled. When you buy a car and it is totalled, your insurer pays you based on the car's value at that time, theoretically making you whole.

By contrast, when you lease a car and it is totaled, the insurer also pays based on the value of the car. But it does not reimburse you for any upfront cap cost reduction you made -- meaning that your upfront money is lost.

Here are a few articles on leasing which explain that, generally, if your leased car is totaled mid-lease, you lose the upfront money because the insurer will not pay for that:

http://autoleaseinsider.blogspot.com/2007/...e-now-what.html

http://www.edmunds.com/advice/leasing/arti...26/article.html

Yes, the concern with making upfront cap cost reductions on leases is the uninsurability of those payments.

Greer

Thanks for the information!

sdg1871

Any time. Leasing a car is a lot more complicated than buying one. If done right, leasing can get you into a car that you could never afford to buy. But due to its complexity, there are many more places for a dealer to make an undue amount of money if the consumer is not aware of all of its nuances. The most common way is the tried and true dealer trick of getting the customer to negotiate to a desired monthly payment. Never ever tell a dealer how much you want to pay per month. The monthly payment is merely a byproduct of its component parts such as MSRP, residual value, money factors and selling price of the car (if also bank fee and sales taxes if you roll them in). Most of these components are negotiable and you can find out the real numbers online. You can then plug them into lease calculators which are also available on line. If you tell a dealer what monthly payment you want to make, you're toast. If a dealer insists on negotiating that way or refuses to disclose all of the above-component parts of the lease, I walk out the door. The good, honest dealers have no problem disclosing all of those things to you.

JeffNNJ

I agree and disagree. A lot of times I will ask someone about a particular payment because I want to see if they're a viable candidate for a particular vehicle. The other day I bypassed this and test drove someone on a 750i. When it came time for me to run the payment, she had what can mildly be explained as sticker shock and I ended up leasing her a 528xi. There is so much competition, particularly in this area, I try to keep the numbers as transparent as possible. The more I disclose, the easier it is for someone to compare and also to trust that I am going to give them a great deal.

Gene

rare and appreciated