General Questions about Leasing Vehicles

medic78

Hello. I have 2 more months on my lease and it seems I have positive equity at this time. My pay-off amount is less than kbb's trade-in value in good contition. I'm from IL and want to trade my lease at a dealership for a purchase of a new car. I hear I can save in some sort of tax credit if I buy a new car with a trade in... Is my best option to do trade-in the lease and save on some tax credit, or do I need to buy the car myself and then trade it in? Thanks for your help. My lease is through Toyota.

volvomax

Generally speaking, there is no sales tax credit for trading in a leased vehicle.

Most states have you pay the sales tax as you go on a lease.
So, since you never paid the full tax in the first place, there is no credit.

If you buy out the lease, you will pay tax on the buyout,which nullifies the idea of trading the car in.

Kbb's trade in values generally aren't worth spit, so I would get a real number on your trade before you go any further.

nfgrockerdude

I'm a new first time buyer/lessor. what are the things lease companies loook at in your credit report? what are the chances of me getting approved? what else besides your credit report do they look at? I'm trying to lease an 08 g35

lewielew

Looking to lease again now that my 48 months are up. Did I get a fair deal or not with the original lease of my 2004 Cadillac CTS. I've used the pull ahead program and had been in 2 other saturn leases 39 mo, when i heard i was eligible for the Caddy to say the least it was a different car.

Here are the facts. Trying to determine the interest rate number one and was I given a fair residual value etc.

MSRP: $33,300
L.E.V.: ?? after i provide you the info can you give me the percentage
Lease end value: $14007
Lease Term: 48 months
Selling Price: $31,620
Cash Cap Reduction:$6438.53
Gross Cap Cost $32219.00
Acq Fee:$595
Adjusted Cap cost: $27294
Lease APR: I don't know?? Pretty sad-can it be figured based on my numbers?
Monthly Payment:$345.41
Sales Tax: $957.53
Term: 48 months
Rent Charge $3300.98---never heard of this until i just pulled my orig contract??
Depreciation $13278.00
Amount Due at start:$6438.53

Thats how stupid I was to just jump in-wasnt even the color i wanted-but it grew on me.

The info on rates and other cost will determine if I use them again. I've learned from this site not to use a large amount for a down payment 4180.00 part of the 6438.00

Thanks Lew

lewielew

Looking to lease again now that my 48 months are up. Did I get a fair deal or not with the original lease of my 2004 Cadillac CTS. I've used the pull ahead program and had been in 2 other saturn leases 39 mo, when i heard i was eligible for the Caddy to say the least it was a different car.

Here are the facts. Trying to determine the interest rate number one and was I given a fair residual value etc.

MSRP: $33,300
L.E.V.: ?? after i provide you the info can you give me the percentage
Lease end value: $14007
Lease Term: 48 months
Selling Price: $31,620
Cash Cap Reduction:$6438.53
Gross Cap Cost $32219.00
Acq Fee:$595
Adjusted Cap cost: $27294
Lease APR: I don't know?? Pretty sad-can it be figured based on my numbers?
Monthly Payment:$345.41
Sales Tax: $957.53
Term: 48 months
Rent Charge $3300.98---never heard of this until i just pulled my orig contract??
Depreciation $13278.00
Amount Due at start:$6438.53

Thats how stupid I was to just jump in-wasnt even the color i wanted-but it grew on me.

The info on rates and other cost will determine if I use them again. I've learned from this site not to use a large amount for a down payment 4180.00 part of the 6438.00

Thanks Lew

mrfurious214

I currently lease a 2006 RSX Type-s until May of 2009. I am paying for 45k miles but I will probably only have about 32k miles when I go to turn my car back in. My residual is $14,128. If I'm 13k miles under, is there anyway I can get equity out of my car? Would I be able to buy the car at the residual and sell it for a higher price (if it's worth more at that time?) rather than just turn it in and lose out? Or would a dealer just give me what it's worth (hopefully more than the residual) and I could use the equity towards a down payment for another car? What is the best way to get value out of my car if I'm turning it in with much less mileage than expected?

volvomax

Right now, 06 Type S' are bringing $17-18000 at auction.
So, chances are that your car won't be worth $14k on a trade a year from now.

Private party, should be worth more, but who knows.
Remember, in most states you will have to pay sales tax on the residual if you buy out the lease, or sell the car privately.

kyfdx

Your first task is to find out what your car is really worth, and compare that to the residual. If your car, even with the low miles, is not worth the buy-out, then you are done... Just turn your car in.

(Caveat: Honda Finance usually quotes the buyuout with sales tax already included.. be sure and ask.)

If it is worth more than the buyout, you have some options..

1) Buy the car, then sell it yourself.. This has some serious drawbacks. First, if you over-estimate what your car is worth, you can take a serious loss (or end up driving a car you don't want). Second, you'll probably have to pay sales tax, before selling it to another person, cutting into any potential profit.

2) Trade the car in to a new car dealer, when purchasing another car. If you really have equity in the car, say it's worth $15K wholesale, and the residual is $13K, then you can pocket the difference. The dealer won't have to pay sales tax, and Honda Finance will sell the car to any licensed dealer for the payoff of the lease.

Probably, the chances of the car being worth enough to pull this off are remote. To get a good idea of what the car is really worth, post all the details here: Real-World Trade-In Values

Good luck with it!
kyfdx
visiting host

EDIT: Forget about posting over there... the expert just came over here to give you the info!! Thanks, volvomax!

delta737h

Apparently, a number of software developers as well as some fund providers are incorrectly computing lease payments and sales tax in those instances when the first payment and taxes are financed or capitalized in the lease. Basically, I’m describing a sign and drive lease which is an attractive option for many especially when the cost of money is low. The problems occur in states like Ohio that compute sales tax on total payments and collect the tax upfront. Some time ago, I asked a Cleveland/Akron area Acura dealer to provide me with a lease worksheet for a 2007 Acura TSX. I requested that all costs typically paid up front be rolled into the lease or capitalized. This included the first payment, acquisition fee, and taxes. They sent me the American Honda Finance Services (AHFS) Lease Worksheet that detailed all the numbers. The sales person claimed that all calculations were made per instructions given by AHFS. The results tabled below show the AHFS Worksheet detail followed by the Correct Accounting Detail.

Agreed Upon Value
Selling Price....................................... 27,115.14
Amounts Financed
1st Monthly Payment........ Inclu in sell Price
AHFS Acquisition Fee.............................. 595.00
Sales Tax............... 0.06 x 332.25 x 36 = 717.68
Capitalized Costs
Gross Capitalized Cost.......................... 28,427.80
Capitalized Cost Reduction..................... 0.00
Adjusted Capitalized Cost...................... 28,427.80
Lease Data
Money Factor........................ 0.00127
Sales Tax Rate (Ohio).......... 0.06
MSRP.............. 28,760.00
Residual Factor..................... 0.62
Residual Value............... 0.62 x 28,760.00 = 17,831.20
Term............... 36
Payment Itemization
Base Monthly Payment........................ 353.10
Taxable Monthly Payment.................... 332.25

Here is the problem with the AHFS Work Sheet...

1st. The Selling Price includes the capitalized first payment. The sell price, once agreed upon, is FIXED and should NEVER be changed for any reason. It's consecrated ground so to speak. The capitalized first payment should be explicitly identified as an amount financed and NOT embedded or buried in the sell price. I know that many fund providers routinely do this and that's very bad accounting. Deducting 353.10 from 27,115.14 yields the correct selling price (i.e., agreed upon value) of 26,762.04.

2nd. According to the worksheet detail, the taxable payment calculation can be inferred and was computed as follows...

0.00127(26,762.04+353.10+595+17,831.20) + (26,762.04+353.10+595-17,831.20)/36 = 332.25

Observe that the 353.10 payment that already includes tax was used to calculate the taxable payment of 332.25 which, in turn, is used to compute the sales tax as
0.06 x 36 x 332.25 = 717.66

The 332.25 taxable payment is now contaminated with sales tax! And, when multiplied by the sales tax rate, is taxed again. In other words, sales tax is being levied on sales tax. In Ohio, this is illegal. In New York, however, it's perfectly legal. Another issue is that the rolled-in (i.e., capitalized) payment MUST ALWAYS MATCH the calculated payment. Here, there is an obvious inequity between the rolled-in 353.10 and the calculated 332.25. At this stage, only the taxable payment is calculated and so the roll-in payment should be the taxable payment and not the base payment that already includes tax.

3rd. The AHFS Lease Worksheet used 36 instead of 35 as a factor to compute the sales tax. This is clearly inappropriate because the capitalized first payment is being amortized over the term of the lease and so the consumer actually makes 35 payments and not 36 payments. The 35 payment streams have already captured the capitalized first payment.

Now, let’s examine the Correct Accounting Detail. This is how the AHFS Lease Worksheet should have been constructed...

Agreed Upon Value
Selling Price 26,762.04
Amounts Financed
1st Monthly Payment 352.46
AHFS Acquisition Fee 595.00
Sales Tax 0.06 x 331.63 x 35 = 696.42
Capitalized Costs
Gross Capitalized Cost 28,405.92
Capitalized Cost Reduction 0.00
Adjusted Capitalized Cost 28,405.92
Lease Data
Money Factor 0.00127
Sales Tax Rate (Medina, Ohio) 0.06
MSRP 28,760.00
Residual Factor 0.62
Residual Value 0.62 x 28,760.00 = 17,831.20
Term 36
Payment Itemization
Base Monthly Payment 352.46
Taxable Monthly Payment 331.63

1st. Observe that the selling price's virginity is preserved as it should be and that all capitalized items are properly accounted for and reconciled and that the first payment is explicitly disclosed as an amount financed and not hidden or buried in the selling price.
2nd. The taxable payment is reconciled as follows...

0.00127(26,762.04+331.63+595+17,831.20) + (26,762.04+331.63+595-17,831.20)/36 = 331.63

Notice that only taxable items (e.g., acquisition fee) are used as input when computing the taxable payment in Ohio. Also note that the rolled-in taxable payment of 331.63 clearly MATCHES the computed taxable payment of 331.63. The computed and rolled-in payments MUST ALWAYS MATCH! This calculation is an intermediate step and done strictly for the purpose of establishing the taxable payment. Remember that we want to ultimately roll-in that first payment into the lease and so this intermediate step must roll-in the taxable payment as well for consistency.
3rd. Observe that the base payment and taxable payment have changed to 352.46 and 331.63 respectively. If you're thinking about leasing or; if you're in the process of leasing and are concerned about the calculations, feel free to contact me at diffeq@zoominternet.net.

looking4asoob

I posted this in the Nissan Pathfinder section, but it is really a general question on how to calculate a low or no downpayment lease based on a dealer listed lease special.

My dealer offered me the following lease deal for a 2008 Pathfinder S. From the research I was able to find, it seems a decent deal (please let me know if I am wrong, I am hitting lease info overload). I don't know how to calculate the monthly numbers to make this a no or little down deal. Can anyone help? Thanks!

24 months lease on Pathfinder S with 12000 miles a year for $179.00 a month plus tax $192.00 total, with the MSRP of $26,680.00 and $3,995.00 down and Residual $18,942.00 Capitalized cost $25,537.00 includes acq. fee, and money factor of 0.00145.

qbrozen

Well, there is alot missing here. What is the selling price? The cap cost should be the selling price plus acq fee minus down payment. With $3995 down, I'm not sure how much is being applied to the cap cost without knowing all of the fees and taxes being charged/paid up front. Off the top of my head, that cap cost seems really high considering the MSRP and money down. But, at the same time, the payment makes NO sense at all given the difference between cap cost and residual. Are you sure its not $279??

delta737h

looking4asoob,

You said...

"24 months lease on Pathfinder S with 12000 miles a year for $179.00 a month plus tax $192.00 total, with the MSRP of $26,680.00 and $3,995.00 down and Residual $18,942.00 Capitalized cost $25,537.00 includes acq. fee, and money factor of 0.00145"

Given this information, the base payment is...

Payment = 0.00145 x (25,537 + 18,942) + (25,537 - 18,942)/24 = 339

which isn't even remotely close to 179 and so, something is missing like the previous poster stated. In order to achieve a 179 payment, the adjusted capcost would have to be 21,820 instead of 25,537 assuming, of course, that all the other info is accurate.

I can give you a formula to use for a sign and drive lease but I'll need to know your state and how sales tax is computed as well as your sales tax rate.

John

looking4asoob

The numbers had me confused as well. The $179 deal is listed on the San Diego, CA dealer website www.mossynissan.com. Of couse that doesn't give all the info, the additional information is directly from the internet Salesman. My fear is the hidden gotcha. Any hints on the right questions to ask about this deal?

My local tax rate is 7.75%. I really appreciate the formulas. I have found lots of information, but I do best with numbers.

Thank you!

looking4asoob

ok, thanks to the formunla from delta737h, I think the numbers now make sense (please correct me if I am wrong). The confusion is the listed capital cost is the dealer discount off MSRP, but not the down payment cap cost reduction. So here is my calc:

Down payment(minus 1st mo payment): $3816 ($3995 - $179 )
Cap cost: $21721 ($25537 - $3816)

So Payment = 0.00145 x (21721 + 18942) + (21721 - 18942)/24 = 175

So to calculate a no down payment would it be just this formula?

Payment = 0.00145 x (25,537 + 18,942) + (25,537 - 18,942)/24 = 339

delta737h

Does the 3995 include the acq. fee? My guess is that it does include this fee as well as the first payment (179) and, perhaps the security deposit? The 3816 looks like a very weird down payment and so it's not very likely that it is. You need assess the exact break down of the 3995.


John

qbrozen

The confusion is the listed capital cost is the dealer discount off MSRP

So they are only knocking $1100 off MSRP?? Seems to me they could do much better.

looking4asoob

The $25537 is only $1100 off MSRP, but it includes destination and acquisition fees. Factoring those the price seemed in line with Edmunds TMV price. Or is the market such that people are getting better than TMV pricing?

Thanks!

cccompson

It sounds like a piddly discount given the current market for SUVs.

qbrozen

I've always done better than TMV.

confused13

On a 36-month lease, should the residual value be similar to retail blue book or trade-in value or something else altogether?

volvomax

On a 36-month lease, should the residual value be similar to retail blue book or trade-in value or something else altogether?

In a perfect world, residual would be akin to wholesale book value.
However, most of the time a residual value is just pulled out of a hat.

kyfdx

The residual is set by the leasing bank.. It is almost always a set percentage of the MSRP, with variances according to model, trim, term and mileage allowance.

Ideally, it is set to match the expected wholesale value of the vehicle, though sometimes the number is inflated to incentivize the lease payment.

regards,
kyfdx
visiting host

uturnsue

I dont know the difference between leasing and having a loan on a vehicle? so what's the difference and what is better in the end?

how do I know I'm not being bamboozled with the legal mumbo jumbo dealers like to use? :confuse:

this mind wants to know

sebring95

Leasing means you never own the vehicle. You rent it. If you put too many miles on it, you pay extra. If you don't put enough miles on it....you get no benefit. If you change your mind and want something else, it can be very expensive to get out of.

Loan means you "own" the vehicle, but the bank holds the title. You can't sell or trade the vehicle without paying off the prior loan. So there's still limitations, but all things being equal it's cheaper/easier to get out of a loan.

IMHO, leases are only beneficial for folks that KNOW they will want a new vehicle every few years, won't likely have their personal situation change (moving, major job change, etc.), and if so they have the cash to get out of the lease and not be financially burdened. It's a convenience. It's very rarely a good financial decision.

If you're not an educated shopper, it's easy to get bamboozled regardless, but leasing can be complex with the various contract terms. Gives the dealer more options to sneak in costs, etc. It sounds like you have little knowledge in this area, so you might seek out a friend or peer to assist you.

tidester

The main difference is that when you finish making your loan payments, you own the car whereas when you finish making your lease payments you own nothing. A practical difference is that lease payments are generally lower than loan payments. As to which is the "better deal" I am sure others will chime in one way or the other.

tidester, host
SUVs and Smart Shopper

volvomax

The main difference is that when you finish making your loan payments, you own the car whereas when you finish making your lease payments you own nothing.

Problem is, most people never finish paying on their loan. They trade the car in before the loan is done.
With the price of cars going up, loan terms are longer. 60 months is the norm and 72 or 84 months are becoming more common.
Can't remember the last 36 or 48 month loan we have done.

bigbutr

We have three payments left on our current lease. Since tax is figured on the part of the vehicle I use (depreciation), if I turn the vehicle in early, do I still have to pay the tax if I turn the vehicle in early?
We're looking at getting something new and the dealers are offering to make our final payments. It's not that much, say $100 or so, but hey, it's $100.

volvomax

Yes, you owe the tax.
Making the payments is the means of collecting the tax.
The lease co MUST forward the tax portion if the payment is recieved.

maxlee2

I'm looking to lease a car - just need it to drive about 10 miles a day (round trip) to work and back. Does anyone know what kind of car would be the cheapest? I am really not picky - just looking to spend as little as possible. THinking maybe i would need a 24 month lease. Thanks

MSUHOCKEY7

I have posted on here a few times looking into different options as far as BMW. My recent visit and discussion with a BMW dealer offered me the BMW SELECT Financial plan. 2.9% , option is to put money down or not on a purchase, choose the amount of months you want to finance. i.e. 60 months 10k cash down with a balloon payment on the last payment which in this example is month number 60. Does anyone have know about this? Any information? Any pitfalls or tricks up the sleeves of the finance folks. I am looking to pull the trigger in the next week or so and want to get everything in order. i am new to this stuff and trying to reach out to this type of community. Any help is appreciated.

tidester

There was some discussion of that issue here: http://townhall-talk.edmunds.com/direct/view/.ef9d9d2/841

You may want to take a look at it.

tidester, host
SUVs and Smart Shopper

tacot

Hi everybody,

Great forum btw!

I am return my leased minivan to Nissan - due 9/18.

My CA vehicle registration was due for renewal in June.
The final date to renew the registration is after the lease trade in date.

Can I turn the vehicle in w/o renewing my registration?

Thanks in advance!

akr

I want to lease a sedan for my 17 year old who just got his license. The two cars we initially looked at was a base 4 cylinder Honda Accord and a base Volvo S40. As he will be leaving for college in about 18 months I wanted to do a 2 year lease. The dealers I visited said no one is doing 24 month lease programs anymore. Is this right? Could you please let me know if any major brand is doing a 24 month lease right now. I would like the payment for a sedan (safety is paramount) to be under $300 with no money down.
Thanks

sebring95

I've not seen many 24 month deals lately and I doubt you'd hit that payment anyway. Depreciation is very steep in first couple years. You can pickup a used Accord, say 2006 variety and payment will be $250-$260/month. It will be just as safe as a new one and in 18 months you can easily sell it for payoff. Insurance will likely be much cheaper as well.

fezo

I know Honda's advertising cheap leases but I don't know the details off the top of my head.

I personally wouldn't lease for someone that young - more likely to use sebring95's approach - but that's naturally up to you.

philski

Does anyone know if it is possible to get a good lease like the honda deals right now if i put the lease in my business name. I want the business to pay for the car and insurance. I am a school psychologist and i travel to schools. Not heavy usage. Just wondering if dealers will consider leasing to me in the business name. My credit is top notch. Thanks Philski

sebring95

Assuming you're self-employed or a single-member LLC, it won't matter for tax purposes whether it's in the business name or your name. You'll still have to carve out personal/business miles and deduct accordingly. I say that to say this....it will be less headache to just put it in your name. To answer the question asked...the lease can put it in whatever name you want but the leasing company will require a personal guarantee from you. You may or may not get as good of a deal depending on your state laws and how much extra work there is for a business lease.

morgan888

dear carman,

i am seeking to lease a 10 r8 can you please provide some ideas regarding residual and money factor for a 3 year lease /10k year

msrp: 140600
r8 4.2
rtronic
premium seats
metallic side
led headlights

thanks
morgan

fsu_seminole1

Just a quick question. Say you prepaid for extra miles up front, but the car was totalled before the lease is up. Do you get the money back for the extra miles you paid for but didn't use like you would if you didn't use them at the end of the lease?

tidester

I don't know the answer to your question but I am curious - what did they charge for miles prepaid?

tidester, host
SUVs and Smart Shopper

fsu_seminole1

Well I was doing a lot of research on leasing a car later on in the future. I've come across some things about how people pay up front for extra miles. If i recall correctly I think it's BMW that charges $0.05-0.10/prepaid mile. Don't quote me on that though. It is cheaper to buy now than get hit with excessive mileage penalty. I have read the money that you paid for the miles upfront if you don't use them at the end of the lease you get it back.

But the thing that gets me is what happens if the car is totalled out before the end of the lease and lets say you bought an extra 10K miles for $0.05/mile. Do you get that $500 back? I know with a downpayment ( used to reduce monthly payment) you lose it if the car's totalled. It was a thought that came to me and I couldn't find any answers on it.

If I'm right it's a lot cheaper/less of a headache to just buy more miles at signing than to pay more for them at the end of the lease. That way if you do go over, you're covered and what you don't use you get the pro-rated amount back, or if you never used any of them you get all the money back. I read how people go over their mileage and complain about it. I've financed a car plenty of time and it's second nature, very easy to me. I'm just learning every angle of leasing so I can be prepared for if and when I am ready to make that jump. Besides if I like the car after 3 years and its worth more than the buyout price then it'll be worth it to keep it. Ok I'm done, I'm just rambling on with my thoughts. Thanks.

grandtotal

I don't think that you will get unused prepaid miles refunded, though I may be wrong. I think instead that you will have more equity (or less negative equity) in the car at the end of the lease.

If you have some equity that is all well and good and you can either buy the car or realise that equity as a trade-in. If you have negative equity you will effectively lose your prepaid mileage payment.

delta737h

fsu,

It depends. Here's why...

Mileage is a measure of usage and so prepaid mileage is reflected in the residual value. Increased usage lowers the expected future market value of the vehicle. And so, prepaid mileage charges are usually deducted from the gross residual as follows...

Gross Residual Value = Res Factor x Adj. MSRP
Net Residual Value = Gross Residual - Prepaid Mileage Charge

Because the residual value is lower, as reflected in the net residual, your monthly lease payment is necessarily higher. The net residual reflects the outstanding lease balance at lease end. Because your reidual is lower to begin with, your outstanding lease balance will be lower throughout the term of the lease than it otherwise would be had you not prepaid additional mileage charges. This is also due to the fact the lease amortization rate (actuarial rate, i.e., rate implicit in the lease) remains about the same whether you prepay mileage or not.

If the vehicle is totaled, the insurance company will pay the fund provider the ACV or approximate market value. If your lease balance exceeds the ACV, your GAP protection will cover the difference. This GAP narrows the lower your lease balance. Lower residuals, triggered by prepaid mileage charges, can cause the ACV to exceed the lease balance (negative GAP). In such cases, you may realize all or part of your prepaid mileage charge. Because prepaid mileage lowers the residual and, hence, the amortized lease balance over the term of the lease, the probability that the lease balance will exceed the ACV is somewhat diminished.

If the GAP > 0 (i.e., lease balance > ACV), then you owe nothing and receive nothing and have, therefore, forfeited the entire prepaid mileage charge. The insurance company will pay the fund provider the ACV and the GAP carrier will pay the fund provider the difference between the amount owed (lease balance) and the ACV.

If the GAP is less than 0 (i.e., ACV exceeds the lease balance), then you'll receive, from the fund provider, the difference between the ACV and the lease balance less any transaction costs incurred by the fund provider. However, this may be insufficient to cover the cost of the prepaid mileage. In this case, you would lose all or part of your prepaid mileage charge. On the other hand, it may be more than sufficient to cover the cost the prepaid mileage.

Frankly, it's a gamble and it all depends on the relationship between the ACV and the lease balance. The only thing the fund provider wants is the outstanding lease balance owed plus any transaction costs. You, of course, get whatever remains. Whether or not that is sufficient to cover your prepaid mileage charge remains to be seen.

Another consideration is that there may be no way to tell whether or not you're vehicle is over or under the mileage allowance particularly if the odometer is missing (if the car is stolen but never recovered) or severely damaged in an accident.

Hope this is helpful.

John

fsu_seminole1

John that is awesome. You answered my one question AND gave me a refresher. I've been reading some of your other posts and you're definitely knowledgeable about leasing. I guess I have no more questions since you've answered them in one reply. Once again, thanks a lot. Take care!

EDIT: I will continue to do research and read about other's experiences with leasing a car on these forums. Better to be prepared walking in instead of just jumping in not having a clue about whats going on. :P

delta737h

fsu,

Many thanks for your kind words and the very best of luck!

John

kyfdx

I'll use BMWFS for an example, because that's the one I know..

If you actually purchase extra miles upfront (over and above the 15K/yr allowance), the cost is $0.15/mi. vs. the $0.20/mi. that you'll pay at lease end...

If your lease goes to term, or if it ends involuntarily (through accident, theft, etc), BMWFS will refund the amount of the unused extra miles.

However, if you sell the car, transfer the lease, trade it in, etc... then, no refund is made. This is something to watch out for, especially in the case of "pull ahead" programs that get you out of your lease early.

This only applies to "extra" miles purchased.. There is no refund if you take the 15K/yr allowance (or any other standard mileage), and do not use all of your miles.

There are probably as many different policies as there are leasing banks. The previous scenario may not be applicable to other companies.

regards,
kyfdx

fsu_seminole1

Yeah I was thinking that too. Thanks for the input also Grandtotal. All advice is welcomed.

Also KYFDX thanks also. I figured thats how it SHOULD work. I know some people who try to get out of their lease by trading the car or voluntarily turning it in will think they should get their money back for the extra miles. That is something to look out for. Now if something does happen to the car (i.e. destroyed beyond repair haha) then its good to know that BMWFS will return the money for the extra miles purchased.

Once again thank you everyone who took the time to reply to my question. I definitely came out with more knowledge than what I went in with.

delta737h

How can BMWFS refund "unused extra mileage" if the car is stolen or the odometer destroyed in an accident? There is really no way to determine mileage used or unused. Consider the following hypothetical example...

If I prepay 9,000 additional miles (entitling me to 15,000 miles annually) on what would ordinarily be a 36,000 mile, 36 month BMW lease and have actually driven 45,000 miles after, say, 24 months, then I'm 15,000 miles over my mileage allowance after two years. Why would BMW reimburse me for "unused milage"? They have no clue if I'm over or under the mileage allowance if the odometer can't be read. It just doesn't make any sense. I can see tons of problems not the least of which are moral hazards. It seems much more logical and prudent to compare the lease balance with the ACV.

John

kyfdx

The BMW car key records the last odometer reading... Plus, all BMWs come with included maintenance, which means they get a reading of the odometer mileage around once per year (and, most likely, more often, if you drive more than 15K/yr).

So, I think the scenario where your BMW is destroyed in an accident, and they can't retrieve the mileage is fairly remote.. I guess a fire would be more likely..

Either way, it doesn't matter.. that's how BMWFS does it... I didn't just guess..

fsu_seminole1

I didn't even know the keys did that. That is amazing! I wonder if its like that with other car manufacturers that have keyless ignition.