Single pay lease

doug63026

If someone purchases a single-pay lease and the car gets totaled driving off the dealer's lot is the buyer out of luck regarding the upfront payment? Is there any way to protect those funds?

Michaell

doug63026 said:

If someone purchases a single-pay lease and the car gets totaled driving off the dealer's lot is the buyer out of luck regarding the upfront payment? Is there any way to protect those funds?

That's not how a single pay lease works.

The monies are put into an escrow account, and the monthly payments are made from it. If the car is stolen or totaled, the balance from the escrow account is returned to the customer.

However, if you make a large down payment to reduce the payment, that money would be gone if the car were stolen or totaled.

doug63026

When looking at the MSRP for a lease is it correct to include the "destination and freight charges" in that figure?

Michaell

doug63026 said:

When looking at the MSRP for a lease is it correct to include the "destination and freight charges" in that figure?

Yes, use the bottom line number of the factory window sticker:

Base MSRP + packages & options + destination charges

doug63026

Am I correct to assume that the tax that's part of the lease payment is sales tax on essentially the vehicle's depreciation? What happens if you live in a state that levies a yearly personal property tax?

Michaell

doug63026 said:

Am I correct to assume that the tax that's part of the lease payment is sales tax on essentially the vehicle's depreciation? What happens if you live in a state that levies a yearly personal property tax?

Sales tax varies by state - where do you live?

I pay personal property tax annually, as part of my registration renewal.

No way to avoid it.

doug63026

Missouri, st. Louis Counry

Michaell

doug63026 said:

Missouri, st. Louis Counry

Not completely familiar with MO sales tax, but generally it's assessed against the monthly payment. Some states tax the sum of the payments and collect it all up front (NY, NJ, GA), and some states tax the entire purchase price, even on a lease (MD, VA, TX).

kyfdx

doug63026 said:

Missouri, st. Louis Counry

Pretty sure that MO taxes the monthly payment, collected monthly by the bank.

jacquelyn

If a car is totaled in an accident soon after it is purchased through a single-pay lease, the buyer may not be able to recover the full amount of the upfront payment. However, there are some ways that the buyer can protect their funds.

One way to protect the funds is to purchase gap insurance. Gap insurance covers the difference between the value of the car and the amount still owed on the lease. This can help to protect the buyer in case the car is totaled or stolen before the lease is paid off.

Another way to protect the funds is to purchase additional insurance coverage. For example, the buyer could purchase collision or comprehensive insurance, which would cover the cost of repairs or replacement of the vehicle in the event of an accident.

Additionally, It is important to check the terms and conditions of the lease agreement and the dealer's policy on what is covered in case of an accident. Some dealerships have a policy to refund the money or offer a replacement vehicle.

It is also important to note that most states have lemon laws that protect consumers from buying defective vehicles, if the car is found to be defective or has manufacturing issues, the buyer may be able to get a refund or replacement vehicle.

In conclusion, if a car is totaled soon after it is purchased through a single-pay lease, the buyer may not be able to recover the full amount of the upfront payment. However, purchasing gap insurance, additional insurance coverage, checking the terms and conditions of the lease agreement and the dealer's policy, and checking the state's lemon laws can help to protect the buyer's funds.

Michaell

I will respectfully disagree.

With a single pay lease, the up front monies are put into escrow, and the monthly payment is made from that account. If the car is stolen or totaled, that escrow account is refunded back to the customer.

I'm not suggesting that you don't need GAP or other insurance, but you should be able to recover the balance of the up front payments that remain in escrow.

doug63026

What would happen in the case of a single-pay lease if the lessee were to become deceased?

kyfdx

doug63026 said:

What would happen in the case of a single-pay lease if the lessee were to become deceased?

Like any lease, the debt belongs to the estate. (not a lawyer). The executor could sell the car to a dealer, and recoup any amount above the payoff. There is no process for ending a lease, because of death.