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BMW X3 Prices Paid and Buying Experience

1544 messages,  Last post on Sep 28, 2009 at 3:51 PM

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What is this discussion about? BMW X3, SUV

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#50 of 1544 Re: leased x3 2.5 in san diego [davidc1] by pipo Jul 19, 2004 (5:39 pm)
Replying to: davidc1 (Jul 19, 2004 5:29 am) Car_man, who hosts a leasing forum on this site, says:   "It is definitely not in your best interest to make a down payment when leasing. I always advise consumers against doing so for two main reasons. The first is if your leased vehicle is totaled in an accident or stolen during your lease term, your insurance company pays off the bank that you are leasing it through and your down payment essentially disappears. The second main reason is that down payments on leased vehicles do nothing to reduce their lease-end purchase prices. So this vehicle's purchase price at the end of your lease would be exactly the same, regardless of whether you had put $2,000 down, or had made absolutely no down payment at all." Replies to this message: davidc1 (Jul 20, 2004 6:10 am)
#51 of 1544 Re: leased x3 2.5 in san diego [pipo] by davidc1 Jul 20, 2004 (6:10 am)
Replying to: pipo (Jul 19, 2004 5:39 pm) Interesting but I don't get it. I would agree that putting nothing down is a good idea when the money factor is very low but how do you lose the big down payment? Whatever you put down reduces your monthly payment. Of course the lease-end purchase price is constant no matter how much you put down. But the payoff amount should be lower from the beginning. If your leased vehicle is totaled in an accident or stolen during your lease term, your insurance company figures out the cost to replace the vehicle at retail price + tax and other costs. Then subtracts the payoff amount due to the bank. Then sends you the difference. At least that's how I got my check after they've payed off the bank. Don't get me wrong, I generally don't put anything down unless I want to lower the monthly payment to a level I am comfortable with. I just didn't get the math here.
#52 of 1544 Example by kyfdx HOST Jul 20, 2004 (6:36 am)
You lease $30K car this month for 3 years, with an $18K residual. Next January, it is totaled in an accident. The insurance company puts a value of $24K on it.   1) If you put nothing down on it, your lease payment is 429.33 and after 6 months you have a total outlay of $2576 and the balance owed to the bank is $28K. The insurance company pays them the $24K, and the GAP insurance pays them the balance. Total cost: $2576   2) If you put $5K down on the lease, your payment is $280.44 and after six months your total of payments and down payment is $6682 and the balance owed to the bank is $23834. The insurance company pays $24K, which would be $166 over what is owed. Assuming you get the overage back, total cost: $6546   Under this scenario, your $5K downpayment cost you $3970. The amount saved in finance charges assuming you complete the lease is about $360 (assuming MF of .002).   For $10 month, I'd rather keep my money in the bank. You can change the numbers and the savings can be more or less.. this was just to illustrate the math behind the advice.   regards, kyfdx Replies to this message: davidc1 (Jul 20, 2004 7:06 am)
#53 of 1544 Re: Example [kyfdx] by davidc1 Jul 20, 2004 (7:06 am)
Replying to: kyfdx (Jul 20, 2004 6:36 am) kyfdx,   Thanks for the example. I would just argue that the insurance co. will value it much higher than that. A six month old car will actually come out close to the original purchase price. I guess it varies by insurance co. but in my real life experience, the retail + tax + registration, etc.. came up to $4K more than what I thought the car was worth. I was actually surprised (pleasantly of course). I also wonder if the GAP is even utilized much these days. But again, this just my own experience. Since one can't assume all insurance will do the same, I suppose the safe thing is to go with your example as the worst case scenario.
#54 of 1544 yes..worst case..but.. by kyfdx HOST Jul 20, 2004 (7:14 am)
Your insurance company may treat you differently, but in most cases, they negotiate with the bank who owns the car. The bank is covered either way.. What the insurance company doesn't cover, the GAP insurance will. They have no stake in helping you recover your downpayment. If the accident is your fault, and you are dealing with your own insurance company, you may have a little leverage with them, but if you are hit by someone else, and have no other loss than the car, you may be left out in the cold by their company.   I totaled a car in '02 and was also pleasantly surprised by the payoff, but it was MY car, not the bank's, and I'd been with the same company since '85 with over ten years accident-free.   It may not ever happen, but I think it is a good rule of thumb to pay as little up front as possible on a lease.   regards, kyfdx Replies to this message: pipo (Jul 20, 2004 12:57 pm)
#55 of 1544 Re: yes..worst case..but.. [kyfdx] by pipo Jul 20, 2004 (12:57 pm)
Replying to: kyfdx (Jul 20, 2004 7:14 am) Another way to put it is that your down payment is at risk, and unless you are very comfortable with the notion that your insurance company will value your specific leased vehicle at a level high enough to eliminate or reduce your loss exposure, you shouldn't make a down payment (especially a big one). Since there are so many variables out of the lessee's control -- date of the accident/theft; general condition of the auto market at the time of loss; depreciation rate specifically applicable to your vehicle (e.g., Audi unintended acceleration debacle as an example of what you wouldn't want to happen to you) -- I agree that it is best to keep your money in your pocket (metaphorically, of course).
#56 of 1544 lease down payment by clpurnell Jul 22, 2004 (8:08 am)
Any overage does not go to the leasee but the one who owns the vehicle. So if it holds it value and is more than owed then the lease company profits not you. Your down payment is gone the moment you hand over the check. Replies to this message: pipo (Jul 22, 2004 8:27 pm)
#57 of 1544 Re: lease down payment [clpurnell] by pipo Jul 22, 2004 (8:27 pm)
Replying to: clpurnell (Jul 22, 2004 8:08 am) I don't think you're right about the overage going to the owner. Why should the owner get the overage? The owner is not the insured under the policy.   My belief is that the insurance company will pay any overage to the lessee; they treat the lease effectively the same way as they would treat a purchase transaction, and treat the lessee as they would the purchaser. Once the owner/lessor is paid off, any overage should go to the lessee. I'm not an expert on this; can anyone confirm?
#58 of 1544 by kyfdx HOST Jul 23, 2004 (5:41 am)
You are renting the car.. Even though you pay for the insurance, the bank owns the car, and they receive the proceeds from any payout. Many times, these are negotiated between the car owner and the insurance company. (When my own car was totaled, I had to negotiate to get the number I wanted for it). If the bank gets their payoff amount, they are satisfied. If they tell the insurance company they need $24K to pay off the loan, and the car is worth $25K, the insurance company is likely to say "fine, here is a check for $24K", then they are out of it. You have very little leverage, other than being a loyal customer. You definitely don't have any legal standing to recover any monies. It may be a possibility that the bank will receive more than the car is worth, and rebate the excess monies to you, but that would be a long shot as well.   My advice still stands.. Don't make any cap cost reduction at lease inception. Then, you won't have to worry about it.   regards, kyfdx
#59 of 1544 Also... by kyfdx HOST Jul 23, 2004 (5:44 am)
There IS a difference between financing and a lease. If you finance the car, you own it, and the bank just has a financial interest. The only requirement is that their lien is paid off. They have no say in what value you get for the car if totaled, etc... If you lease it, they own it. You really have no financial interest in the car. Just an obligation to complete the terms of your contract.   regards, kyfdx

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