Reply to Am I a sucker for leasing all of our family cars?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Never leased, but wondering what happens if you get in an accident in a leased car?[/quote]

Your insurance company fixes it the way they do with any other insured car...if it's totaled they cut a check to the leasing bank.[/quote]

And what happens if the insurance company gives the bank less money than the bank thinks it should get?  What about the deductible?[/quote]

The car's value is spelled out in contract, you insure it for that much. Car gets totaled, insurer pays out. There's no room for "I think it's worth this much".

As an aside, If you wrote off a brand new car you must have been in a pretty bad accident. No one in this position would regret not having an old war without safety features. [/quote]

Unless auto insurance for leases is drastically different, I don’t think you understand how they work.  You have a deductible and the insurance company pays what it believes the value is, not what the bank says.  The bank is incentivized to say its value is high so if you buy it out, you pay even more.[/quote]

I don't think you and I are on the same page. Why is a bank involved in this? Lease is between you and the dealership. No banks involved. You insure your car for a certian amount. You decide that amount, not the insurance company.
[/quote]

Auto insurance isn’t like home owners insurance.  When the “total” a car, make it a total loss, you get the blue book value, not some amount you think you insured it for.

And yes, leases are with banks.  The bank owns the car.[/quote]

At no time have I not been asked what amount I would like to insure it for. Leases are with car dealerships. They own the car.

Unless someone is party to a contract, they can't acquire rights or obligations from it. There might be some convoluted agreement between the dealer and a finance company, but that's of no consequence to the customer.

[/quote]

OMG auto insurance will NEVER pay out more than your car’s value.  You’ve obviously never had a car totaled.  Have you ever heard of gap insurance?  That wouldn’t even be a thing if insurance worked like you think it does.

https://www.kbb.com/car-advice/articles/how-much-and-what-kind-of-car-insurance-you-need/
Bottom Line: If you have health insurance for you and your family, personal injury coverage is usually unnecessary, unless your state tells you otherwise.

The dealership does NOT own the car, the finance company does.  It’s probably a bank or the auto manufacturer’s own finance company.  Either way, they own the car, not the dealership (and certainly not you).  If you are representative of typical leasees it’s no wonder so many here believe it’s a good deal.

http://www.realcartips.com/leasing/0050-auto-lease-terms.shtml
When you lease a car, the dealer sells the vehicle to the leasing company at the price you negotiate (read our negotiating guide). The leasing company then turns around and leases the car to you based on that purchase price.

Leasing costs a lot more than buying.  All you need to know to prove this is what a purchased car costs.  If you buy a $30,000 car and keep it for 12 years and if at the end of twelve years it’s worth nothing (it won’t be) then you lost 30k in depreciation.  Now if you lease that same car, your lease payment is $500 for 144 months or $72,000 in depreciation over 12 years.  Even with maintanence added in, owning is nothing close to that and newer cars need far less maintanence than cars used to.  They also make maintanence idiot proof by putting a reminder right on the dash.[/quote]

This is the stupidest thing I've heard all week. I have no idea why you're so excited that a bank owns a car (you seem to not understand how contracts work) or where you got your $500 figure from. I suspect you're the Honda oddsey troll from earlier.  :oops: [/quote]

First, I’m not that Honda person.  Second, I’m not “excited”, it just seems you did not understand who owns the leases vehicles.  Third, you needed education on auto insurance and why GAP insurance is a thing.  Forth, and most importantly, when you own a car depreciation is capped by the car’s price.  When you lease there is no cap on the amount of depreciation you pay.  You pay an unlimited amount.  You pay depreciation every month for life.  That will always be bigger than the total cost of a car.

I got the $500 number from an online calculator but if you prefer we can use a smaller number, say 350.  350 times 144 is $50,400 in depreciation over 12 years.  If you do this for two cars at a time (two car family) you pay 100k depreciation over 12 years.  Multiply this over the time five (how many 12 year car owning periods you’ll have in your life) and you leasees pay 500k depreciation over a lifetime if you have two cars at a time.  A buyer buys ten cars for 300k during that time (again having two cars in the family at a time).

Buyers cap depreciation at the price of the car.  Leasees have a black hole of unlimited depreciation payments for life.[/quote]

You are just making up numbers. By leasing you are paying the difference between what a car is worth now vs what it is worth at a set point. That’s it. You can’t depreciate below 0. There is no $50,400 depreciation on a $30k car. It’s not possible. Using your original $30k car and it being worth 0 at the end of 12 years, if I lease it for those 12 years (which is impossible, no one writes a lease that long) my obligation is $29,999 (you have to have at least a number at the end) over 144 months or $208 a month.

What makes you think you can depreciate something below 0?[/quote]

Okay wow you totally didn’t understand the post.  When you lease, you pay depreciation.  If you lease cars for 100 year then you pay depreciation for 100 years.  If you buy a car, your car can only go to zero.  For people leasing $30,000 cars every three years for 12 years they will pay depreciation in excess of $30,000 over those 12 years while the car buyer only pays 30k.

I would love to know what car you have and how much your lease is.[/quote]

Oh and tell us how much you put down.  Then we can run some real calculations on this “deal”.[/quote]

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