[RickFLM4]

Originally Posted by Run Silent

So in a normal world - if he leased the car and had insurance on it and it was totaled - and the balance on his lease contract (residual plus remaining payments) was $80,000 and the insurance company valued the car at $60,000 - he would owe the remaining $20,000 to BMW financial, right?

Why wouldn't the other way be the same?

If his remaining payments and residual was $80,000 and the insurance company valued the car at $100,000 - wouldn't he be owed $20,000?

Pretty shit if the door doesn't swing both directions.

Just another reason I don't borrow money, lol.

You are required as lessee to insure the car. Additionally, when you lease a BMW (or likely any car), GAP insurance is included in the lease to avoid that situation where insurance proceeds < remaining amount owed under the lease. BMW doesn’t want to chase after anyone for shortfalls when cars are totaled. Until used car prices went nuts over the last 24 months or so, any leased car that was totaled was almost certainly underwater unless someone wrote a big down payment check, which would have been a mistake on their part.

So effectively, the door does swing both ways. You total a leased vehicle, you walk away financially +/-. Additionally, it’s not just when the car is totaled, but when there is an accident and repair but the value of the car takes a hit. Lessee walks away unscathed as long as the car was repaired. So, kinda hard to expect that benefit of being able to walk away from a totaled car or diminished value but keep any upside without buying the car IMO.

[DocL]

Originally Posted by rcracin

Your analogy would be comparable if you're renting the house with a stated value to purchase at any point during the lease or when the lease ends and also if you as the lessee carries the insurance policy.

Don’t some people rent a house with the option to purchase with a percentage of the rent paid towards the final purchase. Although more rare, still the same premise.

This entire thing is bullshit either way. Hope the guy loses his case.

[///MPhatic]

Originally Posted by kring

It is interesting because it is HIS insurance policy. Not BMWs. So technically he was cut the check...

I work in the insurance industry and I can tell you that we cut checks to the lienholder/shop, not the borrower, which in this case would be BMW (if it's a total loss and won't be fixed). Every insurance company that I know of works this way because it's the owner that takes the loss, not the borrower (they haven't paid for it yet).

The only time we cut a check to the borrower is if there is nothing borrowed, as in they own the car, then it's actually their right to get the car fixed or not. Up until that time it's not their right to choose (some do), but they can be sued for it. Especially in the case of a lease, it's assumed that the vehicle is maintained within the standards of the contract (in case it's turned in early) until the note is PIF.

Any excess equity is NOT his until it's PIF, it's the owners, which is BMW.

Put another way, when people lease they lease a PORTION of the vehicle, like 8-30%, not the entire vehicle (so to speak). They agree to pay that portion to USE the car for that period, knowing it's NOT their car (same with a traditional finance really). BMW would profit from any equity or lose any depreciation.

If you want to get absolutely technical about it I suppose he could sue for the percentage he leased, but he'd lose, as he's not the owner.

[dizz81]

When you buy a car, unless you pay cash for it outright you don't own that car either. The bank does. If you total the car and it's worth more than you owe on the car you get to keep whatever is left.

How's that any different from what's going on here? I'm genuinely asking.

[TR930]

Originally Posted by dizz81

When you buy a car, unless you pay cash for it outright you don't own that car either. The bank does. If you total the car and it's worth more than you owe on the car you get to keep whatever is left.

How's that any different from what's going on here? I'm genuinely asking.

Because you have entered into a contract to own the vehicle over time. You techically own the loan which then buys a car in your name, and the bank has a collateral lein against it.. The bank is a leinholder, not an owner of the car. Lein is released when you pay the loan in full back to the bank..

A lease is renting a car for a period of time from a separate owner.

[MMnut]

I think some of us confused across leasing / renting and financing / borrowing

[rcracin]

The focus here should be the value on the option to buy the car that's guaranteed in the contract. I'm not sure anybody read the article to the end.

The lessee wanted to exercise his option to purchase the vehicle after the crash. BMW claims the lease was canceled as a result of the crash.

This isn't that complicated. It's about what's in the contract.

[ryan stewart]

Originally Posted by MMnut

I think some of us confused across leasing / renting and financing / borrowing

Its really nuts to think this is a thread populated with adults that I assume have owned a car, might own a house, etc, and yet dont really understand leasing vs purchasing something, anything, and think insurance works like on cop shows where you can get a policy on anything at any time and get a payout.

[ryan stewart]

Originally Posted by rcracin

The focus here should be the value on the option to buy the car that's guaranteed in the contract. I'm not sure anybody read the article to the end.

The lessee wanted to exercise his option to purchase the vehicle after the crash. BMW claims the lease was canceled as a result of the crash.

This isn't that complicated. It's about what's in the contract.

I read it to the end. Even the lawyers own statement admits he did not own the vehicle but he "could have:"

“In a closed-end consumer vehicle lease, the consumer is always entitled to purchase the vehicle during the term of the lease, or at the end of the lease,” the lawsuit notes.

The problem is he never did. He totaled the car. Now he is trying to argue that he had the right to ownership of the original vehicle prior to totaling it. He destroyed BMWs asset, they get the equity for fair market value of the vehicle he was renting from them, a vehicle that is gone and he never exercised the option.

The claim they are making now is BMW is lying that he didn't have the right to buy the vehicle AFTER totaling it. So unless there is some odd California law that defines it or it was defined in the contract (which since the claim is "breach of the implied promise of good faith and fair dealing" sure makes it sound like he doesn't have anything in the contract to support his claim) its hardly an open and shut case.

[///MPhatic]

Originally Posted by ryan stewart

Its really nuts to think this is a thread populated with adults that I assume have owned a car, might own a house, etc, and yet dont really understand leasing vs purchasing something, anything, and think insurance works like on cop shows where you can get a policy on anything at any time and get a payout.

There will always be someone trying to take advantage of someone else.

[ryan stewart]

Originally Posted by ///MPhatic

There will always be someone trying to take advantage of someone else.

Well yeah but I mean just the stuff being said here. Like the claim you could insure someone else without their consent, etc. I know that is a popular concept on cheesy cop shows where someone takes an insurance policy on someone and murders them, but I just thought people knew that was fiction.

[zx10guy]

A bit off topic but sort of relevant to the discussion here on actual ownership of a leased vehicle. It amazes me people would modify a leased car. A car they don't legally own.

[///MPhatic]

Originally Posted by zx10guy

A bit off topic but sort of relevant to the discussion here on actual ownership of a leased vehicle. It amazes me people would modify a leased car. A car they don't legally own.

The stupidity of people amazes you? That amazes me.

But if I'm honest, a lot of people lease knowing they will buy at the end because it gives them a lower payment for the first 3 years (and less taxes). It basically turns a 5-year traditional loan at 2.9% into an 8 year at .9% for the first 3 years and 3.9 for the remaining 5. It's common. It's a way to afford a vehicle you can't really afford. These same people lease for 10K a year, yet drive 20K a year knowing it won't matter in the end.

Gap insurance in 3...2...1...

[OkieSnuffBox]

Originally Posted by kring

I don't own you, but I can have an insurance policy on you and there's nothing you can do about it and I get paid if something were to happen to you. He OWNS the policy, and therefor the payout... FULL STOP, no discussion... now he still has obligation and likely a LEAN on the car so that would need to be fulfilled for the outstand balance. his insurance is to make HIM whole. this isn't gap insurance, it's the opposite. the gap is more than closed by the insurance proceeds and therefore, it can only be his.

Sorry I find it hard to take someone seriously when discussing legal matters and don't even know the correct word to use.

The word you're looking for is LIEN.

[ryan stewart]

Originally Posted by zx10guy

A bit off topic but sort of relevant to the discussion here on actual ownership of a leased vehicle. It amazes me people would modify a leased car. A car they don't legally own.

I wonder that impact on terms are on that. Some minor stuff like an exhaust I could see as long as you knew what you were risking warranty wise and just threw the old one in the basement to put back on when you turn the car in, etc.

I honestly dont know about the details of lease terms since Ive never been in the market, but lord I love they exist since I buy CPO cars (and those restrictions help mean there are some low mileage, few year old cars on the market).

[OkieSnuffBox]

Originally Posted by zx10guy

A bit off topic but sort of relevant to the discussion here on actual ownership of a leased vehicle. It amazes me people would modify a leased car. A car they don't legally own.

A boss at a previous job leased a 135. He used one of the piggyback things that you can just unplug when you turn the car in.

He used to take it to the track and beat the piss out of it, pulled the tuner off, and turned it back in at the end of his lease.

[F32Fleet]

Originally Posted by zx10guy

A bit off topic but sort of relevant to the discussion here on actual ownership of a leased vehicle. It amazes me people would modify a leased car. A car they don't legally own.

They do it because the actual owner of the leased vehicle doesn't care until it starts impacting their bottom line (i.e. residuals).

[F32Fleet]

Originally Posted by ryan stewart

I wonder that impact on terms are on that. Some minor stuff like an exhaust I could see as long as you knew what you were risking warranty wise and just threw the old one in the basement to put back on when you turn the car in, etc.

I honestly dont know about the details of lease terms since Ive never been in the market, but lord I love they exist since I buy CPO cars (and those restrictions help mean there are some low mileage, few year old cars on the market).

Typically the vehicle must be in stock configuration when it is turned in. That's it.

[ryan stewart]

Originally Posted by F32Fleet

Typically the vehicle must be in stock configuration when it is turned in. That's it.

I'm sure you're fine in normal circumstances but I'd wonder what they would pull in something like this, where you're not exactly getting the opportunity to revert to stock. Or say a catastrophic failure and they want to blame the mod. On a purchase they just don't warranty and you're left with a broken car and a bank note but since you modified THEIR car...

[RickFLM4]

Originally Posted by ryan stewart

I'm sure you're fine in normal circumstances but I'd wonder what they would pull in something like this, where you're not exactly getting the opportunity to revert to stock. Or say a catastrophic failure and they want to blame the mod. On a purchase they just don't warranty and you're left with a broken car and a bank note but since you modified THEIR car...

If lessee violates term of lease contract (mods that they allege cause damage or failure) lessee is responsible for damage. So pretty much the same as owning the car. There are also damages if the car is not turned back in proper condition. They aren’t going to care about stuff like window tint, but swap out wheels and I expect you’ll pay if you don’t revert back to stock.