I trust you, but gosh this is so confusing.
I see. Thanks for your other post by the way, very informative.
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I had a car crash and freaking out regarding the next steps
- Thread starter cerealzealot
- Start date
I trust you, but gosh this is so confusing.
I see. Thanks for your other post by the way, very informative.
I dont think OP knows how GAP insurance works. It only ever makes sense to get GAP if you dont put down a large down payment.
No prob, happy to help! This was definitely educational - I knew down payments on a lease were a bad idea but now I know why
Please keep us updated on how this works out. Hopefully the car is new enough that the settlement / buyout numbers work out to you getting most of your down payment back. Also remember, if the appraised value of your car comes back too low you can get your own 3rd party appraisal and challenge the insurance company's value.
Oh I certainly don't. That's my first car, I'm 25 (and not even American, even if I'm good in English the lexical vocabulary of all that stuff is new and complicated).
No prob, happy to help! This was definitely educational - I knew down payments on a lease were a bad idea but now I know why
Please keep us updated on how this works out. Hopefully the car is new enough that the settlement / buyout numbers work out to you getting most of your down payment back. Also remember, if the appraised value of your car comes back too low you can get your own 3rd party appraisal and challenge the insurance company's value.
I certainly wanted to put less but Tesla wouldn't trust me. I will definitely bump this thread when I have news, thanks again.
Akikiki
A'-Lo-HA ! y'all
You don't seem to understand how a lease works. If you wrecked the car on the last month of the lease or the first month, you are still bound by the terms of the lease itself. You signed up to give them X down and payments for the duration. Insurance is simply paying off the terms of the lease early per that contract. And as others have said, if its worth less than the lease terms, you are going to owe. And that will likely be covered by the GAP insurance.
And you can have a new car. I doubt anyone is going to stop you. And you can get another from Tesla, either buying it or leasing it. But the terms of your lease on the wrecked car will be separate and completed. You want another, go lease it.
That down payment, as others have already told you, is a payment towards the total amount of the lease. Had you paid 50% of the lease term upfront, then your payments would have been the other half divided by number of months of the lease.
They are not going to give you that down payment back. Its not yours. Its towards the total amount of the lease.
I don't know what I can say because I don't want anything to be returned against me. But so far it's an absolute clusterfuck.
I cannot get the person in charge on the phone, I always get voicemail. Since Friday early morning I've sent 3 emails of high priority, no response.
Some others have said I would get a part of the down payment. You know what I'm ****ing lost, I don't know what to think and my head hurts.
I don't understand why putting a big down payment is screwing me so much. Next time I'll put $1K, crash the car the next day and GAP insurance will cover everything else, I will have lost only 1K? Makes no sense to me (I might be completely dumb, I have no experience in all of that).
Akikiki
A'-Lo-HA ! y'all
Does your lease say in the event of a wreck that totaled the car that you would get some % of your down payment back? Read it, don't ask us to guarantee an accurate answer when we don't know what your contract says.
You won't put down only 1K, if they demand more for the down payment. The lease determines that. I don't think you understand the lease.
If you signed a lease for an car for only one year for $1,000 a month which is $12,000 a year. But the terms of the lease required you to pay a down payment of 25%, you would need to pay $ 3,000 of the $12,000 up front. You would owe $ 9,000 or $750 a month, right?
If you signed a lease for an car for only one year for $1,000 a month which is $12,000 a year. But the terms of the lease required you to pay a down payment of 0%, you would need to pay $ 0 of the $12,000 up front. You would owe $ 12,000 or $1,000 a month, right?
You won't put down only 1K, if they demand more for the down payment. The lease determines that. I don't think you understand the lease.
If you signed a lease for an car for only one year for $1,000 a month which is $12,000 a year. But the terms of the lease required you to pay a down payment of 25%, you would need to pay $ 3,000 of the $12,000 up front. You would owe $ 9,000 or $750 a month, right?
If you signed a lease for an car for only one year for $1,000 a month which is $12,000 a year. But the terms of the lease required you to pay a down payment of 0%, you would need to pay $ 0 of the $12,000 up front. You would owe $ 12,000 or $1,000 a month, right?
Daniel in SD
(supervised)
It's screwing you because gap insurance only covers what you still owe.
If you didn't have gap insurance the total amount you are screwed would be independent of your down payment.
You're screwed by the fact that insurance companies generally only pay the actual value of the car which drops dramatically the second the car leaves the lot. There are insurance companies that offer to pay the price of a new car for the first couple years but obviously that costs more money.
You may or may not get part of your down payment back. It depends what the actual value of the car was when you crashed. I think you will.
I wish I had any advice on the slow responses. There are two items I’ll say:
1. again, this process could take a while. Or it could be short. We don’t know and so I highly suggest you take a rental while they sort this out. If it’s 3 weeks, are you okay without a car that long?
2. if responses are very slow and bothering you, you might talk to your local DOI, department of insurance, and find out what their rules and regulations say. If Tesla is in violation, the states DOI can step in to help you.
This is Exactly how GAP insurance works! I think you've got it now.
Still doesn't help your case since you put such a huge down payment. Feel bad for you...
You’re absolutely right. The difference is your monthly lease payments wouldn’t be as low as your payments are now. Nobody really plans on getting in a wreck a few months after they lease a new car, but unfortunately it happened to you.
Someone else may have to respond but I’m not sure if Tesla or Tesla insurance would replace your vehicle under your current lease agreement. 99% of the time, any driver who rear ends someone is at fault.
Insurance pays the legal party. You are leasing the car to use it, but Tesla legally owns it. The insurance is to protect the asset that Tesla owns, not to protect you. (In the sense of property damage). Most lease contracts will require GAP (guaranteed asset protection). This means if the car has depreciated $5,000 the day you drove the car off the lot and you totaled it, the insurance company would pay the actual market value of the vehicle PLUS $5,000 to the legal owner. Without GAP insurance would only pay the actual value of the vehicle to the legal owner, then the legal owner may require you to fulfill your lease obligations by paying the difference in actual value and leased amount. (When you lease a vehicle you pay depreciation + interest and then also hand back the vehicle which represents the residual value left.)
It’s usually advised not to put any money down on a lease other than to cover fees (lease acquisition, transfer fees, etc.) There is no reason to pay interest (money factor) on those fees.
If Tesla required you to pay a large down payment, that suggests that monthly payments without that down payment may have been to large to qualify you for the financing (pushed debt to income ratio too high, etc). The large down payment could have been saved over a long time, a gift, selling an asset that doesn’t represent steady future income, etc. Usually that’s an indication to walk away, or at least seriously consider a purchase rather than lease.
Sorry this happened. It’s really advisable to read up on lease agreement and insurance policies before getting into them as they’re a little more involved than a straight purchase. I suspect your down payment is gone. You potentially may essentially be released from the lease now and free to enter into a new one (with new terms from the start again) if the lease includes GAP or the value of the vehicle was high enough.
I don't understand how someone who can afford to put down $12k on a car can be so financially illiterate. That said, yes - it seems you understand GAP coverage now. Never put money down on a lease outside of taxes, tags, and fees.
Tesla didn't "make you" put down whatever amount of money. The evaluated your profile as a credit risk, and that's what underwriting came back as an approval requirement. I would have countered with multiple security deposits, if I were you. However, I don't know if Tesla does MSDs. Actually, I wouldn't lease a Tesla because. the money factors and residuals aren't that good - but that's neither here nor there.
You are kidding
It doesn't make sense to me. The total amount I owe to Tesla for the lease was $16K. With the down payment it's $16K - down payment.
What will the insurance reimburse? How much the car is worth today, right? They will give this money back to Tesla, right? Tesla still has my down payment, I still have the lease contract, why wouldn't they give me a new car?
Here's my simplified example: Let's say I have a car, it's worth $40,000. I agree to lend it to you to drive for 3 years for $20,000 (These are the terms). You agree. So now of that $20,000, do you want to split that up over 3 years ($555.55/month) OR... Actually I don't really trust you can pay me $555.55 a month. I need you to pay me $10,000 up front and the the remaining $10,000, you can pay over the 3 years (277.77/month). You agree to this.
So now you drive off and in 3 months you total the car. Since I own the car, I need to get my money back. Your insurance company will pay me what they think the car is worth. They think my car is only worth $35,000. I don't really care as long as I get my total value back. I already have $10,000 from you, the insurance is giving me only $35,000. So I will deduct the left over amount from your $10,000. Now I will give you back $5000 only, not your $10,000. SO you lost $5000 just from having the car for 3 months. So it's important that you try to get the insurance company to value it correctly.
So now that everything is taken care of, the lease is terminated and finished. I am willing to lend you another car at a new term...
Now... If you had the option of no down, you would have been paying $555.55/month. So in 3 months, you paid me $1666.65. You totaled the car. Your insurance is only paying me $35,000. So you paid me $1,666.65 already (technically less because principle and interest, etc but just keep it simple). I'm owed $3,334. You'll have to pay me UNLESS you have GAP insurance. the GAP insurance will pay me this remaining amount. So in this case you are only out $1666.65 for the 3 months you leased the car.
Obviously this is very simplified but idea is the same.
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Thank you, that's THE simple explanation for 5 years old that I needed (not kidding, this makes sense to me, finally). So if insurance doesn't **ck me up and give back a reasonable price for the Model 3 to Tesla (which i would hope, 3 months/1200 miles and that's a TESLA, I know they don't depreciate that much, used 2018 Model 3 with 30K miles are selling for $37K online, come on), I *should* technically get a big portion of the deposit back.
Insurance finally responded back to me, saying:
The actual cash value of your vehicle is determined by the age, market value, mileage & the condition of your vehicle at the time the loss occurred. The money will go to your lienholder first and if there is any excess the remaining balance comes to you.
So there's that, it's exactly like Gasaraki and some others have said. Lesson learned: if you have gap insurance never ever put a big downpayment.
The actual cash value of your vehicle is determined by the age, market value, mileage & the condition of your vehicle at the time the loss occurred. The money will go to your lienholder first and if there is any excess the remaining balance comes to you.
So there's that, it's exactly like Gasaraki and some others have said. Lesson learned: if you have gap insurance never ever put a big downpayment.
OP... get a trade in quote from Vroom or Carvana.. that will give you a rough idea as to how much the car is worth. All you need is the VIN or license plate, options and mileage.
I recently purchased a Model 3 SR+ for $37,990 plus taxes and fees for a total of around $42K. I got an offer from Vroom for $36,500. As you can see I already lost over $5K in value in less than a month.
This is the nature of the car business in the US.
In the end it doesn't make a difference if you leased or purchased the car. The depreciation is the same. The value of the car after X amount of time will the same either way, which means that you lose the depreciation amount lease or buy.
I recently purchased a Model 3 SR+ for $37,990 plus taxes and fees for a total of around $42K. I got an offer from Vroom for $36,500. As you can see I already lost over $5K in value in less than a month.
This is the nature of the car business in the US.
In the end it doesn't make a difference if you leased or purchased the car. The depreciation is the same. The value of the car after X amount of time will the same either way, which means that you lose the depreciation amount lease or buy.
