You were going to have to surrender the vehicle at the end of the lease, right?
What do you plan on surrendering?
My nephew had a car impounded and he followed the poor advice given by the judge as to how to handle it and the impound fees become worth more than the car. We forced to let it go and tell the creditor that it was in possession of the impound so we couldn’t make payments in it.
Tell your leasing company to hash it out with insurance company. I wouldn’t add onto the insurance payout unless legally obligated to.
I’m guessing that because you were leasing and had not yet outright bought the car that they, the leasing company, are claiming they still were the owner and therefore due the entire value of the car from the insurer, is that correct?
I spoke with a former coworker that went through this. Did you get their insurance? That is pretty much your way out- ins cos have asked for ‘admin costs’, ‘lost revenue’ and a whole bunch of other things that go over what your own ins pays.
Sorry, I was thinking you had a rental car!! Disregard my post!
I have no idea the terms of the lease nor would I likely understand them LOL. One thing to find out though, is there GAP insurance? That’s meant to pay off any difference in situations like this and many lease contracts include it.
Sorry, but I don’t see that the value of the car is related to how much is owed on it.
And your insurance company will set a value as well, and that’s not necessarily an amount where you could buy another just like it with similar features and similar mileage.
Read the lease. It may well say they can do exactly what they are doing. I believe I have heard of this happening to others.
You might also review what the lease says you would have had to pay to buy the vehicle at the end of the lease. Was it depreciated original cost, or current market value, or something else? The current market value of used cars is sky high.
If the contract says they could have charged you fair market value, they had a reasonable expectation of receiving that at the end of the lease. It is certainly harsh to make you pay it, but maybe not totally unfair.
Used car prices have apparently been on the rise.
Your leased car may have been worth more than the residual value on the lease before it got wrecked.
Sounds like the Insurance co. doesn’t have the value right.
Get the Ins. Co. to cough up the current market value, pay the last two lease payments, “buy” the car at the previously agreed upon residual value. PROFIT!
If you didn’t have gap insurance on the vehicle you may be liable for the difference your insurance company pays and what the vehicle worth was prior to the accident.
I used to lease a ton for the low monthly payments. I’ll never lease again. Buy your vehicle outright, drive a beater until you can pay cash for the vehicle you want. We did and then put the total of monthly payments to into investments. Best advice a friend ever gave me.
Just found this doing a quick search. It’s short but may help with some of your questions.
https://www.ghandm.com/your-leased-car-is-totaled/
By the way, what makes you think the buyout is $14K? This is a lease, not a purchase, right?
Best advice is have the dealer work it out with the insurance company; it's what you've been paying them for. You shouldn't be on the hook for anything buyout since that is not an option now.
They get the value of the car, which you say is $20k.
Your lease with them is a different matter. In a lease, you are paying basically the depreciation value you intended to use. You’ve got $14k left, and have paid some amount to date as well. Your lease may specify that they owe you a car to finish the remaining $14k of use. It may also state that in the case of a totaled vehicle that the lease terminates. This assumes a linear depreciation. Most leases I have had followed a linear depreciation schedule.
When someone has hit my car, and I've had to get body work done, my insurance company authorizes the repairs, and then goes after the other insurance company to get their money back.
Back in 2011, my sister died. She'd been leasing a Toyota for about a year. While she was in hospice care, she told me to call the Toyota dealer, and get them to pick up the car since she wouldn't be using it anymore. When she had originally leased the car, she told the dealer that she had been diagnosed with cancer, was in remission, but that the cancer could return at any time...and asked him if there would be a problem if she had to return the car before the lease was up. Of course the dealer said it wouldn't be a problem.
I called the dealer about bringing the car back, and was told to call Toyota's financing department, which I did. They hemmed and hawed, and gave me a hard time. When I told my sister, she got pissed, and told me not to make any more payments on it. I ended up having to call Toyota several times, finally telling them that if they didn't come to get the car from her parking lot, that I would simply leave it somewhere, and they could look for it. A few days before the end of August, they sent a tow truck to take the car. My sister died September 2nd, her 69th birthday. Because I had her mail forwarded to my address, Toyota kept sending statements claiming she owed a few thousand dollars because she'd turned the car in before the lease was completed. I gave them the address where she was buried, and told them they could reach her there. They eventually stopped writing and calling, and because of the way they conducted themselves, I would never own a Toyota.
The leasing company owns the car. You were just paying to use it. In order to replace the vehicle they need $ equal to what a similar car in the same condition will (theoretically) cost them.
The insurance company should cover the book value of the car if it is totaled. What is the book value? Where did the $20,000 number from the lease company come from? Is that the book value of the car?
The problem is that you weren’t purchasing the car but were leasing it with a buyout option at the end. The company still owned it in total so it is entitled to market value for the loss. See, unlike when you are buying a house, which you own subject to a lien (mortgage), you were acquiring no equity with your payments. Not a cent. That’s why leasing is a terrible business decision, unless you own a business that can deduct the lease payments and don’t have to depreciate the asset over time.
What exactly is "unfair" about what the leasing company is doing? You are leasing a car from them that has a documented book value. Isn't the insurance company supposed to make them whole?
The issue of what you intended to do with the car two months from now has no real bearing on the dollar value of the asset the leasing company has lost here.