I remember a few years ago Clark Howard called a car lease a fleece. Anyway, depending...that's not necessarily true these days. OK OK back on topic. I understand the end of lease residual value (a contracted number established at lease start time) vs. actual value at turn-in issues. Here's the question: if your lease car is in a bad accident but not totaled and it has been repaired - does the bad carfax report affect the contracted residual value (is there usually fine print in the lease agreement to cover this) ? Seems like it should since the repair history of a repaired car certainly diminishes its value to the dealer that leased it.
Yes. Worse, if the car is totaled, the insurance company will pay only the actual cash value, and you, as the consumer on the lease, will have to make up the difference if that does not cover what you owe the lessor.
Can the dealer recover the difference between the contracted residual value and actual carfax induced reduced value ? Cash from the car leaser at turn in time?
Those that lease cars are aware that accidents happen. Read the fine print. They have covered themselves...well.
MP, thanks for the answer I've never thought about leasing or seen a lease but have wondered about downsides that might not be readily apparent. Having a crash repair looks not to be something that would bite at lease end time. I traded in a car at a shady dealer a few years ago and the full legalsize page of fine print on the back of the trade-in paper was a fright. They could essentially void the deal years later if hidden damage or problems were discovered in my trade-in car. This is a large chain of dealerships owned by that N.C. guy who has a major Nascar presence. That was what got me to thinking that a lease might also have some risky terms.
I don't drive that much, but my mileage alone would be a deal breaker. What is it now, $.25 per mile over 12,000 per year?
The mileage limit can be negotiated when take the lease out. The higher the mileage limit, the higher the lease payment. I have seen some allowed 25k a year. Most are around $.10 a mile for running over. It can also be set that there is no overage fee if you purchase at the end of the lease.
All leases I've seen do NOT change the residual value as a result of accidents which have been repaired. That is one of the "risks of ownership" which remains with the lessor not the lessee. The resultant diminished value of an accident ridden car will be to the detriment of the leasing company, not you at the end of the lease.
Not really. You are already paying a per mile cost at the beginning of your lease for the stated mileage. You will pay slightly more for miles accrued above the stated miles. For example, your lease payment at inception includes a cost of $0.20 per mile for the 15,000 mile per year lease for 3 years. At the end of the lease, you should return it with 45,000 miles or less. If you return it with 47,000 miles, you'd owe $0.25 per mile for the 2000 miles over your limit. Obviously, you'd we $500. But, that's only $0.05 more than you would have paid for those miles had you included them at lease inception. In addition, more miles costs you approximately the same whether you own or lease. When you sell the car you own, you'd get less for it if it has more miles. Either way, more miles cost you.