Lease car + flood damage question

MehulLakhani · 28 Jun 2016 at 19:16

Hi All

My work colleagues is 13 months into a lease on Lexus CT200.

Last week, due to the heavy rain, the car got flooded, and the insurance company have written the car off.

The insurance company have agreed to pay off the rest of the lease. Question is , should he get some compensation for the initial payment - think it is a 6+35 lease. What happens to the 6 months payment made up front at the beginning of the lease.

BTW , he didnt have any sort of gap insurance

Any ideas/experience welcomed.

R

Mehul

xs2man · 28 Jun 2016 at 19:20

That 6 months payment isn't a "deposit" that he will likely see back. It is simply the initial payment, and is now gone. Think of it as the initial depreciation cost when you first start a new car.

rodenal · 28 Jun 2016 at 19:25

Isn't it a bit more complicated than paying remaining rentals in that he lease company still need to be paid for their asset, regardless of the number of payments outstanding?

Assuming this has also been sorted or in discussion with the lease co and insurance then no, you wouldn't get the initial money back as it's just effectively a down payment on reduce monthly payment

cadmunkey · 28 Jun 2016 at 19:27

xs2man said:
That 6 months payment isn't a "deposit" that he will likely see back. It is simply the initial payment, and is now gone. Think of it as the initial depreciation cost when you first start a new car.

This. Without paying it he wouldn't have gotten the lease in the first place.
Is he concerned about finding 6 months payments for his next lease?

muon · 28 Jun 2016 at 20:37

The real crux is that he doesn't own the car or have any equity in it whatsoever.

The insurance is there to compensate the owner of the car and therefore your work colleague is due nothing, even if he is financially worse off. His financial situation isn't what was insured.

thecremeegg · 28 Jun 2016 at 20:41

This is the problem with leasing - it's not all roses!

[TW]Fox · 29 Jun 2016 at 01:28

This is what GAP insurance is for.

muon · 29 Jun 2016 at 01:49

[TW]Fox;29710605 said:
This is what GAP insurance is for.

You don't need GAP insurance for a lease as the insurance company will settle the lease i.e. no gap in the payout and value of vehicle to the owner.

I'm of the opinion that GAP is only really worth it in the case of PCP transactions, as the insurance company will only return the market value of the car which might leave a shortfall.

What the OP's work colleague really needs is initial rental cover, but I don't know if you can get that on it's own. Which then makes it more expensive than it needs to be considering GAP is included.

[TW]Fox · 29 Jun 2016 at 02:15

muon said:
You don't need GAP insurance for a lease as the insurance company will settle the lease i.e. no gap in the payout and value of vehicle to the owner.
.

GAP stopped being purely about the actual finance gap years ago, there are numerous versions now.