Gs300 Dimished Value?

[nelex]

I-270 and yes, its a !Removed! LOL. Not as bad as 66 in VA though ;)

Under normal circumstances, you would be correct. However, we put a large amount of money down going into the lease with the thought that we would purchase the car at the end. When you compare what KBB shows the value of the car without the accident with the current payout, we would have over $5,000 of equity in the Lexus. Now we are upside down on the lease by about the same amount.

Well you should have consulted a financial planner before you did that, that was a mistake. You should NEVER put ANY money down on a lease its too risky. As you've now realized you're handing money to the leasing company and if something should happen to the car you won't get any money back. If you'd totalled it you would have been out your downpayment money. Much smarter to put the money in a savings account and then use it to make payments for a year or something like that.

You never had any equity in the Lexus because its not your property, you rented it for the lease term and it belongs to whoever you leased it through. All you did was pay them some of the payments up front. If you were planning on buying it you should have bought it in the first place instead of leasing it. When you lease then buy you wind up paying for the car twice.

Again, not Lexus' fault.

Many of you would say we should just keep the car until the end of the lease (the equity part would be gone). However, for the sake of the two occupants that were in the car during the accident I must bring closure to the event.

Don't be so dramatic. You were in a car accident, happens to everyone at some point. The car was damaged, now its repaired. Drive it until the lease is up and get a new one.

You're not going to be able to get out of the lease unless your lease company offers some sort of yearly buyout program but thats really rare. The only way out would be to pay all the payments left and turn it in. That would be another foolish financial decision.

when cars are fixed at bodyshops they are put back together better than new in most cases. it shouldnt take away value at all.

Thats only true if you make sure the purchaser doesn't know the car was in an accident. The second they put it up on a lift and someone checks it out with a paint gauge and a thorough frame inspection they'll know its been in an accident and they won't pay you as much for it. Plenty other Lexus around that have never been in an accident to pay you for one that has.

Of course that changes the older the car gets, but a serious accident like this will definately effect the value of a 2003 Lexus greatly.

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[nelex]

I-270 and yes, its a !Removed! LOL. Not as bad as 66 in VA though ;)

Under normal circumstances, you would be correct. However, we put a large amount of money down going into the lease with the thought that we would purchase the car at the end. When you compare what KBB shows the value of the car without the accident with the current payout, we would have over $5,000 of equity in the Lexus. Now we are upside down on the lease by about the same amount.

Well you should have consulted a financial planner before you did that, that was a mistake. You should NEVER put ANY money down on a lease its too risky. As you've now realized you're handing money to the leasing company and if something should happen to the car you won't get any money back. If you'd totalled it you would have been out your downpayment money. Much smarter to put the money in a savings account and then use it to make payments for a year or something like that.

You never had any equity in the Lexus because its not your property, you rented it for the lease term and it belongs to whoever you leased it through. All you did was pay them some of the payments up front. If you were planning on buying it you should have bought it in the first place instead of leasing it. When you lease then buy you wind up paying for the car twice.

Again, not Lexus' fault.

Many of you would say we should just keep the car until the end of the lease (the equity part would be gone). However, for the sake of the two occupants that were in the car during the accident I must bring closure to the event.

Don't be so dramatic. You were in a car accident, happens to everyone at some point. The car was damaged, now its repaired. Drive it until the lease is up and get a new one.

You're not going to be able to get out of the lease unless your lease company offers some sort of yearly buyout program but thats really rare. The only way out would be to pay all the payments left and turn it in. That would be another foolish financial decision.

when cars are fixed at bodyshops they are put back together better than new in most cases. it shouldnt take away value at all.

Thats only true if you make sure the purchaser doesn't know the car was in an accident. The second they put it up on a lift and someone checks it out with a paint gauge and a thorough frame inspection they'll know its been in an accident and they won't pay you as much for it. Plenty other Lexus around that have never been in an accident to pay you for one that has.

Of course that changes the older the car gets, but a serious accident like this will definately effect the value of a 2003 Lexus greatly.

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Geez... I am not blaming Lexus. The one that I have a beef with is the very young driver that ran into my wife when she was at a complete stop. The force of the accident pushed the car into a four lane highway - the attending officer said my wife and daughter were very lucky to be alive, given that it was rush hour and several cars had to manuver around the car at a high speed. I think I have a right to be dramatic.

You must not have had an accident of this magnitude - you would be a bit light on the get over it comments. The car has some unfortunate memories attached to it. I need to let it go.

And oh by the way, I was fully aware of the risks - the lease had gap insurance and I can pay it off at any time. If I keep the car for the remaining term of the lease, I will make $9,600 of payments. If I let the car go now, adding the remaining "equity" that exist from my larger capital reduction payment plus what it will take to correct the upside down position will allow me to get out of the lease for approximately $5K. I am sorry to disappoint you - I do have a bit more of a clue than what you give me credit for.

[91L3xus]

I-270 and yes, its a !Removed! LOL. Not as bad as 66 in VA though ;)

Ah, tousche. No one follows the HOV-2 laws, and cops couldn't care less.

[joey8675]

And oh by the way, I was fully aware of the risks - the lease had gap insurance and I can pay it off at any time.  If I keep the car for the remaining term of the lease, I will make $9,600 of payments.  If I let the car go now, adding the remaining "equity" that exist from my larger capital reduction payment plus what it will take to correct the upside down position will allow me to get out of the lease for approximately $5K.  I am sorry to disappoint you - I do have a bit more of a clue than what you give me credit for.

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Your astute financial skills are quite flawed. Yes you could dump the car for less than the remaining payments, but you then would have NO CAR......

A large down payment on a lease is NEVER a good idea - regardless of your intentions. If the car is stolen or totaled, (GAP insurance is irrelevant), you're not a check back from LEXUS for your downpayment.

If you want to bring your monthly costs down, Lexus offers a MULTIPLE SECURITY DEPOSIT option (in most states), which allows you lower the interest rate and thus lower the monthly payment. This is a much better option.

[SW03ES]

Joey's got it there, the multiple security deposits are the only way to safely buydown the payments of the lease. Even then you need to be sure that the payments will come back to you if the car is totalled or if the value is diminished and the gap insurance has to pay out a claim. The money's still at risk, but not as much as it is when you do a down payment on a lease. Thats about the dumbest thing anyone can do when financing a vehicle. You can dump it for less than the payments yes, but like Joey said you're paying $5000 in rent for something you no longer have the use of.

Gap insurance is irrelevent to you, all it does is protect the lessor from the vehicle's value being diminished because of an accident. It won't protect you at all and still, had the vehicle been totally you would have NOTHING. Not one dime would come back to you. Thats way too risky.

I just hate to see people put themselves at such risk for some car. Its not worth it. If you're going to lease because it makes sense to do that financially, do it. If you're going to buy, buy. Don't lease because you can't afford to buy...

I'm not trying to diminish what your family went through nelex, I've never been in an accident of that magnitude (knock on wood) and am sure I would want rid of the vehicle also. You've got to be smart about it though.

[nelex]

Joey's got it there, the multiple security deposits are the only way to safely buydown the payments of the lease. Even then you need to be sure that the payments will come back to you if the car is totalled or if the value is diminished and the gap insurance has to pay out a claim. The money's still at risk, but not as much as it is when you do a down payment on a lease. Thats about the dumbest thing anyone can do when financing a vehicle. You can dump it for less than the payments yes, but like Joey said you're paying $5000 in rent for something you no longer have the use of.

Gap insurance is irrelevent to you, all it does is protect the lessor from the vehicle's value being diminished because of an accident. It won't protect you at all and still, had the vehicle been totally you would have NOTHING. Not one dime would come back to you. Thats way too risky.

I just hate to see people put themselves at such risk for some car. Its not worth it. If you're going to lease because it makes sense to do that financially, do it. If you're going to buy, buy. Don't lease because you can't afford to buy...

I'm not trying to diminish what your family went through nelex, I've never been in an accident of that magnitude (knock on wood) and am sure I would want rid of the vehicle also. You've got to be smart about it though.

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I would not have started this thread if I was not serious about learning from this experience. My goal was to get an education on the supply and demand for a damaged Lexus and the concept of dimished value, which I did. Thanks who provided feedback.

For those who expanded the thread to critize my financial decision to lease, thanks for the comments as well. Looking back, I would do things differently. But honestly, who has not made a bad decision, car wise, at least one time in their life? I guess I was due to stumble.

And finally, I hope no one has to go through what I have been through to bring things back to normal. Repairing a car was challenging in itself. But to deal with the physical and emotional side of the accident is something I grossly underestimated. Be careful.

[SW03ES]

Oh we all make these kinds of mistakes, not a big deal. Its just important that you learn from the experience and don't do it a second time.

Your error wasn't in choosing to lease, for many people leasing is a great tool. The error was in putting a large sum of money down on the lease, and leasing with the intention to buy it afterwards.

[Bartale]

I am curious if Lexus will hold you responsible for inherent diminished value at the end of your lease if the vehicle was in a serious accident?

Yes, the car is perfectly repaired (dealer inspected saying it is fine) but can or will Lexus Financial come after you for the inherent diminished value of the car being in a serious accident at lease end?

Just curious if anyone has ever dealt with this before.

Thanks, Bart

PS: sucks to get rear ended in your 04 GS430 by a van....

[SW03ES]

No, Lexus leases (and most all leases) require gap insurance. The gap insurance will pay them for the difference between the actual value and the projected residual value.

If your lease has no gap insurance, they definately can come after you for that. Most do though.

[Bartale]

No, Lexus leases (and most all leases) require gap insurance. The gap insurance will pay them for the difference between the actual value and the projected residual value.

If your lease has no gap insurance, they definately can come after you for that. Most do though.

Thanks for your response. It is a Lexus lease - I guess my confusion is when they talk about GAP everyone seems to be talking about if your vehicle is a total loss from accident/theft, not in reference to diminished value when you turn back in the car.