I am leasing my TSX and I just was thinking about the gap protection and the cap reduction. In my case, I put down $2500 dollars, but I was just worrying that if my car is totalled that I would essentially lose that money, while if I had put a $0 cap reduction, there would be of course no cap to lose. Does anyone have any information if this is true? Is the difference between the two cases somehow reflected in the money factor or anywhere else? If not, it would be one more good reason not to put anything down on a lease....

 

I would never put anything down on a lease.

and that means anything, pay the fees and be on your way.

 

I'd get gap protection. If you drive the car off the lot and get t-boned, you're screwed out of the money.

 

Isn't GAP protection INCLUDED in most leases now ? AHFC has it included, doesn't it ?

 

Yes gap protection is included. My question was regarding the down payment or cap reduction. If car is totalled right after one leaves the lot, does one essentially lose their cap reduction? With 0 towards cap reduction (down payment is the fees), if the car is totalled, gap protection covers the gap so one seems free and clear. If one puts, say, 2500 down like I did, and were to have the car totalled, it seems like insurance would not reimburse me on that full cap reduction, unless my payoff is less than the car value. In that case, there would be no gap. Not that cars get totalled that often, but losing the cap reduction seems like a risk if you put a substabtial one down up front. Can anyone verify that this at least makes sense?

So in wiz's example it seems like if I put 2500 down and then get T boned, I lose that money, while if I had put 0 down, I would not - I would just be responsible for the fees.

 

I don't know the answer for sure, but I tend to think you're right. The insurance operates to the benefit of the owner of the vehicle - they, not you, are compensated for its loss. Where you benefit from gap protection is that you will owe nothing - the lease is effectively terminated by the destruction of the vehicle. You won't get back your downpayment (cap cost reduction) just as you won't recover any payments made under the lease. Face it - cap cost reduction is nothing more than making a bunch of payments in advance.

If I'm wrong on this I hope someone will correct me.

Cheers,

Jaeger

 

Gap protection does NOT protect you if you total the car after you leave the lot .. that's why the experts ALWAYS say, to NEVER, EVER put ANY money down on a lease ... Essentially, all it does, is lower your monthly payment, kinda like making all those payments in advance, like Jaeger said ...

You CANNOT get that money back .. the ONLY money you should ever put down at signing is First Month Payment, Bank Fee (which can be rolled into the monthly lease payment) ... tax, license & doc fee ...

We just signed a lease last night for my dad on a TL .. and it consisted of First month, Title and License, and Doc Fee .. it only totaled $650 ...

I made the mistake once of leasing and giving them $2000 at signing ($1400 of it was CAP COST REDUCTION) -- just to get my payment to where I wanted - why give them the money sooner ??? I will NEVER do that again !!!

 

Yes in answer to your question you would lose ANY money that you have paid if you total the car. The only advantage to paying any money upfront is to have a lower monthly payment. I personally prefer a lower monthly payment so I put money down on a lease. It's a gamble yes but to me it's worth it.
Thre are some options like many have already mentioned, such as rolling EVERYTHING into your monthly payment and essentially paying nothing when you pick up the car.
Also I know of lease insurance, which covers you if something were to happen to the car. You get any money that you have paid into the lease such as payments and down payment/cap. cost reduction, all I know about it is is that it gets added on to your monthly payment. I would also think that that insurance has many stipulations in it as well though that is just pure speculation.